As drug makers jockey for an edge in the burgeoning market for biosimilar medicines, a Russian company called Biocad is accusing Roche (RHHBY) — one of the world’s largest pharmaceutical manufacturers — of deliberately setting low prices in Russia and using other allegedly illegal tactics to sabotage competition.
Among the steps Roche took to undercut Biocad was to deliberately drop prices for three cancer medicines — Avastin, Herceptin, and Rituxan/MabThera — in Russia, where the company said it sells biosimilar versions, according to a lawsuit filed earlier this month in federal court in New York. At the same time, Biocad alleged Roche and its Genentech unit raised prices in the United States to compensate for those price cuts.
“While Roche and Genentech keep raising prices in the US, they engage in predatory pricing in Russia, where (they) sell such drugs at a loss — all to destroy (Biocad) and prevent it from entering the US market with cheaper biosimilars,” the Russian company contended. For instance, Biocad claimed Roche sold 100 milligrams of Avastin to its exclusive distributor for 20 percent less than the officially declared price.
The strategy was to financially weaken the Russian drug maker to the point where it would be unable to remain competitive and pursue development and sales of biosimilar medicines, according to the lawsuit, which claims Roche violated US antitrust laws. Biocad alleged that Roche took these steps because the US patents on its three cancer medicines will expire over the next three years.
A spokeswoman for Genentech, which markets the drugs in the US, wrote us that the company does not comment on pending litigation.
The allegations emerge at a time when the biosimilar market is forecast to become a fast-growing and lucrative chunk of the US pharmaceutical industry. Biosimilars, which are highly identical versions of brand-name biologic drugs, have been available in Europe for several years, although only three have so far been approved in the US. But many more are expected in coming years.
Spending on biologics has nearly doubled since 2010, to more than $128 million last year and accounted for more than half of the rise in overall drug spending over the past five years, according to the IMS Institute for Informatics, the market research firm. But IMS forecasts that biosimilars may save health systems in the European Union and the US anywhere from $50 billion to $110 billion by 2020.
That’s because biosimilars are expected to cost anywhere from 10 percent to 30 percent less than brand-name biologics. However, this assumption is also something of a moving target, given that drug makers often raise prices to wring as much profit from their existing medicines as they can before lower-cost rivals arrive on the market.
Biocad, in fact, charged Roche and Genentech gradually increased prices over the past few years in the US, while simultaneously lowering prices in Russia as part of its maneuvering to fend off biosimilar competition. In its suit, the Russian drug maker contended Avastin is currently more than five times cheaper in Russia than in the US, while Herceptin and Rituxan cost about four times less than in the US.
Since 2012, Genentech raised the list price of a vial of Avastin seven times – from $608 to $709. The drug maker also took seven price hikes for a vial of Herceptin, which jumped from $3,221 to $3,943. And the list price for a vial of Rituxan increased seven times, from $632 to $774, according to Truven Health Analytics, a market research firm that tracks prescription drug pricing.
Biocad also alleged that a subsidiary of R-Pharm, Roche’s exclusive distributor in Russia, earlier this year announced that Avastin would not be available until later this year. Meanwhile, however, the company submitted bids for government contracts at lower-than-cost prices in order to prevent Biocad from winning any business, according to the lawsuit.
This is only the latest squabble instigated by drug makers over biosimilar competition. Last year, AbbVie (ABBV) filed a citizen’s petition with the US Food and Drug Administration to argue that biosimilars need distinct labeling in a bid to slow approval of biosimilar versions of its best-selling Humira rheumatoid arthritis treatment. The drug maker also took the European Medicines Agency to court to prevent clinical trial data from being disclosed.
Meanwhile, Amgen (AMGN) and Sandoz, the generic unit of Novartis (NVS), are fighting interpretation of a federal law that says a brand-name company is entitled to receive 180-day notice from a drug maker that wants to sell a biosimilar. Amgen won a court ruling saying notice should be provided 180 days before FDA marketing approval can be granted, and Sandoz is asking the US Supreme Court to reverse the decision.