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Italy to Fund Unapproved Use of Roche Drug to Cut Costs

Italy will pay for patients to use Roche Holding AG’s (ROG) cancer drug Avastin to treat an eye condition for which it’s not approved as the country looks to rein in medical costs.

The decision today by the Italian Medicines Agency will steer patients with age-related macular degeneration away from Lucentis, a similar but more expensive drug developed by Roche and sold by Novartis AG (NOVN) in Italy that regulators cleared for the same disease. The country’s antitrust authority this year accused the companies of colluding to block the use of Avastin for the eyes, and the government is seeking 1.2 billion euros ($1.6 billion) in damages from them.

Other European governments may follow Italy’s lead as drug costs soar. The companies objected to the agency’s decision, with Novartis saying it violates European law. Drugmakers have been prosecuted and fined billions of dollars over the years for encouraging doctors to prescribe medicines for unapproved uses, known as off-label marketing.

“Given the body of evidence, I would expect other regional bodies in Europe to follow Italy’s endorsement of off-label Avastin for AMD,” said Asthika Goonewardene, a health-care analyst at Bloomberg Industries in London. “They are trying to contain costs, so this should not come as a surprise.”

Roche and Novartis denied any wrongdoing in the Italian antitrust case.

Cheaper Drug

A study last week in the journal Health Affairs found that the U.S. could save almost $3 billion a year if Medicare patients were given Avastin instead of Lucentis to treat eye diseases.

Lucentis is marketed by Roche in the U.S. and by Novartis in the rest of the world. Roche receives royalties from Novartis’s sales of Lucentis outside the U.S. Lucentis costs 40 times more than Avastin in the U.S., so both companies stand to lose profit from increased use of the cheaper drug.

Avastin, developed by Roche’s Genentech unit, was first approved by the U.S. Food and Drug Administration in 2004 for advanced colon cancer. Roche has said it has no plans to evaluate Avastin’s use for eye diseases.

“We are concerned about efforts by European Union member states creating secondary, national marketing authorizations for economic reasons that undermine the EU regulatory framework and could potentially put patients at risk,” Richard Bergstroem, director general of the European Federation of Pharmaceutical Industries and Associations, a trade group, said in a statement. The group represents the biggest drug companies.

Doctors’ Freedom

Roche supports the trade group’s position on off-label prescribing, Nicolas Dunant, a spokesman, said in an e-mailed statement.

“In general, Roche supports the overall approach that physicians should have the freedom to prescribe the medicine they think is right for their patients,” the company said. “At the same time, it is our obligation to inform the medical community including physicians and patients about the known risks associated with the off-label uses of our medicines.”

Novartis had sales of $2.38 billion last year from Lucentis. Roche reported 1.69 billion Swiss francs ($1.88 billion) in U.S. sales of Lucentis last year. It doesn’t break out its royalties. Avastin, which is approved for colorectal, lung and other cancers, had 6.25 billion francs in sales. Both companies are based in Basel, Switzerland.

“Novartis strongly rejects the Italian law allowing reimbursement of Avastin to be used off-label in the eye for economic reason as it is against European law,” Eric Althoff, a spokesman, said by e-mail. “Patient safety is of the highest importance for Novartis, and we urge the Italian Medicines Agency to promptly implement clear protocols and procedures around the use of Avastin including monitoring.”

The Italian government introduced a law decree hinting at reimbursement of off-label prescriptions in March, converting the decree into law on May 16, said Vincenzo Salvatore, senior counsel at law firm Sidley Austin LLP in Brussels.

“We expect litigation to flourish over the next few weeks,” Salvatore said in a media briefing in London on June 4.

To contact the reporter on this story: Makiko Kitamura in London at mkitamura1@bloomberg.net

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

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