Pharmaceuticals

A Money-Back Guarantee on a Cancer Drug


Roche Holding is resorting to a radical new protocol to reverse a slump in sales of its blockbuster cancer therapy Avastin. The Swiss drugmaker is offering hospitals and insurers in Germany a money-back guarantee on the drug, which costs €3,000 to €6,000 per month ($4,110 to $8,220), depending on the kind of cancer being targeted. Avastin is approved for the treatment of lung, brain, kidney, and colon tumors.

Roche will pay a refund if patients given Avastin as a first-line treatment see their tumors worsen within three to seven months, according to a draft contract obtained by Bloomberg News. Daniel Grotzky, a spokesman for the Basel-based company, verified the information. The new contract was prompted by a law Germany passed last year that gives insurers the right to bargain with manufacturers on prices for new medicines.

Pay for performance is the hot new thing in health care. From Europe to the U.S., there’s been a push to link insurance reimbursements to patient outcomes. Nonetheless, deals like the one Roche is offering in Germany are a novelty in the pharmaceutical industry, according to Arznei-Telegramm, a German newsletter that first reported on the Roche contract. Birgit Kulhoff, an analyst for Rahn & Bodmer, a bank in Zurich, expects other drugmakers to follow suit. “To bind it to the performance of the drug is interesting, it’s definitely new,” Kulhoff says. “I would expect these kinds of deals more often.”

Roche’s pharmaceutical sales in Germany fell 7 percent, to $1.3 billion, in the first nine months of the year as government price controls took effect. While the company doesn’t break out sales of individual drugs by country, sales of Avastin worldwide dropped 10 percent in the third quarter to $1.42 billion.

The drive to control health-care costs is putting pressure on makers of expensive therapies to identify genetic markers that show which patients will benefit most from a drug. Roche has developed companion diagnostic tests for its breast cancer drug Herceptin and its melanoma drug Zelboraf, but so far has struck out on a biomarker test for Avastin.

Also, the drug’s effectiveness against breast cancer is being challenged. A U.S. Food and Drug Administration panel said in June that Avastin shouldn’t be prescribed to women with the disease because studies didn’t show it works well enough to outweigh such risks as gastrointestinal perforations, complications in surgery, and deadly bleeding. FDA Commissioner Margaret Hamburg has yet to make a final ruling.

In the German draft contract, Roche also offers to reimburse the cost of the drug if patients take more than 10 grams of Avastin in a year, which is equivalent to about seven months of therapy for breast, kidney, and ovarian cancer patients because of the higher dosages such cancers require. A similar clause is already in use in some countries, according to Roche’s spokesman. “We’re aware of cost pressures in the public health-care system,” Grotzky says. “Access to our medicines is important to us.”

Such deals may be attractive to insurers, but Arthur L. Caplan, director of the Center for Bioethics at the University of Pennsylvania, calls them bad medicine. “What we need in health care is solid, proven evidence from clinical trials about what works,” he says. “Not somebody running around with a rebate program, a guarantee, or a coupon.”

The bottom line: Roche is offering a money-back guarantee on Avastin to help combat a 10 percent drop in worldwide sales of the cancer drug.

Kresge is a reporter for Bloomberg News in Berlin.
Flinn is a reporter for Bloomberg News.

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