(UPDATED: See below.)

Almost two weeks ago, Genentech angered doctors and elderly patients when it announced plans to restrict access to Avastin, a cancer drug that doubles as an unapproved, but quite inexpensive, treatment for eye disease. In those conditions, which can lead to encroaching blindness when left untreated, Avastin competes with a much more costly Genentech drug called Lucentis. (For background and our take on the situation, click here.)

lucentis-eye-injection.jpgNow the giant biotech appears to be taking a few steps back from the precipice. In an open letter posted on its site yesterday, Genentech said it will postpone plans to bar Avastin sales by “compounding pharmacies” — which can safely divide up a large vial of the drug into the tiny doses needed for intraocular injection (see photo at left) — by a month, giving retinal specialists and patients until Jan. 1 to find other suppliers. Perhaps more important, Genentech said it would continue to make Avastin available to compounding pharmacies should the FDA grant it “legal and regulatory authority to do so.”

Genentech also offered a more detailed explanation for its original decision to limit Avastin distribution, noting that the FDA had warned a compounding pharmacy about the sterility and repackaging of the drug. Worse, at least from the big biotech’s perspective, an FDA inspection of a Genentech manufacturing facility raised questions about the suitability of some Avastin production lots for use in the eye due to a “higher visual inspection standard.” (More on that when I know more.) Genentech says that to “resolve” the FDA’s concerns, it destroyed four batches of Avastin, amounting to 350,000 vials with a market value of more than $200 million — a vastly inflated estimate of the company’s actual loss, given that the marginal production cost to Genentech is almost certainly far lower than that.

To be fair, the issues here are complex, although it’s also important to bear in mind that we’re only hearing one side of the story — the FDA doesn’t comment on regulatory matters. If we take Genentech’s version of events at face value, then the company does appear to face additional regulatory scrutiny related to the ocular use of Avastin, with the potential for further unexpected losses if inspectors require the destruction of additional production lots. It’s hard not to sympathize with management under such conditions.

But there’s still something missing in this explanation. Even with the compounding pharmacies out of the picture, no one expects Avastin use in eye disease to go away, since ophthalmologists will still be able to get it from hospitals or other doctors. As a result, Genentech’s regulatory risk doesn’t really go away, either — if the FDA is concerned about Avastin’s suitability for ocular use when, say, half of elderly patients with wet age-related macular degeneration are using the drug, is the agency really going to be that much less concerned if only one-quarter of these patients are using Avastin? That’s still a lot of people.

So while Genentech’s concern about potential problems with the FDA certainly can’t be dismissed, it’s still not really sufficient to explain their actions. The only way for the company to really placate a safety-obsessed FDA — Genentech’s implicit characterization, not mine — would be either to declare total war on ocular Avastin use or to improve Avastin manufacturing so that the product would satisfy the FDA’s alleged concerns. So far, of course, Genentech hasn’t done either, although its allusion to getting FDA permission to supply compounding pharmacies suggests that it may be weighing the latter. If so, that’s all to the good.

Still, the company’s first instinct was clearly to inconvenience patients, many of them desperate, with a move that might also improve its bottom line, instead of taking steps that would clear up the problem for good, albeit at some expense and potential harm to future Lucentis sales. That still says a great deal about the company’s claimed commitment to “the best interests of patients.”

Hat tip to the WSJ health blog

UPDATE: David Williams raises some similar questions at the Health Business Blog, and apparently manages to dig up the FDA warning letter to the compounding pharmacy as well.