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Monday, October 15, 2007

Genentech Gets Tough: Who is the Target?

How do you crack down on compounding labs without adversely affecting your key customers? That is the tricky question Genentech is grappling with as it tries to shut off the primary source of supply for bevacizumab (Avastin), for ophthalmologic use against neovascular macular degeneration.

An October 11 letter from Genentech to “retinal community” members makes the compounding pharmacies the clear target. “As of November 30, 2007, Genentech will no longer allow compounding pharmacies to purchase this product directly from wholesale distributors,” the company declared.

In response to questions about potential limitations on supply to hospital pharmacies, the company emphasizes that is not taking any action to limit that source of supply. A Genentech spokesperson says there will be no allocations to hospital pharmacies to try to restrict spillage from the use of VEGF in oncology to the ophthalmic markets.

If ophthalmologists want to get Avastin from hospital pharmacies, that route will remain open, a company spokesperson explains.

That makes the October 11 announcement appear to be a surgical strike by Genentech against one class of trade – a class that the company argues has raised quality control issues. Genentech points out that it has the Food & Drug Administration on its side in questioning use of compounded Avastin: a December 4, 2006 warning letter from the agency to the New England Compounding Center; and FDA inspection observations at Genentech which note continued off-label ocular use of Avastin.

But is Genentech really restricting this fight to compounders? By cutting off the supply of the inexpensive ($17 - $50 per shot) Avastin, the company will be moving more of the ophthalmologists to the $1,950 per moth (ranibizumab) Lucentis.

Genentech is shifting a large inventory risk to its customers: the wholesalers and ophthalmologists. The firm says it is not changing payment terms from its current 85-day dating for the product. It could have extended the payment terms to soften the blow of forcing more doctors to the higher-priced version of anti-VEGF treatment. The higher priced product also puts the eye doctors in the uncomfortable position of trying to collect average co-pays in the $400 per month range.

The tough approach to its customers is exacerbated by the context of the extended argument that the company has been having with segments of the ophthalmologic community over the potential for Avastin and the effort from the specialty community to support a comparative trial of Avastin and Lucentis. Genentech has helped to make that trial difficult for the eye doctors and the government to undertake. In the fight, the company has created bad feelings among a number of opinion leaders in the small customer class of ophthalmologists.

The move against compounders also shifts liability risks as well as carrying costs. One close observer of the field says Genentech is making this move to isolate the company from liability and make ophthalmologists fully liable for any adverse events that could arise from using Avastin in the eye.

The observer notes that there is an ongoing study of Medicare macular degeneration claims at Duke (the AWARE study under Scott Cousins) to try to pick up the frequency of untoward events from excessive anti-VEGF from injection in the eye. The study uses date from the Chronic Condition Warehouse database, managed by a Medicare contractor, the Iowa Foundation for Medical Care (IFMC), a Medicare contractor. Genentech claims that Lucentis has been designed as an antibody fragment to bind more specifically in the eye and avoid appearing systematically.

If Genentech can shift Avastin ophthalmic sales to Lucentis, the investment community will be impressed, but the cost might be forcing more financial and liability risk on its customer base.

2 comments:

Irv Arons said...

Don't you think the timing is curious? The cut-off date is the day before the CATT Study to compare Avastin vs. Lucentis is supposed to begin recruiting patients.

For more on this controversy, take a look at my web Journal. I've been following this controversy for over a year.

The link is:

http://irvaronsjournal.blogspot.com

Irv Arons

Kenneth said...

I have central retinal vein occlusion(eye stroke). I have had one Avastin treatment and will problable need more. It appears that my eye sight is improving. Why should I be forced to pay $2000 a dose when Avastin works at $200 a dose.
In other industries if a product is developed that does not sell or there is no demand for, the company has to take its lose and move on. Why am I forced to pay a company for a more expensive drug.
My insurance does not cover the Avastin. I am likely sure they don't cover the other drug either. I can afford the Avastin but I can not afford the other drug at $2000 per treatment. I am also likely sure at my families income I would be denied financial assistance (nor should I have to apply for it when Avastin works).
So I guess when this drug company puts greed and the recouping of an invest ahead of the peoples health and sight, myself and many people who need this drug go blind.
Just another reason for national health care system. Of course for those of us that go blind we will be on medicare and disablity.
So let the taxpapers pay for my health care and disabilty just so long as the drug maker makes thier invest back.