Drugs that treat a form of vision loss known as age related macular degeneration aren’t just big business. They’re also a controversial part of the national debate over high drug prices, and their increased use has put ophthalmologists in the crosshairs of insurers, the federal government, and the press.
“Retina practices are under significantly increased scrutiny relative to even two or three years ago,” says W. Lloyd Clark, a retina specialist at Palmetto Retina Center in West Columbia, SC. “The amount of attention is substantially higher.”
The spotlight could soon grow brighter. By the end of the year, New York drugmaker Ophthotech (NASDAQ: OPHT) will release Phase 3 data for pegpleranib (Fovista) that could change how age related macular degeneration (AMD) is treated. Should pegpleranib produce positive results—by no means a guarantee—it could soon become the first combination treatment for the more damaging form of the disease, known as wet AMD, adding another flashpoint to the debate over drug prices.
Today, wet AMD patients periodically get a single drug injected into their eye. Pegpleranib would either be a second, separate injection, or be mixed with another drug into a single injection.
If pegpleranib were to work, it could give ophthalmologists another weapon to use against wet AMD. Yet eye doctors interviewed by Xconomy were on edge about the pending results and their effect on costs.
“Everybody is watching [pegpleranib], not just retina specialists,” says ophthalmologist Julia Shulman, a co-owner of NYC Retina in New York. “We’re bankrupting Medicare with some of these [drugs], and I think everybody wants to see what’s going to happen. How does this end?”
In 2014, for the first time ever, the Centers for Medicare and Medicaid Services, which administers the federal Medicare insurance program, published data showing how much reimbursement individual providers received. Ophthalmologists topped the list, accounting for $5.6 billion, or 7 percent, of all Medicare money in 2012, according to the New York Times. The substantial reimbursements were driven in large part by the doctors’ prescriptions of drugs for wet AMD. The condition causes a distortion of vision—imagine a grey or black marble in the center of your vision that expands over time without treatment.
AMD affects more that 2 million Americans, a number expected to grow to nearly 5.5 million by 2050 as the population ages, according to the National Eye Institute.
Between 85 and 90 percent of have the slowly progressing “dry” form, for which there are no approved treatments. The remaining 10 to 15 percent have the fast-moving wet form, when abnormal blood vessels form in the eye and leak fluid, ultimately causing potentially significant vision loss. The market for AMD treatments has exploded the past several years. Until recently, the standard of care was laser therapies that didn’t actually improve patients’ vision. They stopped deterioration but as a consequence destroyed the very retinal tissue clinicians were trying to save. But the standard has evolved to injectable pharmaceuticals that improve patients’ vision without damaging their eyes.
Ranibizumab (Lucentis) from Roche/Genentech and aflibercept (Eylea) from Regeneron Pharmaceuticals (NASDAQ: REGN) are the only two FDA-approved drugs for wet AMD. Each costs doctors close to $2,000 a dose (how much of that cost is passed through to patients can vary), and they generate more than $7 billion in annual worldwide sales combined.
The amount the U.S. Medicare system spends on these two drugs alone is significant. Medicare spent about $2.63 billion combined on aflibercept ($1.3 billion) and ranibizumab ($1.33 billion) in 2014. That’s roughly 12 percent of the $21.5 billion it spent on its so-called Part B program, which governs drugs administered in hospitals and clinics. Spending on those two drugs alone rose eight percent from the previous year.
(Medicare’s Part D prescription program is much larger, spending $121 billion on drugs in 2014.)
To put this in perspective, the only drug that ate up more Medicare Part B dollars in 2014 was the cancer and arthritis drug rituximab (Rituxan, $1.5 billion). (The most recent CMS data are for 2014, when the Government Accountability Office issued a report on the surge of Medicare spending from medications approved between 2006 and 2013.)
These wet AMD drugs aren’t cures, but they can restore some vision, prevent further damage to the eyes, and stop people from going blind. They block a protein called VEGF and stop abnormal blood vessels from forming. A patient’s improvement depends on how much damage the eye has already suffered from the leaking fluid. Patients receive injections once a month or less, depending on the severity of their case and how well they respond to treatment. Some might need monthly injections for a short time, and others might stay on repeated injections for years. Every patient is different. “If you ask 100 retina specialists, you may get 100 different answers” for how to treat them, says Jonathan Feistmann, who co-owns NYC Retina with Shulman.
