of Anti-angiogenic Drugs

George A. Williams

INTRODUCTION

The advent of anti–vascular endothelial growth factor (VEGF) therapy for neovascular age-related macular degeneration has prevented blindness in tens of thousands of people. However, the costs of these drugs are beyond anything seen before in ophthalmic drug therapeutics. An analysis of the financial implications of retinal drugs must include not only an evaluation of the direct costs of the drugs and the costs associated with their administration but also the cost savings that accrue from their clinical benefit. This chapter discusses the financial and regulatory issues associated with retinal drugs.

The development of photodynamic therapy with verteporfin and pegaptanib sodium for neovascular age-related macular degeneration introduced ophthalmologists to the financial and regulatory implications of physician-administered drugs. The financial implications of physician-administered drugs can be considered from both a microeconomic and a macroeconomic perspective. The microeconomic perspective involves the cost to the patient and the ophthalmologist. The macroeconomic perspective considers the costs to society and the health care system. Together, these costs present significant and difficult issues.

COSTS TO PATIENTS

The economic burden of antiangiogenic therapy to the patient can be considerable.

Under Medicare, physician-administered drugs are paid for by Part B and therefore patients are responsible for 20% of the allowable reimbursement for both the drug and the physician services associated with administering the drug. For ranibizumab, this can total nearly $500. The need for repeated treatment in most patients multiplies the economic burden. Fortunately, a majority of Americans have supplemental insurance to cover co-payment costs. However, the recent economic problems are beginning to adversely affect some patients’ access to supplemental insurance coverage. Many drug companies have programs through independent foundations to assist financially eligible patients with drug-related co-payments. Although the preliminary experience with these programs has been generally positive, their long-term viability is unknown. There are also significant indirect costs associated with antiangiogenic therapy related to the frequency of treatment and follow-up such as transportation, parking, time away from work for the patient or more commonly their family members, or even loss of a job. The net result is that antiangiogenic therapy can create a substantial economic burden for many patients.

An analysis of a “typical” patient on antiangiogenic treatment readily demonstrates the costs involved. If we assume that a patient with active neovascular age-related macular degeneration (AMD) is seen every 4 to 6 weeks and receives six injections per year, we can calculate the costs associated with such a treatment regimen. Each office visit costs approximately $150 with the evaluation and management service combined with a unilateral optical coherence tomography. At eight visits per year, this cost is $1,200. If a patient receives two unilateral fluorescein angiograms per year, this adds $235. Six injections of ranibizumab per year cost approximately $12,200. The total for such a “typical” patient is $13,635. Obviously, the cost increases if more visits or injections are required or if the patient has bilateral disease.

COSTS TO OPHTHALMOLOGISTS

For ophthalmologists, antiangiogenic therapy also creates significant economic problems. Practice management issues related to increased patient volume and drug costs are considerable. The increased patient volume may require additional office and clinical personnel as well as more office space or office hours. The costs of drugs such as ranibizumab distort practice accounting and demand detailed tracking of accounts payable and receivable. For some practices, drug costs can become the leading cost in the practice. Under current Medicare regulations, the allowable reimbursement for retinal drugs is paid at 106% of the average sales price (ASP) of the respective drug. This 6% margin is expected to cover the costs of an efficient provider for the drug ordering, billing, and inventory. The ASP is determined quarterly by Medicare based on reports from the drug manufacturer, which provide the net revenue per unit dose of the drug. The net revenue is the actual sales price minus any rebates, discounts, or fees paid to distributors or physicians. Thus, the ASP is often less than the actual cost of the drug to the ophthalmologist. Although, the ASP can change every 3 months, the physician cost for the drug rarely reflects the changes in net revenue and therefore physicians rarely receive the full 6% margin. Also, state and local sales taxes or gross revenue taxes on drug revenues can further decrease the reimbursement to the ophthalmologist. In the first quarter of 2009, the allowable reimbursement for ranibizumab was $2,036. The cost of ranibizumab is $1,950. Therefore, the true margin is not 6% but only 4%. This of course assumes that the ophthalmologist receives payment from both Medicare (80%) and the co-payment (20%). If not, the ophthalmologist loses over $400 per treatment. Typically, there is no problem with the Medicare’s 80% payment, but the 20% co-payment is sometimes a problem due to the vagaries of secondary insurance coverage or patients’ inability to pay. Ophthalmologists are then placed in the uncomfortable position of losing money per treatment. This can create an adversarial situation that may compromise the patient-ophthalmologist relationship. It is therefore critical that ophthalmologists explain to their patients the financial implications of antiangiogenic treatment.

