Genentech Still Riding High on Cancer Drug Approval
Shares of Genentech Inc. climbed again Friday despite concerns about the cost of the company’s new colon cancer drug, Avastin, which received regulatory approval Thursday.
Investors pushed the company’s stock up $4.79, or 4.6%, to $107.89 on the New York Stock Exchange amid predictions on Wall Street that Avastin would become the bestselling cancer drug to date, with annual sales of $2 billion. On Thursday, shares had risen 7.5% to $103.10.
Driving the forecast is a monthly price for the drug of $4,400 -- one of the highest for a cancer medication. Genentech, based in South San Francisco, has defended the price as fair because the drug prolonged the lives of patients by five months in a large clinical trial.
But some experts said Friday that the price could further strain a healthcare system struggling to contain drug costs.
The Food and Drug Administration cleared Avastin as a first-line treatment for patients with colon cancer that has spread to other organs. The drug is the first to shrink tumors by choking the blood vessels that feed them and is being tested in other cancers, including breast and lung.
Avastin must be used with two standard chemotherapy drugs and would boost the cost of treatment to $60,000 to $80,000 a year per patient, according to analysts.
William B. Schwartz, a medical professor at USC, said the benefit of Avastin was “very, very marginal” in relation to its cost. He said the drug raised a larger issue facing the healthcare system as more advanced and more costly biotechnology treatments reach patients.
“Can we as a society afford to pay huge sums for technology that is not of great clinical importance?” he asked.
The expansion of Medicare to include prescription drugs may embolden drug makers to charge higher prices, said Paul Ginsburg of the Center for Studying Health System Change, a policy think tank.
“Now that elderly people have much better drug coverage,” he said, “I would expect that almost all new drugs would come out with a high price.”
Drug companies counter that it costs on average $500 million to develop a new drug. Genentech took 16 years to develop Avastin, and it will be sold initially to only 69,000 patients.
Genentech has expressed confidence that Medicare would cover Avastin and that private health insurers would follow suit. Medicare typically covers drugs that are approved by the FDA.
Robert Seidman, chief medical officer at WellPoint Health Networks Inc. of Thousand Oaks, said Avastin probably be reviewed by his company -- the parent of Blue Cross of California -- this summer.
Avastin and other biotech drugs in the pipeline for cancer would present a challenge for insurers, Seidman said.
“There are more drugs in the FDA pipeline for oncology than any other” branch of medicine, he said. “The widespread adoption of some of these high-priced biotech drugs is a potential threat” to affordable healthcare.