There is a much cheaper alternative. Bevacizumab, also from Roche/Genentech, was the first injectible anti-VEGF drug used to treat patients with wet AMD. It isn’t FDA approved for that use, but is widely prescribed off-label and costs closer to $50 a dose.
It’s administered after pharmacies split, or “compound” larger doses of the drug into much smaller doses that are appropriate for eye injections. But compounding comes with contamination risks. Very rare cases of dangerous eye infections have been reported from compounded bevacizumab, and that risk is one reason some ophthalmologists don’t prescribe the drug.
But is bevacizumab any less effective for wet AMD than the chemically similar ranibizumab, or aflibercept? That hasn’t been definitively proven. The National Institutes of Health sponsored a large study known as the Comparison of AMD Treatment Trial (CATT), to test bevacizumab and ranibizumab head to head. The NIH reported in 2012 that that there was no statistically significant difference between the two drugs on AMD patients’ vision loss after two years of treatment. Other researchers have found similar results in other studies. (For another data point, eye doctors note that aflibercept has done better in treating another retinal disease, diabetic macular edema, in head to head studies with its rivals.)
It all adds up to a segmented market. Bevacizumab has a 44 percent market share, according to a recent research note from SunTrust Robinson Humphrey. Next is aflibercept (37 percent), followed by ranibizumab (19 percent).
Polling several eye doctors, Xconomy found the same fragmentation. Carl Regillo, the director of retina service at Wills Eye Institute in Philadelphia, says he’s always preferred on-label drugs. There are “slight differences” in favor of them over bevacizumab, Regillo says, and he starts patients on either ranibizumab or aflibercept. Clark of the Palmetto Center prefers those two drugs as well. Feistmann believes bevacizumab is usually just as effective as the other drugs at a fraction of the cost. Shulman, however, will start patients on aflibercept if their AMD is particularly bad and they can get insurance coverage, feeling it’s the best drug in the group.
The high costs and increased use of eye injections have forced ophthalmologists to provide more justification for their prescriptions. Clark says he sends insurers more paperwork to support routine clinical care, but there are more denials than ever before.
In 2015, the insurer Humana instituted a “step therapy” policy for wet AMD for its commercial group and individual coverage, meaning patients have to fail or not be eligible for bevacizumab before Humana will pay for more expensive drugs. Via email, Humana spokesperson Marina Renneke said that its coverage was “consistent” with American Academy of Ophthalmology treatment guidelines and “is aligned” with National Institutes of Health research comparing the different wet AMD drugs.
The pressure from Medicare to cut costs isn’t as direct. Medicare was once able to demand a similar step therapy approach, but that ability was rescinded in 2010. In its place, doctors like Clark report more paperwork and more justification required for the expensive drugs. Direct limits aren’t completely off the table, however. The 2014 GAO report that highlighted escalating Part B drug costs spurred an outside Medicare commission to reconsider cost-saving measures, which it calls “least-costly alternative policy.” The commission has not made a final recommendation.
But a medical society for eye doctors is pushing back against the cost measures. The American Society of Retina Specialists has complained to insurers and their drug-buying agents about policy changes.
“These three anti-VEGF agents are not interchangeable,” the ASRS wrote in a December 2014 letter to Humana, arguing that specialists must be allowed to use their judgment for each patient.
Genentech and Regeneron expressed similar sentiments.
“We believe doctors choose the most appropriate medicines for their patients and having a choice of medicines is a good thing for people facing serious diseases,” said Genentech spokesperson Allison Neves.
Regeneron spokesperson Ilana Tabak says that the company “support[s] the need for a value-based reimbursement model that takes into consideration critical factors including clinical value, innovation, and cost,” but adds that the Regeneron is “committed to ensuring” that aflibercept is accessible and affordable for patients and hasn’t raised the drug’s price in the U.S. once since it was FDA approved in 2011. (Price hikes every year are common in the drug industry.)
Potential conflicts of interest also color the debate. As the New York Times and Washington Post have reported, Medicare reimbursement rules allow eye doctors to gain more financially by buying one of the on-label treatments rather than bevacizumab. And many eye doctors who were Genentech consultants were also among the top billers of the company’s ranibizumab.
Clark of the Palmetto Center in South Carolina acknowledges that he is a paid consultant to Genentech, Regeneron, and Bayer and has been an investigator in several pegpleranib trials. But he says the charge that doctors are more likely to buy and prescribe high-priced wet AMD drugs because they’ll benefit financially “isn’t fair at all.” There are tiny margins between the price his office pays for the drugs and the amount he’s reimbursed—four percent at best, he says—and he doesn’t have a low-cost, FDA-approved alternative to ranibizumab or aflibercept.