Typically, the ophthalmologist purchases the drug from suppliers or directly from the manufacturer. Although this can be done on a just-in-time basis, most physicians carry an inventory of the drug to provide same-day convenience for their patients. However, maintaining an inventory of expensive drugs entails considerable financial risk. This can create a conflict between accounts payable and accounts receivable.

The 20% co-pay requirement by Medicare can create significant problems for both patients and their physicians. The co-pay results in substantial out-of-pocket liabilities for patients without secondary coverage. For expensive drugs that are used on a monthly basis, this rapidly results in large balances. Regardless of whether or not the patient is able to pay off these balances, the physician is responsible for payment to the distributor or manufacturer. This creates a conflict between the physician and patient, which can damage the therapeutic relationship. Even when patients have secondary coverage for the co-pay, physicians may remain in financial jeopardy. Unfortunately, many secondary insurers have inconsistent and irregular payment policies concerning Part B drugs. This is particularly common with Medicare Advantage plans, which in 2008 covered 22% of Medicare beneficiaries.

At the macroeconomic level, antiangiogenic therapy is most commonly used for neovascular age-related macular degeneration, a disease with a large and increasing case number resulting in increased utilization of physician services, imaging, and drugs. It is clear that the direct costs of antiangiogenic treatment will total billions of dollars per year and contribute to the continuing escalation in health care costs.

The financial burden to the overall health care system from Part B antiangiogenic drugs was 4% of the total Part B drug costs in 2007. Even more impressive is that it represented 13% of the $5.4 billion spent for all of ophthalmology. This trend is seen throughout all of Medicare. In 1997, Part B drugs cost $2.8 billion compared to physician payments of $31.9 billion or 8.6%. In 2007, Part B drugs cost $16.3 billion compared to physician payments of $60 billion or 27%. Thus, from 1997 to 2007, physician payments increased 88% compared to a 582% increase for Part B drugs.

Physician services associated with administration of antiangiogenic drugs have exploded over the past several years. In 2000, the number of intravitreal injections given to Medicare beneficiaries was 3000. In 2008, this had increased to nearly 1 million. This alone increased Medicare costs over $180 million. As expected, imaging studies have also increased from 3.1 million in 2004 to 6.8 million in 2007. This increase is primarily due to antiangiogenic therapy and costs an additional $155 million. Other studies such as fluorescein angiography have also increased.

This growth in physician services, imaging, and drug costs adversely affects the sustainable growth rate (SGR), which is used to determine the yearly revaluation of physician reimbursement. Although the costs directly associated with antiangiogenic therapy are a small contributor to the overall effect, they are indicative of the problems inherent in the SGR system. In fact, the American Medical Association (AMA) has repeatedly cited the increased costs associated with antiangiogenic therapy for neovascular age-related macular degeneration as a factor in the overall growth in physician services. The AMA estimated that in 2007 these costs were $300 million, not counting the cost of the drugs. However, the AMA has also described the benefits of antiangiogenic therapy to Medicare beneficiaries as “priceless.” Although there is widespread consensus that the SGR system is fatally flawed and that a new payment update mechanism is needed, at the time of this writing, the SGR system remains in effect.

