Article Date: 1/1/2006

AMD Treatment Trends Call Attention to Cost/Benefit Considerations
As AMD treatment choices grow, can comparison-shopping be far behind?

Existing and emerging pharmacotherapy will expand the age-related macular degeneration (AMD) market in the United States to nearly $2.3 billion in 2013, up from $275 million just a decade earlier, according to Decision Resources, Inc., a Waltham, Mass-based pharmaceutical and healthcare research and advisory firm. This anticipated growth in the AMD market and the shift to pharmaceutical therapy within the vitreoretinal arena raises a litany of concerns, with the value and cost to patients, physicians, and society near the top of the list.

While pharmaceutical companies have clearly shown the usefulness of photodynamic therapy (PDT) and anti-vascular endothelial growth factor treatments via studies that prove they are clinically effective and, in some cases, more effective than alternate treatment approaches, other considerations call the relative value of these interventions into question.

For instance, a comparison of the actual cost of treating a lesion in the office for 2 years with either laser or pegaptanib sodium (Macugen, OSI/Pfizer) or PDT using verteporfin (Visudyne, QLT/Novartis), illustrates how expensive pharmacotherapy is in comparison to laser therapy. The cost of treating the lesion using verteporfin, including the drugs, the laser surgery and the diagnostic tests and office exams is $11,162 for 2 years. Of that, $1,776 is in surgical fees, $2,116 is for the diagnostic tests and $7,220 is the cost of the drug. Treating the same lesion with pegaptanib sodium for 2 years costs $18,000. Treating the same lesion in the office with laser therapy costs $1,735. The vast majority of the monies exchanged in the verteporfin and pegaptanib sodium scenarios go to the drug manufacturers. "It's easy to see that pharmacotherapy for AMD, while very expensive, is currently about all we have to offer patients," says William Rich, III, MD, the American Academy of Ophthalmology's (AAO) Secretary for Federal Affairs and Chairman of the AMA/Specialty Society RVS Update Committee. "The question," he added, "is what is the relative value of that to society."

Melissa M. Brown, MD, MN, MBA, who is co-director of The Center for Value Based Medicine along with Gary C. Brown, MD, MBA and Sanjay Sharma, MD, MSc, MBA, says a cost-utility analysis is exactly what is needed to answer that question. In cost-utility analyses, which identify the value received from pharmaceutical interventions for the dollars expended to all stakeholders in healthcare, including patients, providers, insurers, administrators, and policy makers, value is based on quality of life, length of life, and the efficacy of the intervention. Once those are determined and interventions of equal value are identified, cost can be addressed. Cost is important, but secondary, they maintain.

"Value is defined as an improvement in the quality of life and/or the length of life. Medical interventions that have significant value are ones that should be readily accessible. With the rising costs of healthcare back in the double digits, costs should and do become a relevant factor when deciding among treatments of similar value," says Dr. Melissa Brown. "In our evaluation of Macugen and Visudyne, using quality-of-life analyses and clinical trial data we have been able to create specific guidelines based on the value that each confers. We have been able to determine where Macugen performs better and where the value is similar. In the instances where the value is similar, Visudyne becomes the preferred treatment because the treatment costs are significantly less than with Macugen usage," she says. When data are made available from the combination verteporfin/pegaptanib sodium studies, she emphasizes, re-evaluation will be in order.

Adverse effects are an important part of the value equation, says Dr. Gary Brown. "For instance, about 1.3% of people on Macugen get endophthalmitis. With a value-based analysis, you can put every single benefit as well as every single adverse effect into the analysis to arrive at a common outcome," he says. "People try to compare Visudyne and Macugen, but without a value-based approach there's no way to tell which is the better choice," he adds.

Transpupillary thermotherapy (TTT), another AMD treatment that is in the pipeline, will have to be factored into the analysis in the not too distant future. "This intervention is much less expensive than alternatives and even easier for patients, but the value has been shown to be slightly less than other treatments in early data," says Dr. Gary Brown. "But it's not far off in value and something that is going to have to be watched very closely," he adds.

One of the benefits of value-based medicine, he explains, is that, while each therapy has different side effects and different outcomes, this methodology can take those dissimilar numbers and make them comparable. "One can look at the value gained from each when measured on the same scale," he says. "Value-based assessments can be utilized in all fields of medicine. This may not be very important to retinologists trying to decide which AMD treatment to use, but it's clearly very important to all of the different third-party payers. Medicare, Medicaid, and the private insurers are seeking this information," he adds.

