The government agency is funding a head-to-head trial comparing Genentech’s older Avastin cancer drug, which some docs use off-label to treat macular degeneration, with its newer and more expensive Lucentis, which has the FDA imprimatur for the disease.

What’s at stake? Money, of course. Old drug costs $40 and new drug costs $2,000 a shot.

Such efforts make drugmakers very uncomfortable, as The Wall Street Journal reports this morning in an interesting piece (subscription required).

If Avastin works as well as Lucentis, the government’s Medicare program for the elderly could save $1 billion or more a year, officials say. The mutiny by doctors nationwide against a high-priced drug — and Washington’s willingness to go to bat for them — is triggering alarms in the drug industry. “Industry doesn’t want an equivalency trial where there could be decisions on coverage. They are terrified,” says William Rich, director of health policy at the American Academy of Ophthalmology, which backs the NIH trial.

Some say the trial is the first step toward making the US resemble the UK, where the government studies drug costs versus effectiveness, and refuses to pay for those that fail to make the grade. “It’s a backdoor to what the U.K. does,” says Anthony Adamis, chief scientific officer for a unit of OSI Pharmaceuticals Inc. that makes Macugen, a similar eye drug.

For its part, Genentech has been arguing for months that Lucenta is worth the money because of the extensive and expensive clinical trials. Charles Semba, the development leader for Lucentis, says the drug “isn’t Avastin Jr.”

Maybe, but either way, the eyes have it.

[tags]Avastin, Genentech, Lucentis, NIH[/tags]