Genentech Finds No Friends in Lucentis Pricing Flap

(MoneyWatch)  Negative public opinion just keeps piling on to Genentech regarding its pricing policy on Lucentis and Avastin. This weekend saw a big Associated Press story describe how the company is refusing to ask the FDA to approve Avastin for use in treating "wet age-related macular degeneration," an eye condition that leads to blindness.

Genentech is doing this, most people believe, because Avastin would be a much cheaper treatment for wet AMD than Lucentis, another Genentech drug. It costs about $60 per dose to use Avastin on the disease, and $2,000 to use Lucentis. To preserve this lucrative discrepancy, Genentech has tried to prevent compounding pharmacies repackaging Avastin for use in fighting wet AMD.

And the company has declined to be involved in the head-to-head comparison of Lucentis and Avastin, which is widely expected to demonstrate that the two drugs have basically the same effect.

Krysta Pellegrino, a company spokeswoman, said this to the AP: "No matter the outcome, we continue to believe Lucentis is the most appropriate treatment for wet AMD."

That is an astonishing position for the company to take, as it seems to suggest that even in the unlikely event that the study showed that repackaged Avastin was better for wet AMD, the company would continue pitching its more-expensive, less-effective drug for the condition.

Of course, Genentech is over a barrel on this issue. If it caves, it could say goodbye to $216 million a quarter in revenue. Avastin already has half this market, by some estimates, and is currently booking about $650 million a quarter in revenue, or heading toward $2.6 billion a year, and Lucentis revenues are heading toward $864 million a year. Thus Genentech finds itself in the bizarre position of trying to protect an $864 million franchise from the growth of another of its franchises that is almost three times the size -- a situation where drug companies usually cut the smaller business loose in order to grow the bigger one.

But what is good for Genentech and its shareholders is looking bad for the industry and taxpayers. As the BBC recently reported, The U.K.'s NHS has approved Lucentis for patients there -- which will make eye treatment more expensive than it needs to be in that single-payor system. The same thing has already happened in the U.S., where Medicare estimates that its Lucentis bill could be $1.2 billion a year, compared to $60 million a year if those same patients were treated with Avastin.

As the AP makes clear, important people are beginning to dislike Genentech because of all this maneuvering. The story quotes an e-mail from Dr. Daniel Martin, the chairman of the National Eye Institute and the man in charge of the Avantis-Lucentis study. He wrote to the company:

The fact that we are comparing your drugs and you are not involved is very awkward and can easily give way to anti-Genentech sentiments ... The leaders of this study are only interested in answering the many scientific and patient management questions that we face with our patients every day, but some investigators and the press want this study to be more than that. Your involvement would be very helpful to both of our causes.

Those "anti-Genentech sentiments" have finally arrived in the mainstream press. On the strength of the AP piece, three local newspapers ran anti-Genentech editorials: TheLouisville Courier-Journal, The Las Vegas Sun, and The Spartanburg, S.C., Herald-Journal.