COST CUTTING

One obvious way to decrease the cost of antiangiogenic therapy is to use less expensive drugs. The use of bevacizumab instead of ranibizumab has the potential to save billions of dollars. In order to determine the potential savings associated with bevacizumab, several assumptions are necessary. The simplest model assumes equal efficacy, safety, and injection frequency between bevacizumab and ranibizumab. In 2008, the US sales for ranibizumab were $875 million, which equates to 450,000 injections per year. Market and physician surveys suggest that in 2008, approximately 40% of patients treated with antiangiogenic therapy for neovascular AMD received ranibizumab. This is consistent with the approximately 1 million intravitreal injections in the Medicare population. Therefore, the use of bevacizumab at approximately $40 per injection compared to the $2,031 per injection cost of ranibizumab may have saved approximately $1 billion in direct drug costs.

Although the direct costs of antiangiogenic therapy are substantial, the indirect costs of untreated or undertreated neovascular AMD with attendant blindness, disability, and lost productivity are even greater. People with visual loss from neovascular AMD have a lower employment than unaffected people. The employment rate for people afflicted with visual loss from AMD is 44% for those with mild visual limitation and 31% for those with severe visual limitation due to neovascular AMD and/or geographic atrophy compared to 78% of those unaffected. Additionally, people with advanced AMD earn less money compared to people without disability. In 1997, the mean wage for a person with no disability was $31,182. The mean wage for a person with mild visual loss was 30% less and for a person with severe visual loss it was 38% less. A detailed analysis of the economic loss to the gross domestic product (GDP) of the United States estimated the total loss from advanced AMD to be $29.8 billion. A study on the effect of AMD upon the Canadian GDP found similar results when adjusted for the population difference.¹

Furthermore, vision loss leads to higher nonocular-related medical costs due to depression, injury from falls, skilled nursing facility utilization, and long-term care utilization. A study examining the association between vision loss and medical care costs in Medicare beneficiaries concluded that persons with vision loss incur significantly higher costs than those with normal vision. Approximately 90% of these costs are nonocular-related medical costs. This study estimated that blindness and vision loss resulted in $2.14 billion in nonocular-related medical costs in 2003.² Treatments such as antiangiogenic therapy, which can prevent or reverse vision loss, can reduce these costs. Therefore, any analysis of the costs of antiangiogenic therapy must consider the huge indirect costs associated with vision loss.

REGULATORY ISSUES

The pharmacotherapy of blinding retinal disease is replete with examples of off-label drug use. The history of this off-label drug use is testimony to the innovation, persistence, and even courage of ophthalmologists in their continuing efforts to improve vision for those afflicted with retinal disease. Sometimes, off-label drug use is employed to treat relatively rare conditions such as endophthalmitis or uveitis for which a Food and Drug Administration (FDA) label is unlikely. Other times, off-label drugs are used to treat common disorders such as diabetic retinopathy or age-related macular degeneration. The advent of ocular photodynamic therapy with verteporfin in 2000 initiated a new era in the management of age-related macular degeneration. Although this novel therapy provided a safe and effective treatment for many patients with previously untreatable subfoveal choroidal neovascularization, the FDA label restricted its use to predominantly classic neovascular lesions. This limited label was used as the basis for the Centers for Medicare and Medicaid Services (CMS) coverage as outlined in a National Coverage Determination (NCD).³ Although this NCD was the first exposure for many ophthalmologists to the confusing and arcane regulations that govern off-label drug use, most ophthalmologists had been using approved drugs off-label for years for the treatment of endophthalmitis, uveitis, proliferative vitreoretinopathy, and cystoid macular edema. Even the use of preoperative and postoperative antibiotics for endophthalmitis prophylaxis is off-label.

