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How Drug Companies Make Money: Genentech and Lucentis vs. Avastin


Genentech introduced Lucentis in 2006 at $2000 a dose to treat wet macular degeneration, a blinding eye disease that mostly affects the elderly.  Physicians quickly discovered that Avastin, which cost $50 a dose and was also made by Genentech, worked just as well as Lucentis.  Unfortunately, studies showed that Lucentis was no better than Avastin: a large federal study of 1,200 patients showed that they were equivalent.

As an aside, a third drug, Eylea, made by Regeneron, was approved in 2011.

Lucentis is more convenient to use than Avastin, being made up in single doses; Avastin bottles have to be broken up and repackaged into the correct dosage, usually by compounding pharmacies.  This can introduce contamination, and in fact a serious case occurred in 2011 in which more than a dozen patients developed serious eye infections and some were blinded.  This problem could have been avoided if Genentech had packaged the Avastin in appropriate doses.

To promote the use of the new drug, Genentech hired a number of doctors as consultants, paying them thousands apiece to push Lucentis.  Half of the 20 doctors who were paid the most in 2013 were among the highest users of the drug in 2012.  Payments of $8500 to $37000 were made in the first five months of 2013 for consulting, speaking, travel, and meals to these physicians.  The company also pays rebates to doctors who use large amounts of Lucentis.  As a result, Lucentis is costing the federal government about $1 billion a year and netting Genentech about $1.3 billion.  The Inspector General for the Department of Health and Human Services calculated that if all patients were given Avastin instead of Lucentis, the government would have saved about $1.4 billion in 2011.

Doctors deny that payments from pharmaceutical companies influence their prescribing practices.  Multiple studies have shown the opposite.  Even small blandishments, like a free lunch, will make a physician have a better attitude towards a drug and its manufacturer.  Genentech says that it caps physician payments at $50,000 a year, and of course many doctors who prescribe large amounts of Lucentis aren’t getting any payments at all.  Nonetheless, the company has identified “opinion leaders” who are popular and well-spoken to spread the word.

Here’s a quote from the New York Times article about the practice of paying physicians for consultation:

“Eric Campbell, a professor of health care policy at Harvard Medical School, said doctors frequently denied that relationships with drug companies could change their behavior, despite many studies to the contrary. “They are suggesting that the drug companies that are spending this money, that these companies are dumb enough to be wasting their money,” he said.”

And here’s the link to the article:

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