Off-label drug use - price analysis for Avastin (R) in ophthalmology

Purpose - The use of drugs outside the approved indication, called off-label use, is a growing phenomenon in medical practice. Especially, when a drug approved for systemic use is used locally in small quantities, the drug price per treatment can fall far below the potential value of the drug. This paper aims to outline the potential value of off-label Avastin (R) used for wet/neovascular age-related macular degeneration (AMD), the leading cause of legal blindness in western countries. Design/methodology/approach - The van Westendorp price sensitivity measurement (PSM) method was used to find an optimal price range for an Avastin formulation potentially approved by German regulatory authorities for neovascular/wet AMD. A survey was conducted among a majority of German AMD specialists as the central part of the buying center. Germany, the largest pharmaceutical market in Europe, was selected for the study. Findings - The effective total response rate was 25.1 percent (51 questionnaires). The price range found is clearly above the price for currently used "off-label" Avastin and far below the price for other comparable drugs approved for the treatment of neovascular AMD. The van Westendorp PSM method found for Avastin used in the eye the optimal price at (SIC)95($131), the indifference price at (SIC)200 ($276) and the acceptable price range between (SIC)90 ($124) and (SIC)310 ($428). The discussion provides further implications for pricing strategies for new drugs. Originality/value - As price sensitivity and availability of drugs have become an increasingly political and public topic, off-label application of drugs is turning into an important challenge for the pharmaceutical industry. Taken in total, the results provide support for the view that off-label application not only creates major threats for pharmaceutical companies, but can also offer growth opportunities.