With Aventis (dba Lucentis) a little dab will do ya', and that's a problem for Genentech

Avastin (bevacizumab) is a great anti-cancer drug, which to my mind justifies its high price. More power to Genetech for developing it and they deserve the profits they are reaping. Nexium it is not. As an added bonus, bevacizumab works great for age-related macular degeneration, too. Of course the amount required to inject into the eye is a lot less than what's infused for metastatic colorectal cancer and non-small-cell lung cancer. So Genentech has come out with Lucentis, basically Avastin in a smaller package. Genentech prices the drug based on clinical value, so drop for drop Lucentis is a lot more expensive than Avastin. This has absolutely nothing to do with the cost of making the drug. In fact the cost of goods for Avastin is truly trivial. (If someone tells you otherwise they are a liar.)So compounding pharmacists have been taking Avastin and repackaging it to make Lucentis. That drops the price of Lucentis from $2000 to $40, a factor of 50. Genentech would love to be able to convince people that this homemade Lucentis is less effective or dangerous or less convenient. They've done their best to prevent equivalency studies from being done, but alas the 50x price factor is just too compelling to prevent the research from going forward. As it turns out, there's probably no discernible difference between the two products. From MedPage Today:

"For those patients that need treatment every two to three months, our general impression is that there's no difference between the two drugs, and when we reviewed our data retrospectively, that was confirmed," [said Philip J. Rosenfeld, MD, PhD of the Bascom Palmer Eye Institute in Miami]. "A few patients did better with Lucentis and a few did better with Avastin, but for the vast majority of patients there is no difference between the two drugs."He noted that a definitive answer to the question of therapeutic equivalency of the drugs won't be available until the conclusion of a head-to-head trial of the drugs sponsored by the National Eye Institute. Enrollment for that trial is scheduled to begin at the end of the year.In an article in the Oct. 5, 2006 issue of the New England Journal of Medicine, Genentech's chief medical officer Hal Barron, M.D., said that the company has "a huge database suggesting that Lucentis is very effective and very safe, so we are just not sure of the value of taking something that is not formulated for the eye and subjecting patients to a randomized trial when there is, in our opinion, a very low likelihood of its being superior."

Barron neatly sidesteps the pricing issue here. The drug doesn't need to be superior clinically to be superior financially. There's a lot of money at stake.I'm sympathetic to Genentech. I think they actually do deserve to take in a lot more than $40 from a Lucentis injection. (They make less than $40 now, since that is the retail price.) If Genentech had been a little more clever, they might have come up with a nifty injection device that would encourage physicians to use real Lucentis in the eye. Maybe they can still try that. In the meantime they are cutting off supplies of Avastin to compounding pharmacies. I think a grey market is likely to develop.The biggest problem for Genentech in this case is the way drugs, especially cancer drugs, are prescribed. For some of these products up to 80 percent of the use is off-label. That means Genentech benefits greatly from the use of its drugs in indications where it has not received government approval. This is legal so long as Genentech doesn't explicitly push it. Most of the time it works out great; dosages are in the same order of magnitude so pricing isn't much of a factor. It's a bit rich for Genentech to complain about Avastin being used off-label in the eye, when they don't complain about it being used off-label for any other organ. Lucentis itself is used off-label for ocular indications other than macular degeneration.Genentech is really selling a solution to a problem, not a physical product. Ultimately that may move the field toward a pricing model explicitly based on degree of improvement rather than volume of product. For now Genentech will need to do what it can to protect its franchise. My hope is that they don't find themselves resorting to such heavy handed moves too frequently.