“This is an issue of drug pricing, and [retina specialists] have absolutely no control over that,” Clark says. “We just have to try to take care of people the best we can.”
It’s into this climate that combination therapy could soon arrive, with Ophthotech’s drug, pegpleranib, leading the way. The company is testing pegpleranib in three separate combinations with each of the anti-VEGF drugs. The idea is to thwart wet AMD in two ways. Pegpleranib blocks a different protein, PDGF, which is also implicated in unwanted blood vessel growth. According to Ophthotech’s website, there is room for improvement over the current standards. The company cites clinical studies that anti-VEGF treatments alone lose effectiveness after a year in about 20 percent of patients, and a majority of patients taking the drugs never gain back “significant” vision. Long-term follow-ups from the NIH’s CATT and other studies show that the benefit of anti-VEGF therapy tends to wane over time. (Ophthotech officials declined requests for comment.)
Ophthotech’s Phase 2 results of a pegpleranib-ranibizumab combination showed patients could read an average of 4.1 more letters more on a visual acuity chart than patients on ranibizumab alone after 24 weeks of treatment. (The results were published on Monday in the peer-reviewed journal Ophthalmology.) To put that in perspective, Regillo, of Wills Eye, says he wants to see a pegpleranib combination provide a boost of “at least 3 or 3.5 letters” over single-drug therapy before he considers using the combination on newly diagnosed patients.
Clark cautions that any improvement less than 5 letters—a full line on the chart—“[won’t] be that exciting in terms of broad acceptance in clinical practice,” and Regillo says less than three letters would be more “noise” than signal.
Ophthotech’s Phase 3 pegpleranib-ranibizumab study, which is treating patients for a full year, will produce data by the end of the 2016. In a recent research note, Leerink Partners analyst Joseph Schwartz estimated as much as $1.26 billion in peak U.S. sales if pegpleranib comes through.
The company could also earn up to $700 million in payments from Novartis if the drug wins approval and is cleared for reimbursement in various European countries. (Novartis holds rights to pegpleranib in Europe and owns partial rights to ranibizumab.)
At least two things make observers wary of Ophthotech’s upcoming data. First, skeptics wonder if the difference between the pegpleranib-ranibizumab combination and ranibizumab alone on patients’ vision will be as large as it was in Ophthotech’s Phase 2 trial. Second, a rival combination therapy from Regeneron, which also aimed to block VEGF and PDGF, failed a mid-stage trial last month.
“When you hear about the same [drug] target not working, that has to create some skepticism,” Regillo says. (Regillo has received research grants from several wet AMD drug developers and is a Genentech consultant.)
In a recent report on retinal diseases, Leerink estimated that pegpleranib, if approved, would cost $1,500 a vial. With all the handwringing over AMD drug prices and insurers’ growing restrictions, how many doctors will prescribe it? And how would they use it?
“[The potential cost] is a concern,” Regillo says. “I’m going to use the least amount of drug to get whatever benefit this combination derives.”
Regillo speculates he might use a pegpleranib combination first, up to six times, then switch back to a single drug to maintain the gains from the combo therapy. He also notes that wet AMD patients with 20/40 vision or better likely won’t need a combo therapy. Clark agrees, saying the best theoretical use might be to eliminate damage to the eye in severe cases as quickly as possible.
Shulman says that if Ophthotech’s Phase 3 studies show patients with severe cases improve rapidly, she might be persuaded to use a combo therapy rather than aflibercept alone as she does now. Additionally, Feistmann says, there are still many people that don’t respond to anti-VEGF therapy. “Hopefully [pegpleranib] will help the non-responders so we have an extra tool in our toolkit,” he says. (Both Shulman and Feistmann disclose that they own Roche stock.)
With eye doctors feeling pressure to control costs, Ophthotech’s upcoming data won’t just have to be good. They’ll have to be good in ways that save patients time and hassle and save the healthcare system money. (Sometimes those goals overlap, sometimes they don’t.)
The most substantial burden for wet AMD patients—typically 65 years or older—is coming into the office for monthly injections, Shulman says. If a combination therapy can reduce office visits by lasting longer per dose, the price might be right. The more clear-cut the benefits are, the more likely the next generation of AMD therapy—whether it comes from Ophthotech or elsewhere—will make the cut with doctors who would love nothing more than to escape the spotlight.