Macular Degeneration

When cheaper isn't better: The case of Avastin, Lucentis and wet AMD

Overview Avastin / Lucentis



9.27.11 | David E. Williams

When cheaper isn't better: The case of Avastin, Lucentis and wet AMD

I'm a big fan of cost containment in health care. But I'm dead set against using a $50 shot of Avastin in place of a $2000 shot of Lucentis even if safety and efficacy are the same. Why? Because it has a chilling effect on innovation.

To make a long story short, 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 about $50.

In the short run only Genentech - maker of both Avastin and Lucentis - 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 $50 or so. As a result, drugmakers are reluctant to develop products 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.

Now safety concerns are emerging over the use of Avastin in the eye. These could easily be the result of problems with the compounding pharmacies. Nonetheless, the Veterans Administration for one has decided to stop substituting Avastin for Lucentis. As soon as that was announced, the stock price for Regeneron - maker of a Eylea, a new drug for wet AMD - jumped 9 percent, which supports my point about the impact on innovation. You can bet the VA action also increased the likelihood that companies with wet AMD drugs at earlier stages of development will take them forward. I hope some of those drugs make it to market, offering new and better options for patients at a price somewhere above Avastin but below Lucentis.

The author, David E. Williams, is the co-founder of MedPharma Partners who writes regularly on the Health Business Blog.