Jan. 13 (Bloomberg) -- Testing all colon cancer patients in the U.S. for a drug-defeating gene mutation might save $604 million annually in costs for treatment with Erbitux, the drug marketed by Bristol-Myers Squibb Co. and Eli Lilly & Co., scientists said today.

More than 10,000 patients diagnosed with colon cancer each year have mutations in a gene, called KRAS, that render Erbitux ineffective, said Veena Shankaran, a researcher at the Veterans Affairs Midwest Center for Health Services and Policy Research in Chicago. Erbitux had sales of $1.3 billion in 2007 and a similar cancer drug, and Amgen Inc.’s Vectibix, had $170 million.

The American Society of Clinical Oncology, which hosted a conference today where the results were announced, is recommending KRAS testing for all eligible colon cancer patients. Those who have the mutations shouldn’t get Erbitux or similar drugs, said Jennifer Obel, a gastrointestinal cancer specialist and spokeswoman for the society.

“Our sense is that this is becoming more the standard of cancer care,” she said today in a telephone call with reporters.

About 150,000 people were diagnosed with colorectal cancer last year, according to the American Cancer Society. A $450 test for the gene can save about $60,000 in treatment costs for each patient, the study said.

Bristol-Myers and Lilly “look forward to working with the FDA to determine the appropriate way to communicate information about KRAS to doctors and patients,” said Brian Henry, a spokesman for New York-based Bristol-Myers, in a telephone interview.

More Savings Possible

The study only looked at the costs of Erbitux and administering it, Shankaran said on the call. Using the tests might result in more savings from decreasing the need for clinic appointments and infusion visits, and from eliminating side effects of drug treatment, she said.

The U.S. Food and Drug Administration is considering whether to call for KRAS testing on the labels of Erbitux and other cancer drugs, including Vectibix. The drugs work by blocking epidermal growth factor receptor, which is involved in both cell growth and cancer.

Normally, shutting off the epidermal growth factor receptor also turns off KRAS, which is also involved in normal and abnormal cell growth. When KRAS is mutated, however, blocking the receptor has no effect. Other drugs that block the receptor include Genentech Inc.’s Tarceva and AstraZeneca Plc’s Iressa.

Targeting Treatment

Many doctors have already begun testing their patients for KRAS mutants before prescribing drugs linked to the epidermal growth factor receptor, said Obel, who sees cancer patients at NorthShore University HealthSystem in Evanston, Illinois. Health insurers have also been willing to pay for the tests, because they can save money and prevent potentially toxic treatment, she said.

The study is just one example of how doctors are using genetic markers to target cancer care, Obel said on the call. Research from the University of Toronto presented at the conference suggests that mutations in the epidermal growth factor gene itself might help predict the risk of esophageal cancer in people who have acid reflux disease, a stomach condition that also raises the risk of the cancer.

Another study from the University of Texas M.D. Anderson Cancer Center suggested that certain gene mutations might tell doctors how likely it is that pancreatic cancer patients will respond to therapy.

“Our study authors are showing how personalized medicine is the next step in cancer care,” Obel said.

To contact the reporter on this story: John Lauerman in Boston at jlauerman@bloomberg.net.

Last Updated: January 13, 2009 19:00 EST