Avastin's High Price Tag: A Catalyst for Crisis in Cancer Treatment

Strategic Insights -

As doctors excitement grows about the potential of Avastin, a drug already widely used for colon cancer, as a treatment for breast and lung cancer, many are cringing at the price Genentech plans to charge: about $100,000 a year. This price, more than double the current level for colon cancer treatment, raises concerns that the drug's high cost may price out patients and hinder the effectiveness of cancer treatment. Analysts predict that Avastin's U.S. sales could grow nearly sevenfold to $7 billion by 2009, but doctors warn that some cancer patients are already being priced out of the Avastin market.

Key Takeaways:

  • Avastin, a colon cancer drug, is expected to be priced at about $100,000 a year for breast and lung cancer treatments, more than double the current price for colon cancer.
  • Despite its potential benefits, some cancer patients are hesitant to take Avastin due to high out-of-pocket co-payments, which can reach $10,000 to $20,000 a year.
  • Genentech's argument for high pricing cites the "value of innovation and the value of new therapies," but Doctors and patient advocates argue that the cost is prohibitively high and discourages use of the drug.
  • Avastin's price may set a precedent for other oncology drugs, potentially driving up costs to unsustainable levels, according to some doctors.
  • Analysts expect Avastin's U.S. sales to grow nearly sevenfold to $7 billion by 2009, but this growth may be tempered by concerns over price and access.
  • Genentech's Roche, its majority owner, is standing by the price, citing the "pressure on society to use strong and good products."
  • Doctors and researchers are optimistic about Avastin's potential benefits and are conducting numerous clinical trials to expand its use for earlier stages of disease.
  • Ellis Minrath, a pancreatic cancer patient, chose not to take Tarceva, another Genentech drug, due to its high co-payment costs, but Genentech product development chief, Susan Desmond-Hellmann, would have recommended its use.

Statistics:

  • Avastin's price is expected to reach about $100,000 a year for breast and lung cancer treatments.
  • Average patients take Avastin for 11 months, extending their lives 5 months compared to other treatments.
  • About 200 clinical trials including Avastin are taking place worldwide.
  • U.S. sales of Avastin are expected to reach $7 billion by 2009, compared to $1.1 billion last year.
  • Genentech's overall profit is forecast to triple to $4 billion in 2009.
  • Sales, which were $6.6 billion in 2005, are expected to climb to $18 billion by 2009.

Sources:

  • "Avastin, A Billion-Dollar Cancer Drug, Faces Price Crisis" by Alex Berenson, New York Times.
  • Genentech press release, "Avastin Receives FDA Approval for Treatment of Advanced Non-Squamous Non-Small Cell Lung Cancer".
  • Roche press release, "Roche Group Strategy Presentation to Analysts".
  • Sanford Bernstein report, "Avastin: A Potential Seven-Billion-Dollar Blockbuster".
  • Vanderbilt University cancer unit press release, "Avastin, A Colon Cancer Drug, Shows Promise for Breast and Lung Cancers".