Valerie Clark
Apr 27, 2012

What one drug company is doing to increase health care costs

Novartis is attempting to force the UK's national hospitals to use their more expensive drug. International pharmaceutical giant Novartis is suing the United Kingdom's national health system (NHS) for using a cheaper, unlicensed drug instead of Novartis' licensed drug for treating age-related blindness. Even if Novartis wins the legal battle in the UK, and forces the NHS to use the $1,000 drug, it will (and already has) generated numerous counts of negative publicity for the company. During a time when health care costs are soaring, a low-cost alternative medication will always be favored by the public and physicians, no matter what health care regulations apply. 

In the US, drug A (in this case, Avastin, developed and licensed by Genentech, a subsidiary of Roche) is approved by the FDA and marketed as a cancer drug, yet somehow ends up in the hands of ophthalmologists looking to treat patients with blindness. Physicians (in this case, ophthalmologists) are allowed to prescribe drugs for an off-label use, but the drug company cannot market the off-label use without an FDA-approved evaluation of standard safety parameters. For the most part, this is also the case in the UK. The exception is that the UK has a national health system of state-run hospitals which are regulated more heavily -- physicians in these hospitals are required to prescribe the licensed drug product for a specific disorder if one exists. So, when treating certain eye conditions in the UK, drug B (in this case, Lucentis, also developed by Genentech but licensed to Novartis in the UK) is the only drug licensed and approved for use. Yet, many UK physicians are prescribing drug A for its off-label use instead. 

From the standpoint of the physicians, preference for Avastin over Lucentis is purely based on cost effectiveness. Based on what they’ve seen while treating patients with eye disorders, there is no reason to justify the expense of Lucentis (US $1,130) over Avastin (US $97). Also, because the pressure to cut costs is so high, there is an underlying incentive to always use a cheaper drug if one exists. Officially, Avastin does not exist as a treatment for eye problems, including blindness; Avastin exists as a cancer drug. Physicians' highest priority is (and should be) the outcome for the patient. But, when there are no apparent benefits to using a costlier drug over a cheaper one, and there is no law restricting the use of the cheaper drug, then one would tend to question the intent of any physician who would use the costlier option. 

Treating age-related blindness is sparking a debate about drug prices in the UK. In the UK, however, physicians working with the national health system are legally required to use the costlier drug, Lucentis, over the cheap alternative, Avastin, for treating eye conditions. Interestingly enough, the National Institute for Health and Clinical Excellence, which approves drugs for the national health system, does not normally review off-label uses of drugs, but published a report two years ago that there may be enough evidence to do so in this case. 

In the US, there is no law requiring physicians to use a specific drug for a certain treatment. As shocking as that may seem, it is true.  Drug companies invest millions into developing a drug for a particular treatment for which there is an unmet need; yet, they cannot force the use of their drug upon any physician who does not see the benefit. This brings us to Novartis’s side of the story. 

The way Novartis is justifying their law suit is on the basis of risking patient safety for cost savings. It sounds almost as if they are saying, “you get what you pay for” -- if you’re going to use the cheaper, unapproved product over the tailor-made, costlier treatment, there are inherent health risks one must acknowledge. (Remember though, both drugs are made by the same company!)  If you’re Novartis, you’re probably very unhappy about the fact that you worked so hard to market a drug so specific that no other competition could exist only to be undermined by physicians who prefer an off-label cancer drug capable of producing the same outcome for patients with a favorable cost savings. 

A key factor to consider during drug development should always be cost-effectiveness, as well as demand and safety. Just because there is a legal way to force physicians to buy your product in the UK, it doesn’t make good business sense to generate revenue that way. If drug B costs $900 more than drug A, there ought to be a substantial health benefit to justify the difference.  If not, it seems the extra cost for drug B is only necessary to recover losses related to marketing and licensing, which in turn, creates a greedy image for pharmaceutical companies worldwide. 

Related stories:

Novartis tries to make UK hospitals use $1,000 drug

NHS faces judicial review from Novartis over Avastin