Genentech Caps Cost of Cancer Drug for Some Patients

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The New York Times

In an apparent nod to growing concern over the rapidly climbing costs of cancer drugs, Genentech announced yesterday that it would cap the total cost of its drug Avastin at $55,000 a year for patients below a certain income level.

The announcement came as the drug, approved two years ago as a treatment for colorectal cancer, received a new approval for use in treating advanced non-small-cell lung cancer.

Avastin costs about $4,400 a month for treatment of colorectal cancer. But twice as much of the drug is needed for lung cancer, bringing the cost to $8,800 a month, or more than $100,000 a year.

The prospect of a $100,000-a-year drug made Genentech the target of fierce criticism from some doctors, patient advocates, the news media and politicians. Some doctors said patients were already forgoing use of Avastin and some other drugs so they would not deplete their family’s assets in an attempt to gain a few more months of life.

Avastin, also known as bevacizumab, prolongs the life of lung cancer patients by about two months, according to the results of the main clinical trial. Those who got Avastin along with two chemotherapy drugs had a median survival of 12.3 months compared with 10.3 months for those who got only the chemotherapy. Avastin did, however, raise the risk of lung hemorrhages, some of them fatal.

Rather than cut the price across the board, Genentech opted for the expenditure cap, which it called the first of its kind in the pharmaceutical industry. The $55,000 ceiling would be for total spending by all payers — Medicare, private insurers and the patient — and not just for a patient’s out-of-pocket costs. The program would cover all approved uses of Avastin, not just for lung cancer.

Walter Moore, vice president for government affairs at Genentech, said the income level for eligible patients had not yet been determined but would probably be $75,000 a year or higher. Some patients would also be eligible for free drugs or for assistance with co-payments under existing programs, he said.

”What we want to make certain is that oncologists are able to make the right clinical choice,” he said in an interview. ”We think this helps take the additional expense off the table.” He said Genentech began working on the plan a year ago, before criticism of Avastin’s price mounted in the spring.

Genentech is not the only company trying to address the public furor over cancer drug prices. Two weeks ago, Amgen announced that its new colon cancer drug, Vectibix, would be priced 20 percent below a similar drug from a competitor and that patient out-of-pocket expenditures would be capped at 5 percent of adjusted gross income.

It is not clear whether Genentech‘s move will mollify critics. Jerry Flanagan, health care policy director at the Foundation for Taxpayer and Consumer Rights, a consumer group in Santa Monica, Calif., said that Genentech ”cannot expect that this will appease patients that are being priced out of life itself.”

He noted that the clinical trial used to win approval for the use of Avastin for lung cancer was paid for by the National Cancer Institute, not Genentech. ”Now taxpayers who paid for the drug are being asked to pay again at the pharmacy,” he said.

Mr. Moore of Genentech said the government paid ”only a sliver” of the overall costs of developing Avastin. Genentech has said it has spent hundreds of millions of dollars to develop Avastin and that the drug provides value to patients without the cost being overly burdensome.

Dr. Richard Gralla, president of the New York Lung Cancer Alliance, a patient group, said that Avastin’s use in lung cancer is not cost-effective for society as a whole because of the very high expense required to extend life for such a short time.

Geoffrey C. Porges, an analyst at Sanford C. Bernstein & Company, said the expenditure cap ”allows Genentech to have the spotlight taken off them and just have it directed to someone else.”

Mr. Porges said the cap would not significantly affect the company’s profits from the use of Avastin to treat either advanced lung or colon cancer because not many patients would use the drug long enough to reach $55,000 in spending. However, he said, in the future the drug is likely to be approved to treat breast cancer and earlier stages of lung and colon cancer, where patients would be expected to live longer and use the drug for extended durations.

”The long-term value of this franchise has been substantially reduced,” Mr. Porges said.

Avastin, the first drug to work by choking off the blood supply to tumors, has been considered a major advance. Some analysts expect sales eventually to reach $4 billion to $10 billion a year as the drug is approved for various types of cancer.

In the third quarter of this year, Genentech‘s sales of Avastin were $435 million, up 34 percent from the 2005 quarter.

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