Is Becoming France the Answer to Medicare's Biggest Problem?

News from France was a bit mixed for Roche  (NASDAQOTH: RHHBY  ) this week, with lawmakers voting to allow use of Roche's cancer drug Avastin as a cheaper alternative for eye treatment drug Lucentis, which is marketed by Novartis  (NYSE: NVS  ) and...Roche (how awkward). Although Avastin is a cancer drug and not indicated for age-related macular degeneration (AMD), which Lucentis is indicated for, lawmakers want to encourage doctors to prescribe Avastin off-label for the eye condition as the drugs work in a similar fashion.

Now, how much money are we talking about saving in France? About $273 million -- really not that much considering that Lucentis revenue for Novartis (which markets the drug outside the U.S.) was $2.4 billion. But in price-conscious Europe, the concern is that more countries could do something similar, potentially harming revenue in one of the world's largest drug markets. Other countries in Europe are already taking their own action -- Italy, for example, has sought $1.6 billion in damages relating to an alleged collusion between Novartis and Roche to prevent Avastin from being used as an AMD therapy.

That's nice, but what does this have to do with Medicare?
A study in Health Affairs indicates that switching patients from Lucentis to Avastin would save Medicare $3 billion. That's a nice chunk of change, and with the federal government and insurers struggling to bend the cost curve and contain health care spending, it could be an intriguing opportunity for Medicare to copy France and save a bundle of money.

In the video below, Motley Fool health care analysts Michael Douglass and David Williamson discuss this cost-savings fight and what it could mean for Roche, Novartis, and their competitors.

Cost-savings is yesterday's news. This could be tomorrow's.
We've all read the headlines about governments seeking to bend the cost curve and save money -- we already know about the stocks that will benefit from that, so it's already priced in. But the best investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3027102, ~/Articles/ArticleHandler.aspx, 12/20/2014 1:07:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement