Boston, MA 05/08/2014 (wallstreetpr) – Novartis AG (ADR) (NYSE:NVS) and fellow drug company Roche are facing scrutiny from the European authorities over possible collusion in the marketing of two drugs. The two companies are already being investigated in a number of countries in Europe over the same concerns.
Italy and France have had issues with the two companies whose alleged collusion practice costs governments more in healthcare costs. Italy has already fined Roche and Novartis about 182.5 million euros or $254 million. The country accused the companies of blocking doctors from using a certain drug in favor of a more expensive one, ostensibly to increase their revenue.
The drugs that are causing jitters among European authorities are Avastin and Lucentis. Avastin is a cancer drug developed by Roche, but it can also treat an eye disease known as age-related macular degeneration (AMD). Lucentis is another Roche-developed drug that the company is recommending for AMD treatment. The drug is being marketed jointly by Novartis AG (ADR) (NYSE:NVS). The two drugs are priced differently with Avastin going for about $100 per dose, and Lucentis goes for $2,000 per dose.
The companies are reportedly colluding to stop the use of the cheaper option for eye treatment, yet it suits the condition.
The concerns were raised by a European consumer group that asked for the investigation of the two companies.
High healthcare costs
The big aging population and the increasing number of people with chronic diseases such as diabetes are causing a headache to European governments. As such, authorities are closely monitoring prices with hopes of finding a way to mitigate the rising healthcare costs. And Novartis AG (ADR) (NYSE:NVS) and its partner Roche are finding themselves as targets in the drug-price surveillance.
A lot of worries to chew over
Novartis AG (ADR) (NYSE:NVS) and Roche are likely to face more regulatory scrutiny even in the U.S. where they are trying to stop the approval of Avastin for AMD treatment.