An understanding of the issues involving off-label drug use requires a review of the FDA label process.⁴ The FDA is a public health agency whose mission is to oversee the use and marketing of regulated medical products. The FDA reviews the toxicology and clinical research from Phase 1, Phase 2, and Phase 3 studies, which is presented in an Investigational New Drug (IND) application and, when appropriate, approves a drug for use and marketing. When a drug is approved, the FDA issues a label that describes and defines the drug’s specific medical indication(s), dose, dosage form, side effects, and chemical structure. For some drugs, the FDA may include a “black box” warning in the label to emphasize potential complications associated with severe morbidity or mortality. The format of the FDA label has received widespread criticism for its confusing and almost impenetrable structure and syntax. Recently, FDA announced a more “user-friendly” format designed to facilitate use by both patients and physicians.⁵ Although this new format is an improvement, it remains suboptimal.

Any use of a drug not listed in the label is considered off-label. Off-label uses include giving an approved drug for a disease or indication other than that for which it is approved; at a different dose, frequency, or route of administration than specified in the label; or to treat a child when the product is approved to treat only adults. However, the use of an approved product by physicians is not restricted by the FDA to the limitations of the label. Physicians are allowed to use FDA-approved drugs in the treatment of an individual patient as medical practice. The FDA recognizes that off-label use of drugs by physicians is often appropriate and may represent the standard of care. The most obvious example of off-label drug use constituting the standard of care in ophthalmology is the use of intravitreal antibiotics for endophthalmitis, despite the fact that no antibiotics are approved for intravitreal injection or for the treatment of endophthalmitis. The FDA has issued specific guidance on off-label drug use.

“Good medical practice and the best interests of the patient require that physicians use legally available drugs, biologics and devices according to their best knowledge and medical judgment. If physicians use a product for an indication not in the approved labeling, they have the responsibility to be well-informed about the product, to base its use on firm scientific rationale and on sound medical evidence and to maintain records on the product’s use and effects. Use of a marketed product in this manner when the intent is in the practice of medicine does not require the submission of an Investigational New Drug Application……..or review by an Institutional Review Board (IRB). However, the institution at which the product will be used may, under its own authority, require IRB review or other institutional oversight.”⁵

In addition to the FDA, medical organizations such as the AMA and the American Academy of Ophthalmology are on record supporting off-label drug use when there is appropriate evidence-based medicine, expert consensus opinion, or unmet medical need.^6,7 The American Medical Association policy on off-label drug use is “The AMA confirms its strong support for the autonomous clinical decision-making authority of a physician and that a physician may lawfully use an FDA approved drug product or medical device for an unlabeled indication when such use is based on sound scientific evidence and sound medical opinion.”⁷

If the FDA recognizes off-label drug use as appropriate and if the FDA does not regulate medical practice in the treatment of an individual patient, what role does the FDA play in off-label drug use? One important role is that the FDA precludes drug sponsors from marketing drugs to physicians or patients for off-label use. “Pharmaceutical manufacturers cannot proactively discuss off-label uses, nor may they distribute written materials (promotional pieces, reprints of articles, etc.) that mention off-label use.”⁸ Therefore, the FDA label has important marketing implications because pharmaceutical companies are not allowed to market drugs for off-label use. Currently, this limitation applies to any formal marketing such as media advertising or drug detail information. Recently, the FDA has proposed a controversial relaxation on the restrictions for the marketing of off-label indications.⁹ Regardless of the status of off-label marketing, the FDA does not restrict other parties such as physicians or specialty societies from discussing off-label uses or distributing written materials concerning them.

The FDA also becomes involved in off-label drug use when the drug is in “investigational use.” The term “investigational use” suggests the use of an approved drug in the context of a clinical study protocol. When the primary intent of the investigational use is to develop information about a drug’s safety or efficacy, or if the off-label use involves a route of administration or dosage level or use in a subject population or other factor that significantly increases the risks associated with the use of the drug, submission of an IND is required.⁴ Physicians can obtain the IND application (form 1571) from the Internet.⁵ Most investigational review boards will require an IND for a clinical trial involving off-label drug use.

