By Lisa Richwine and Ben Hirschler

Roche's (ROG.VX) top drug Avastin should no longer be approved for breast cancer,  U.S. regulators said on Thursday, in an unusual move that could shave $1 billion from its annual sales.

European officials, meanwhile, recommended restricting use of the drug in breast cancer, so that in future it is given only in combination with one type of chemotherapy.

Avastin, the world's best-selling cancer medicine, has been approved for fighting breast and other cancers. But the drug has not extended survival or improved symptoms in any study of patients with breast cancer.

In the United States, Roche said it would request a hearing to contest the decision from the Food and Drug Administration (FDA). If the FDA grants a hearing, there is no set date for when this would occur and until the procedure is concluded, Avastin will remain FDA-approved in breast cancer.

The drug will also remain available for treating bowel, lung, brain and kidney cancers.

But industry analysts estimate Roche could lose $1 billion of its $6 billion in annual sales from the expected slump in sales for breast cancer. Shares in the Swiss group ended 0.9 percent lower at 140 francs following the news.

"We expected a negative outcome in the United States. In Europe, we were more hopeful that the European Medicines Agency would maintain a broader label for Avastin in breast cancer," Helvea analyst Karl-Heinz Koch said.

"We see sales halving to around 450 million Swiss francs ($464 million) in Europe. We now need to adjust our share price target to reflect the EU outcome."

In Europe, the drug is still recommended as a treatment for metastatic breast cancer in combination with paclitaxel -- the type of chemotherapy Roche said was most frequently used in the region -- but not with docetaxel or capecitabine.

Recommendations from the EU drugs watchdog are normally endorsed by the European Commission in due course.

CONTROVERSIAL DECISION

Doctors could still prescribe the drug for breast cancer patients in future, but U.S. insurance companies are unlikely to cover it without FDA approval and European healthcare systems may also be more reluctant to pay for it.

The case has drawn complaints from some U.S. lawmakers and split patient groups, with some arguing it helps some women and should remain an approved option. One petition delivered to the FDA in support of the drug carried about 9,500 signatures.

Critics have accused the FDA, which is not allowed to consider cost, of trying to limit access to an expensive treatment. Avastin costs about $8,000 a month in the United States, although Roche caps the annual price tag at $57,000 per patient.

Five Republican lawmakers wrote to FDA Commissioner Margaret Hamburg last month voicing concern the Obama administration was "overreaching into the personal healthcare options of Americans".

Britain already refuses to pay for Avastin for advanced breast cancer and the country's healthcare cost agency last week gave the drug a poor assessment. [ID:nLDE6B71VI]

Avastin won U.S. clearance for breast cancer in 2008 after a study showed the drug stalled cancer growth by 5.5 months. The FDA required Roche to confirm the drug worked. Later research found only a one- to three-month delay in breast cancer growth with no improvement in survival or symptoms.

After reviewing Roche's latest research, an FDA panel of outside experts voted 12-1 in July to urge withdrawal of the drug's approval for breast cancer. Members said they were not convinced Avastin provided any worthwhile benefit in that setting to justify serious risks including blood clots.

Avastin's risks include gastrointestinal perforations, bleeding and blood clots. Roche said rates of those problems were low, at less than 4 percent in the breast cancer trials.

The company argues Avastin provides meaningful benefit for patients with few choices for fighting an advanced cancer.

Roche has a separate application pending with the FDA seeking approval of Avastin as a second-choice treatment for advanced breast cancer after initial therapy fails. The deadline for that decision is May 19.

Avastin was once expected to become the world's biggest selling drug by 2014, but its prospects have faded after doubts over its benefits in breast cancer and after it failed in clinical trials for prostate and stomach cancer. The drug's generic name is bevacizumab.

(Additional reporting by Katie Reid in Zurich, editing by Kate Kelland)