Three months ago, antitrust authorities in Italy fined Novartis ($NVS) and Roche ($RHHBY) $251 million on charges they colluded to protect sales of their eye drug, Lucentis. Now, that country's Health Ministry is seeking an additional €1.2 billion ($1.6 billion) in damages. The Ministry said the companies had a "horizontal agreement to restrict competition," according to Bloomberg.
Roche developed Lucentis to treat the blinding disorder age-related macular degeneration, and Novartis markets it in Europe, but many eye doctors prefer to use the much less expensive cancer drug, Avastin, which is also effective against the disease. The two companies came under fire in Italy in February, when the Italian Competition Authority launched an investigation into allegations that Novartis and Roche had formed a "cartel" to restrict sales of Avastin to eye doctors. Both companies were fined in March.
In April, French authorities began their own probe, raiding local offices of Novartis and Roche. Then the EU joined in, confirming earlier this month that it was "gathering information" on the question of whether the two companies colluded to protect Lucentis. The Swiss companies continue to deny the charges and did so again last night in statements provided to Bloomberg and the Wall Street Journal. They both have said they plan to appeal.
The Avastin-vs.-Lucentis controversy has been plaguing Roche and Novartis ever since Genentech (now a unit of Roche) won FDA approval for Lucentis back in 2006. Both drugs are known as VEGF inhibitors--they choke off the growth of harmful blood vessels. But eye doctors around the world have chosen to use Avastin off-label because it is so much cheaper: In Italy, for example, a Lucentis injection costs about €900 ($1,230) compared with €81 ($111) for Avastin, regulators there have estimated.
The Italian Health Ministry says that the steep damages award it's seeking from the two companies is justified by estimates of what Lucentis has cost the country's health system, according to Bloomberg. Paying for the drug rather than its bargain-priced alternative caused damages of €45 million ($61 million) in 2012, €540 million ($735 million) in 2013, and €615 million ($837 million) this year, the Ministry says.