Italy's move to fund unapproved use of Roche's Avastin alarms the industry

In the U.S. pushing drugs for unapproved uses has gotten companies into big trouble. In Italy, the opposite is now true. To save money, the government will pay for patients to be treated for an eye disease with Roche's ($RHBBY) Avastin, a drug not approved for that use, and has taken legal action against the Swiss drugmaker and marketing partner Novartis ($NVS) for steering physicians toward the pricier Lucentis, which is.

Italy's approach, which may look appealing to other cash-strapped European countries, drew a sharp rebuke from both companies as well as Big Pharma in general. "Novartis strongly rejects the Italian law allowing reimbursement of Avastin to be used off-label in the eye for economic reason as it is against European law," spokesman Eric Althoff told Bloomberg. Novartis markets Lucentis in Europe. "Patient safety is of the highest importance for Novartis, and we urge the Italian Medicines Agency to promptly implement clear protocols and procedures around the use of Avastin including monitoring."

The Italian government will cover cancer drug Avastin as a treatment for age-related macular degeneration, instead of Lucentis, which is approved for that condition, Bloomberg says. Doctors have long used Avastin off-label for treating the eye disease. Italian antitrust regulators recently took legal action against Roche and Novartis for allegedly plotting to convince doctors not to use the less expensive drug and is seeking €1.2 billion ($1.6 billion) from the two. France and the EU are also looking into the matter.

The companies deny wrongdoing saying they have an obligation to let doctors know the perils of substituting one drug for another. Roche said in a statement to Bloomberg that doctors should decide for themselves how to treat their patients but it is not as simple as substituting one drug for the other: "[I]t is our obligation to inform the medical community including physicians and patients about the known risks associated with the off-label uses of our medicines."

The economics of the situation are pretty compelling. A recent study found that the U.S. Medicare system could save $3 billion a year if Avastin was substituted for the $2,000-plus-per-dose Lucentis. They are pretty compelling for Roche as well. Avastin, first approved for colon cancer, is approved for multiple indications and generated $6.751 billion last year for the drugmaker, up 13%, but Lucentis, used only for eye conditions, generated nearly $1.9 billion with 15% growth last year. It is even more important for Novartis, which markets it outside the U.S. Novartis reported Lucentis sales of $2.38 billion last year.

The pharma industry, which stands to lose more revenue if drug substitution becomes a trend, spoke out against Italy's decision as well. The industry has seen little growth in the EU in recent years as governments have already been cutting reimbursements and been slow to approve new drugs. "We are concerned about efforts by European Union member states creating secondary, national marketing authorizations for economic reasons that undermine the EU regulatory framework and could potentially put patients at risk," Richard Bergstroem told Bloomberg in a statement. He is director general of the European Federation of Pharmaceutical Industries and Associations, a trade group that represents Big Pharma.

- read the Bloomberg story

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