Tale of two eye drugs plays out in Medicare's doctor reimbursements

Behind ophthalmology's recent ranking as Medicare's highest-reimbursed specialty is a tale of two eye drugs.

Lucentis and Avastin have been shown equally effective in combating age-related macular degeneration, the leading cause of blindness in the elderly. They share a similar molecular make-up and even the same manufacturer.

But the cost per dose is much different: $2,000 versus $50. With a recommended two-year, 24-injection course of treatment, the difference per patient is huge.

Ophthalmologists, who buy the drugs and are then reimbursed for them, used the pricier Lucentis often enough to account for about $1 billion in Medicare spending in 2012, according to recently released data from Centers for Medicare and Medicaid Services. Indeed, Lucentis is a key reason ophthalmologists are at the top of the Medicare list.

Critics say the way doctors are reimbursed under Medicare — the average cost of the drug, plus 6 percent of the cost — sets up a financial incentive to choose the costlier medication. An Ohio ophthalmologist who has been outspoken on the debate, Dr. J. Gregory Rosenthal, said doctors shouldn't use Lucentis.

"It has no reason to exist," said Rosenthal. "No medical reason. Of course, it has an economic reason."

Other physicians say it's more complicated.

Only the pricier Lucentis has federal approval for the treatment of eye disease. Avastin is approved as a cancer drug, but a South Florida doctor in 2005 showed it could be effective for macular degeneration. Later, a two-year study by the National Institutes of Health confirmed the drugs are equally effective.

Such an "off-label" use of a drug isn't unusual, but it can give some patients pause, said Dr. Mark Hammer, a Tampa ophthalmologist with among the highest Medicare reimbursements in the area. His practice uses Lucentis more often than Avastin.

Compounding pharmacies take large vials of Avastin made for cancer patients and divide them into the tiny portions used in the eyes. Cases involving dirty medications coming out of compounding pharmacies — including a dozen Miami-area patients in 2011 who suffered eye inflammation and blindness from a contaminated batch of Avastin — hurt the industry's reputation and raised fears of infection.

"Compounding pharmacies are not well regulated, and there have been some horrendous cases of blindness reported," said Dr. Peter Pavan, chairman of the ophthalmology department at the University of South Florida's Morsani School of Medicine.

Yet, he noted, problems have been rare compared with how often the drug is used. He said patients at USF Eye Institute chose the two drugs at roughly the same frequency. Patients pick Avastin because of the cost.

"Avastin is enormously safe, enormously effective and cost effective," he said. "For many patients it's a Godsend."

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Data released last week covered only those patients in traditional Medicare, not the roughly one-third of recipients enrolled in privately managed Medicare Advantage plans. Though patients on traditional Medicare owe 20 percent co-insurance for the drug, supplemental policies may cover much of that share.

"Avastin is much less expensive, but if Lucentis is paid for by their insurance company to them it doesn't make a difference," said Hammer. "Sometimes they say, 'Well I want to save the government money.' But not often."

Medicare is forbidden by law to tell doctors to use a less expensive drug. A bigger issue: The federal program cannot negotiate with pharmaceutical companies for lower prices.

Pavan said it's not clear that there is a financial incentive to use Lucentis. When patients don't pay their share, the practice eats the cost. If Medicare balks at paying for a treatment, the doctor has no hope of reimbursement. And the automatic budget cuts known as the sequester take some of that 6 percent, he said, meaning that Lucentis isn't necessarily a lucrative choice.

He said the idea that doctors chose Lucentis for their own financial gain is "ludicrous."

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Physicians and the government have long known about this issue. A September 2011 report from the federal Office of Inspector General found that if doctors used Avastin rather than Lucentis, the Medicare program would have saved $1.4 billion.

Both drugs work by blocking growth of abnormal blood vessels and leakage of fluid that create the damage seen in age-related macular degeneration, also known as the "wet'' form of the condition.

Genentech developed Avastin for cancer. It has not sought approval of it as an eye medication, despite the FDA's encouragement, according to the Washington Post.

While Avastin is very expensive for cancer patients, it's cheap for eye patients because such a small dosage is required. So Genentech can make far more money off Lucentis for eye care.

The National Institutes of Health's two-year clinical trial, ending in 2012, found the drugs were similarly effective among patients in the study, whose average age was 80. The Avastin patients were more likely to suffer "adverse events" that required hospitalization, but the study could not detect a link between the drugs used and the need to go to the hospital.

Jodie Tillman can be reached at jtillman@tampabay.com or (813) 226-3374.

Tale of two eye drugs plays out in Medicare's doctor reimbursements 04/15/14 [Last modified: Tuesday, April 15, 2014 11:34pm]

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