Value-based medicine is beginning to capture the attention of these payers and the methodology's catch words are creeping into the medical insurance industry's lexicon. "Value-based medicine is used in other countries and clearly there is significant interest and need here," Dr. Brown says.

Dr. Melissa Brown says that most importantly, value-based medicine allows for better quality of care. The process highlights those interventions of great value, some value, and those of minimal value. "The practice of medicine based upon providing interventions that best improve the quality of life and allow for a longer life at the most reasonable cost ultimately strengthens our overall healthcare system," she says.

Retinal specialist George A. Williams, MD, chairman of the AAO's Ophthalmic Technology Assessment Committee for Retinal Diseases and a member of its Health Policy Committee, says that the Browns' work is being watched by a variety of interested groups. "A lot of people have been looking for some guidance from them and waiting to see what their data might show," he says. Dr. Williams points out that while value-based medicine has been embraced in Canada and the United Kingdom, countries in which the Browns have published extensively, the United States is lagging behind. "The United Kingdom has the National Institute for Clinical Excellence (NICE), and they've made a national decision that they are going to make the tough decisions about value. Our country, on the other hand, has made the decision that it does not want to do that, and that decision is based on politics. For example, the Centers for Medicare and Medicaid Services (CMS) is actually prevented by law from looking at the cost effectiveness of these AMD treatments," he says.

Sean R. Tunis, MD, the former chief medical officer of CMS and director of the Office of Clinical Standards & Quality, addresses this topic in a series of articles. In a May, 2004, New England Journal of Medicine editorial, he wrote: "One of the most difficult policy issues confronted in any discussion of coverage criteria is the role of cost effectiveness analysis in deciding what is to be considered reasonable and necessary. The Medicare statute is silent on that. . . The use of economic analyses in decisions about medical coverage will be challenging to defend whenever a specific patient is denied care as a result. . .Whether coverage decisions and other Medicare policy decisions should be influenced by economic factors remains an important and controversial issue. Given the trend in healthcare costs and the accelerating pace of medical discovery, policy making should focus on getting good value from healthcare spending. . ."1


Society is not picking up the entire tab for AMD treatments; physicians are splitting the bill. To calculate the cost of AMD pharmaceuticals to retinologists one must consider both the reduced opportunity for income that is part of the overall equation, as well as the effect of physician-provided pharmaceuticals on the physician reimbursement fee structure.

The increasing use of pharmacotherapy in the vitreoretinal arena has an indirect connection to an anticipated reduction in reimbursement to retinologists, according to the AAO's Dr. Rich. "In-office physician-administered drugs are growing faster than anything else in Medicare, and according to the formula that's used to configure physician reimbursement, the use of in-office physician-administered drugs, known as Part B drugs, essentially counts against the funds that are budgeted to us, and this in turn lowers our fees," he says. Cancer drugs account for the lion's share of the burgeoning in-office drug market, but Dr. Rich pointed out, "just as the increase in cancer drugs affects reimbursement to ophthalmologists, the increase in retina drugs affects reimbursement to primary-care physicians and general surgeons."

Dr. Williams further explains that the actual impact of in-office AMD drug treatments on physician reimbursement is quite minimal in comparison to other physician-administered drugs. "We're looking at relatively small players in this field. For instance, I don't think the Visudyne sales in the United States have ever been more than a few hundred million dollars per year, whereas some oncology drugs can represent as much as $5 billion per year. So it's not that AMD drugs are going to bankrupt the system, it's that the cumulative effect of the Part B drugs adversely affects payments to physicians," he says. Dr. Williams is also chairman of the Department of Ophthalmology, William Beaumont Hospital in Royal Oak, Michigan, and a clinical professor of biomedical sciences at The Eye Research Institute of Oakland University in Rochester, Michigan.

Rather than rising at the rate of inflation, reimbursement for retinal office consultations and surgical interventions in Medicare will be reduced by 26% between 2006 and 2012, according to Dr. Rich, unless Congress can be convinced to eliminate the Sustainable Growth Rate (SGR) factor from the yearly calculation Medicare fees. The SGR penalizes physicians if the growth in services exceeds the Gross Domestic Product (GDP). The two leading factors which lead to growth above the GDP are drugs given in the office by physicians and the increase in diagnostic testing. "The services provided by retinal physicians that offer the greatest health benefits such as macular hole surgery and office consultations for diabetic related eye diseases, will essentially be reimbursed less," he said.

