Roche sells insurance to gin up paying customers in China

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While other drugmakers cut prices, set up access plans or wrangle with the Chinese government to sell products in that country, Roche ($RHHBY) is taking a more indirect tack. As Bloomberg reports, the Swiss drugmaker has teamed up with the reinsurer Swiss Re to sell private insurance to middle-class Chinese. That way, more patients can afford to use the company's pricey cancer drugs.

"We're creating a market," Roche CEO Severin Schwan told the news service. He went on to say that the "old theory" that only the rich can afford coverage--and the expensive drugs it will buy--is wrong. "Now what you have is an emerging middle class. This emerging middle class is able to make a contribution."

Roche and Swiss Re work with 5 domestic insurers to sell the policies, which supplement public insurance, which doesn't cover expensive drugs such as Roche's Herceptin, Bloomberg says. So far about 6 million people have signed up, and the insurance plan is expected to end the year with 10 million. Next year? Twelve million, with the help of China Life Insurance, which Swiss Re expects to join up early next year.

The cost of cancer drugs is a hot topic around the world. In India, domestic drugmakers have slashed prices on their cancer treatments, some of which are copies of still-on-patent drugs. The government has already forced one multinational pharma--Bayer--to authorize a copycat version of its Nexavar treatment, and it's threatening similar moves against other drugs.

Meanwhile, in the U.S., Sanofi ($SNY) just announced 50% discounts for its new cancer treatment Zaltrap, after doctors at Memorial Sloan-Kettering Cancer Center announced they wouldn't use the drug because it's not cost-effective.

Roche's cancer treatments run tens of thousands of dollars in the U.S.; a year's worth of Avastin can run more than $100,000. The company wouldn't disclose its Chinese prices, but told Bloomberg that they're similar to prices in the U.S.

- read the Bloomberg piece

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