Roche details hit to Avastin price in Japan

Roche COO Dan O'Day

Expected price cuts for reimbursed drugs in Japan this year have riled domestic and foreign firms with exact details sparse until Roche on the first quarter earnings call gave a figure for oncology drug Avastin.

Daniel O'Day, chief operating officer for pharmaceuticals at Roche ($RHHBY), while noting that overall sales of Avastin (bevacizumab) rose 4% in the first quarter, said the therapy was one of the products that faced a price cut in Japan.

"We had an impacted 10.9% price tug (cut) in Avastin for Japan," O'Day said on the April 19 earnings call.

"In Japan, the pricing discount really went into effect very late in the quarter," he said.

In the fourth quarter earnings call, O'Day signaled the Avastin price decrease in Japan, and noted that the country "accounts for around 10% of our overall Avastin sales."

Reimbursement in Japan was a double-whammy this year for many drug firms operating there, with price cuts for widely prescribed drugs by Japan's Central Social Insurance Medical Council, known as Chuikyo, reaching as much as 50%.

Under the formula, drugs with annual Japan sales of more than ¥150 billion ($1.8 billion) and those that see sharp sales gains can face cuts. That also affected companies such as Gilead Sciences' ($GILD) hep C blockbuster Sovaldi (sofosbuvir) that took an estimated cut of 30%.

On top of that, the every-other-year price-cut exercise by the government at the same time aims for savings of $1.5 billion.

However, the companies did dodge a possible sales tax increase that had been on the table until the government of Prime Minister Shinzo Abe decided against the move because of fears it would hit spending power in the economy.

Still, O'Day said that for Japan, Roche saw "really solid growth throughout the portfolio, oncology and immunology." He also highlighted Kadcyla (ado-trastuzumab emtansine) as reimbursement grows with sales showing a "strong 27% growth, continuing to penetrate in the second-line setting."

"In Japan, the growth is driven predominantly by breast cancer and by lung cancer," O'Day said.

Elsewhere in Asia, O'Day said first-line non-small cell lung cancer in China is beginning to gain traction "particularly due to recent approvals and reimbursements for our key products, Herceptin (trastuzumab), MabThera (rituximab), and Avastin in some of the new provinces."

"Growth continues to be driven by APAC mainly in this quarter due to China and the ongoing reimbursement in a variety of provinces," O'Day said.

- here's the earnings release from Roche