Italy Fines Novartis, Roche $251 Million Over Eye Drug

Italy’s antitrust regulator fined Novartis AG (NOVN) and Roche Holding AG (ROG) 182.5 million euros ($251 million) for allegedly colluding to prevent the use of Roche’s Avastin cancer drug as a treatment for an eye disease.

Roche and Novartis blocked distribution of Avastin in favor of a more expensive drug, Lucentis, that the two companies market jointly for an eye malady known as wet age-related macular degeneration, the regulator said in a website statement today. Novartis must pay 92 million euros and Roche 90.5 million euros, the agency said.

The companies, both based in Basel, Switzerland, said they have no agreement to restrict competition and they plan to appeal the verdict. Avastin is only approved for cancer, but it belongs to the same family of medicines as Lucentis, one called anti-VEGF that prevents blood-vessel growth. For that reason, and because Lucentis costs more, some doctors in the U.S. and Europe use Avastin to treat the eye condition.

“I’m surprised,” said Olav Zilian, an analyst at Helvea SA in Geneva. “I thought that the companies and European governments had come to an understanding on the pricing of Lucentis.”

Roche and Novartis represented Avastin as “more dangerous” than Lucentis, influencing doctors and health services, the regulator said. Avastin costs up to 81 euros, compared with about 900 euros for Lucentis, the regulator said.

‘Unethical Tactics’

The practices cost Italy’s health system more than 45 million euros in 2012 alone, with possible future costs of more than 600 million euros a year, according to the Italian regulator.

The European Consumer Organisation, a consumer advocacy group, called on the European Commission to start an investigation across the EU.

“The unethical tactics of Roche and Novartis to block the cheaper alternative at the expense of consumers are unacceptable,” Monique Goyens, the group’s director general, said in an e-mailed statement.

Once a drug is cleared for one ailment -- like Avastin, which first won approval as a cancer medicine in 2004 -- doctors can prescribe it for any disease, a practice known as off-label use. Pharmaceutical companies, however, are only allowed to market the drug for the illness for which it has been approved. Novartis said the Italian ruling runs counter to the law by validating such an approach.

Unlicensed Use

“Patient safety and risks arising from unlicensed use of medicines are a critical issue,” Novartis said in a statement today. The ruling “openly encourages and promotes the widespread unlicensed intra-vitreal use of Avastin.”

Lucentis generated $1.9 billion last year for Roche, the world’s biggest maker of cancer drugs, according to data compiled by Bloomberg. It’s one of the few drugs approved to treat wet age-related macular degeneration, a deterioration of the macula portion of the retina that can cause blindness.

Lucentis was developed by Roche’s Genentech unit and Novartis. Roche markets the drug in the U.S. while Novartis sells it in the rest of the world.

A study in 2010 found that Avastin worked as well as Lucentis in treating the disease. Roche hasn’t sought regulatory approval for the use of Avastin in the eye malady and has fought efforts in the U.S. to expand the use of the drug for that purpose.

Lucentis “was designed to act specifically in the eye,” Roche said in a statement. “Avastin is approved for the intravenous treatment of patients with certain forms of cancer and is not manufactured or approved for use in the eye.”

Roche shares fell 0.4 percent to close at 264.50 Swiss francs, while Novartis climbed 0.6 percent to 73.95 francs.

The Rome prosecutor’s office opened a file into the Roche-Novartis case, though it hasn’t identified any wrongdoing or put anyone under investigation, according to Italian news agency Ansa. The case will be referred to the economic crimes office headed by prosecutor Nello Rossi and a “hypothetical” crime to be investigated might be market manipulation, Ansa said.

For Related News and Information: Novartis Profit Drops on Emerging-Market Currencies, Franc (2)

To contact the reporter on this story: Eva von Schaper in Munich at evonschaper@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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