Amgen Inc.'s (AMGN) bone-strengthening drug Xgeva, used in cancer patients, is a potential multibillion-dollar product, but questions remain whether the treatment's benefit compared to well-established competition justifies the significantly higher price.

Studies have shown Xgeva to be more effective than commonly used Zometa, from Novartis AG (NVS, NOVN.VX), but it costs almost twice as much. That price difference has prompted resistance to its use and sparked a discussion about whether the benefit to patients is proportional to the increased expense.

The Xgeva debate also comes amid a much larger examination of the rising cost of healthcare in relation to the actual benefits provided to patients.

Xgeva's success is important for Amgen, which has faced numerous pressures to its business in recent years from rising competition and regulatory issues related to its aging suite of drugs. Xgeva, approved in December, is a high-dose version of Amgen's osteoporosis treatment Prolia, which launched in June 2010 to disappointing sales.

Josh Ofman, Amgen vice president of reimbursement and payment policy, stressed the clinical data supporting Xgeva and said that skeletal complications cause "significantly higher medical costs." In a statement, he described the insurance coverage for Xgeva as "outstanding" and noted the drug's convenience of simple injection, compared to intravenous infusion with Zometa.

Oppenheimer projects 2014 Xgeva sales in this usage at $1.5 billion, which is equal to Zometa's sales last year.

Many analysts are optimistic for Xgeva because of Amgen's experience in selling cancer and specialty drugs, but the market is competitive, and Zometa is well established with a cheaper generic version arriving in early 2013.

In advanced cancer patients, the disease often invades bones, weakening and destroying them, which both drugs help prevent. In late-stage head-to-head trials in advanced breast and prostate cancer, Xgeva was superior to Zometa. But a monthly dose of Xgeva costs about $1,650, compared to about $844 per dose of Zometa given every three to four weeks.

Some aren't willing to pay that much. Regence BlueCross BlueShield, an insurer in the Northwest that covers 2 million people, recently conducted an analysis and decided to pay for Xgeva only if patients are unable to use Zometa or the generic pamidronate, a drug in the same class as Zometa.

In a statement, Regence said the evidence of Xgeva's superiority "is uncertain" and that other drugs have a more established track records of safety and effectiveness. Furthermore, Regence said one clinical study of Xgeva, a breast cancer trial, was "flawed" because more than half of the enrolled patients didn't complete the study. The insurer also questioned the metric used in the study to determine Xgeva's superiority.

Amgen's Ofman defended the testing of the drug, saying the design of the trials used the "most scientifically appropriate methods" with measurements based on the precedent of Zometa. The majority of patients that dropped out of the trials did so because of death or disease progression, he said, as is common.

"The results of the trials are clear based on the differences observed in the accepted and appropriate endpoint," he said.

In a recent editorial in the Journal of Clinical Oncology, Howard West from the Swedish Cancer Institute in Seattle questioned whether a "modest" improvement over Zometa could justify "a disproportionate increase in cost", estimated at hundreds of millions of dollars per year in the U.S.

While there is criticism, many insurers are covering the usage of Xgeva. Cigna Corp. (CI) covers both Xgeva and Zometa with no restrictions for approved uses. An Aetna Inc. (AET) spokeswoman said the insurer considers Xgeva "medically necessary" when cancer from solid tumors spreads to the bone. Notably, the insurer requires precertification before using the drug, something it doesn't require for Zometa.

Recent updates to treatment guidelines from the American Society of Clinical Oncology and the National Comprehensive Cancer Network include both Zometa and Xgeva, but don't give a preference to either. The ASCO guideline, for breast cancer, notes that there is "insufficient evidence" to show that either drug is more effective.

Meanwhile, some cancer centers said they are reviewing Xgeva and how it fits into treating patients.

Oncologists at Vanderbilt-Ingram Cancer Center have "informally" agreed to not use Xgeva in patients currently on Zometa until their disease progresses. The physicians "are certainly aware of the difference in price and are cognizant of how this affects treatment costs for our patients," a spokeswoman said.

Julie Gralow, a breast-cancer specialist at the University of Washington, highlighted Xgeva's convenience and said her institution is conducting a detailed analysis of all aspects of Xgeva.

"I think that just looking at the price of the drug in an isolated manner is not the way to evaluate these drugs," Gralow said.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

 
 
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