Avastin instead of Lucentis: Something’s not quite right
February 2nd, 2010 by 
David E. Williams of the Health business blog
Sometimes bio/pharma companies cry wolf over regulations, for example when they claim that the emergence of bio-generics or bio-similars would devastate their businesses by lowering the incentive for investment. But other times they find themselves in a no-win situation and need someone to defend them.
The Avastin/Lucentis story is one such situation and I’ll gladly step up.
Avastin is a highly-effective anti-cancer drug. Lucentis is basically the same drug, but it’s indicated for an ophthalmic condition: wet age-related macular degeneration. Since Lucentis is injected in the eye only a little bit is needed. Some enterprising doctors and pharmacists figured out they could split up one Avastin dose into lots of Lucentis doses. Instead of $2000 or so for a Lucentis treatment they have an Avastin equivalent for less than $100 –maybe as low as $20.
The situation has caused Genentech a lot of grief. Their revenues have suffered, they’ve taken a lot of hits in the press and from eye doctors, and the FDA has started holding Avastin production facilities to stricter standards usually reserved for ophthalmic products. The company is in a tricky situation and has had to fall back on the notion that Lucentis has gone through clinical trials for wet AMD while Avastin hasn’t. That’s a weak argument and is undermined by a new Kaiser study showing equivalence.
In the short run only Genentech loses out. Patients get a much less expensive drug and insurance premiums are a little lower than they would be otherwise.
But it’s also shown the world that the price point for a wet AMD treatment is $20 or so. Now who on earth is going to bother developing a new treatment for wet AMD? I’ve already seen situations where companies chose to drop development of early stage compounds in this therapeutic area because they are afraid they can’t make money.
The problem is really the way that drugs are priced. Avastin is priced by volume, but really what patients are getting is a treatment for cancer that’s worth a certain amount of money, regardless of the amount of physical product used. In the past I’ve proposed a software licensing model for drugs. Despite the challenges of implementation I still think it’s a good idea.
Posted in Economics, Pharma, Policy and politics | 
6 Comments »
February 3rd, 2010 at 4:36 pm
Your software license model is an interesting idea. I’m trying to wrap my mind around it. A big difference between software and medical treatments is that the latter requires a highly specialized, technology intensive intermediary step – diagnosing the condition and prescribing a treatment. This step is further complicated by all kinds of legal and regulatory issues. Acquiring software – by license or outright purchase – is a comparatively simple transaction. One size basically fits all. Does your software licensing model envision payers determining generic license fees per condition (think: DRGs) or physicians determining the fee per specific patient? The former might work on a software licensing model, but I think it would be a disaster for patients in an era of personalized medicine. The latter requires a pretty complex and often fluid calculation – particularly for cancers – that I think would totally confound the software model.
February 4th, 2010 at 10:55 am
Admittedly this concept is not fully worked out.
However, I would tend toward a DRG-style fee that provides a license by condition. The physical quantity of the drug (usually) is not a big factor in cost so that should work.
It might be hard to police but if the coding is matched to the Dx I don’t think it should be too hard.
February 10th, 2010 at 8:58 am
[...] http://www.healthbusinessblog.com/?p=3061 [...]
June 3rd, 2010 at 5:47 pm
[...] that Avastin is cheap when used for wet AMD, even though it’s pricey when used for cancer. As I’ve suggested previously, Genentech should be able to charge Lucentis prices for Avastin when it’s used in the eye. So [...]
June 3rd, 2010 at 6:59 pm
[...] that Avastin is cheap when used for wet AMD, even though it’s pricey when used for cancer. As I’ve suggested previously, Genentech should be able to charge Lucentis prices for Avastin when it’s used in the eye. So [...]
June 26th, 2010 at 7:06 am
[...] that Avastin is cheap when used for wet AMD, even though it’s pricey when used for cancer. As I’ve suggested previously, Genentech should be able to charge Lucentis prices for Avastin when it’s used in the eye. So [...]