The problem with convincing Congress to change the SGR and administratively remove drugs from physicians' budget, which would result in the elimination of almost all of the anticipated cuts in physician services, is that the cost of doing so is approximately $150 billion. Where can those funds be located? Physician payment is in Part B Medicare, which is funded annually from tax revenues. The problem is with tight budgetary constraints, the Bush administration is not interested in increasing "spending," when it is actually cutting some spending from other health sectors such as the Veterans Administration.

"This administration doesn't want anything to threaten its outpatient drug bill. It doesn't want any other cost to go up in Medicare until the outpatient drug bill is up and running," Dr. Rich says.

Dr. Rich pointed out that a bill recently introduced in Congress may eliminate the SGR and the proposed cuts if physicians agree to a new reimbursement paradigm that would reward physicians for agreeing to be "Paid for Performance." Under this program physicians would be rewarded for practicing according to good solid evidence-based quality-of-care measures. Physicians who do not follow those guidelines would be penalized. The problem is that the program also includes economic credentialing, which means that retina specialists' practice patterns would be scrutinized to see if one of them orders more fundus photos or fluorescein angiograms than the typical retinal specialist in their region of the country.

"Everyone agrees that we should all be practicing according to quality guidelines but the economic credentialing is fairly onerous," Dr. Rich says.

Retinal specialist, Dr. Williams says the likely advent of pharmacotherapy for ARMD will further aggravate the reimbursement situation. "The primary issue in physician reimbursement is the adverse effect of the SGR. The formula for calculating SGR is based on unrealistic and invalid assumptions that penalize physicians for factors that are beyond their control. An example of such a factor is the cost of physician-administered drugs," says Dr. Williams. A simplified version of this complex formula, he says, is "The more you do, the more you lose."

Along those lines, the consensus is that injectable drugs are the antithesis of a profit center for retinologists. "It costs us quite a bit to provide these drugs," says Dr. Gary Brown, who is a professor of ophthalmology at Jefferson Medical College and the Director of the Retina Service at Wills Eye Hospital, in addition to his role at the Center for Value Based Medicine. "There are several reasons for this. First, we have to pay for the drugs and second, all it takes to lose money is for 1 patient out of 10 to either be uninsured or not pay the co-pay with either Macugen or Visudyne. It's a real problem. We offer these treatments because we think it's important to patients, but I think a lot of retinal specialists wish they didn't have to offer them because it's very easy to get burned if you have a few patients who don't pay. There isn't any other medication in ophthalmology that has presented this problem, and I believe there are even a few insurers that are not even allowing retinologists to take a differential on the drug. Congress has considered eliminating that as well, so things can get even worse," he says.

Dr. Melissa Brown, an assistant surgeon at Wills Eye Hospital, Adjunct Senior Fellow at the Leonard Davis Institute of Health Economics at the University of Pennsylvania, and holds an adjunct faculty position at the University of Pennsylvania School of Medicine in addition to her work with the Center for Value Based Medicine. She says, "The key is to have a system of evaluating healthcare that identifies good value for the best price and provides incentives, not disincentives, for healthcare professionals that encourage those practices. The two aspects cannot and should not be separated. The cost savings need to be made at the expense of the less valuable and unnecessarily more costly interventions and not the professional providing the care. It is in the obtainment of these goals where the worlds of politics and medicine intersect," she concludes.


The cost-benefit ratio of AMD treatments would be incomplete without consideration of Medicare coverage of optical coherence tomography (OCT) and fluorescein angiography (FA) used for evaluating response to treatment and monitoring fellow eyes. The clinical study protocol for pegaptanib sodium called for infrequent postoperative testing. However, most retinologists who have incorporated pegaptanib into their practices say they will test every 4 to 6 weeks at least for the first several treatments. Critics of frequent testing say it is sometimes over-used to help to offset losses associated with pharmacotherapy, and rumors have emerged suggesting that Medicare will only cover one postop pegaptanib sodium diagnostic test. This, says Dr. Rich, is completely false. "There is no national policy to that effect," he says. "There are, however, isolated instances where that policy is in place." Dr. Rich says he cannot imagine that lone policy being maintained. "That policy is an aberration that was started by the carrier being told by industry that the tests weren't necessary, and denying coverage was one way to keep costs down. No prudent retinal physician is going to blindly inject a drug if they don't know whether the lesion is getting better or worse or when they should stop. They need to know more about the natural course of this disease to make prudent treatment decisions. [If that isolated policy expands] the retinal community will have to step up and take the position that this is not good medicine," he said. RP


1. Tunis SR. Why Medicare has not established criteria for coverage decisions. N Eng J Med. 1994;350:2196-2198.

Retinal Physician, Issue: January 2006