Genentech "Sees The Light" On Avastin?


In a remarkably candid "Open Letter" on the homepage of its web site Genentech is taking a step back from implementing its new restrictive policy over the use of the cancer drug Avastin in lieu of Lucentis for age-related macular degeneration (AMD), the leading cause of adult blindness. I had recently blogged about the company's action and angry reader responseto it.

The drugs are very similar and a lot of eye doctors have been using Avastin by breaking it up into little, relatively inexpensive doses instead of using the pricier Lucentis. Genentech said it would start cracking down on that practice at the end of next month, but now it's pushing out the date it'll take effect to New Year's Day.

In the letter Genentech says, "We made this change so that affected physicians will have sufficient time to develop and implement transition plans to assure that patient care is not adversely affected."

But I think the following excerpt is the most striking acknowledgement in the communication: Genentech seems to be taking a more apologetic tone and is recognizing (even more so than it indicated on its recent conference call) that it may be a futile attempt to curb the use of Avastin for Lucentis: "We understood that some would disagree with our decision to stop supplying Avastin to compounding pharmacies and would accuse Genentech of making profit, not patients, its priority. Genentech's decision was not motivated by a desire for increased profits. We did not and do not expect that this change in policy toward compounding pharmacies will lead to any increase in LUCENTIS® (ranibizumab injection) sales. Further, we expect Avastin to be available and that physicians will continue to prescribe it for ocular indications." Compounding pharmacies are the places that repackage the Avastin into smaller doses to be injected into the eye for AMD.

I suspect that the reader feedback I got was just the tip of the iceberg in terms of the protest and pushback Genentech must have received. This is obviously a small victory for patients and doctors. But investors aren't greeting the news too warmly.

As I write this shares of DNA are down one percent. Successfully pushing patients onto Lucentis would have meant higher sales and profits. Revenue from the drug actually went down in the third quarter. That is highly unusual for a relatively new drug that has been proven to work as well as Lucentis--it not only slows down or stops the loss of vision, it actually restores sight in some patients.

Questions? Comments?