Another regulatory issue involving off-label drugs is the formulation of ophthalmic preparations by compounding pharmacies. Any drug product prepared by a compounding pharmacy is considered by the FDA to be either off-label or a new drug.¹⁰ Compounding pharmacies are licensed by individual states to provide drugs to individual patients at the prescription request of a physician. In ophthalmology, compounding pharmacies provide multiple drugs for retinal pharmacotherapy such as antibiotics, corticosteroids, and bevacizumab. Compounding pharmacies prepare approved drugs at dosages that are relevant for ocular administration and prepare preservative-free drugs. Although the FDA states “Traditional compounding typically is used to prepare medications that are not available commercially….,” the FDA has recently expressed concerns about the legality of some compounding pharmacy practices related to retinal pharmacotherapy.¹¹ These issues are related primarily to the marketing of compounded retinal drugs and the need for a patient-specific prescription for each dose. The role of the FDA in regulating the state-controlled compounding pharmacies is also a concern. At the time of this writing, these issues are under litigation. As a result, legislation has been introduced in Congress to clarify the role of the FDA in the regulation of compounding pharmacies. The implications of this legislation to retinal pharmacotherapy are unknown.

The legal implications of off-label drug use primarily involve risk management issues. The keys to addressing these risk management issues are patient selection and informed consent. As discussed above, FDA approval status does not necessarily define appropriate medical practice, nor does the FDA regulate medical practice. Medical practice is the therapeutic relationship between a physician and an individual patient. The physician must decide what the appropriate medical care is for each patient and this decision must fall within the standard of care. The question then becomes “When does off-label drug use become the standard of care?” The answer depends on who is defining the standard of care. Payers may use specific definitions of the standard of care to establish coverage determinations, which are discussed later. From a risk management perspective involving malpractice, a jury, judge, or arbitrator determines whether treatment is within the standard of care. This determination is based upon such factors as supporting authoritative literature, expert consensus, scientific rationale, and local or national medical practice patterns.

An important factor in establishing the standard of care is informed consent. This is particularly critical with off-label drug use. The Ophthalmic Mutual Insurance Company (OMIC) recommends that physicians inform patients about the off-label status of a proposed treatment.¹² The discussion should include the known and potential unknown risks as well as the rationale for the off-label drug use. The physician should also discuss why any available FDA-approved or CMS-covered therapies are not appropriate. This discussion should be well documented in the medical record. OMIC also recommends that a specific off-label informed consent be used. OMIC provides a specific consent for bevacizumab and triamcinolone acetonide with useful suggestions concerning patient selection, preparation of the medication, and informed consent and documentation.¹² Recently, the off-label use of bevacizumab for retinopathy of prematurity has raised concerns. This treatment must be considered investigational and should be performed only in the context of an approved clinical trial with an IND from the FDA.

Another difficult issue concerning off-label drug use concerns coverage for the drug and associated services. In ophthalmology, this usually means coverage by Medicare, which can be established either by the local Medicare carrier via a local carrier decision or by CMS as an NCD. The Medicare Benefit Policy Manual provides that individual carriers may establish on a case-by-case basic coverage for off-label drug use based upon their assessment of the medical indication as reasonable and necessary.

“FDA approved drugs for indications other than what is indicated on the official label may be covered under Medicare if the carrier determines the use to be medically accepted, taking into consideration the major drug compendia, authoritative medical literature and for accepted standards of medical practice…..” ¹³

Some carriers have outlined criteria that they consider when determining coverage of off-label drug use on a case-by-case basis. These criteria consider the following factors:

1. Whether alternative treatments were tried before considering off-label use
   
2. Whether there are published recommendations from specialty societies or in other authoritative based guidelines
   
3. Whether authoritative medical literature supports the off-label use. Such literature must include peer-reviewed publications that demonstrate efficacy. Such studies may not include case reports, opinions, book chapters, or abstracts.
   
4. Whether there is other evidence of broad scientific support
   
5. Whether the use is an accepted standard of medical practice¹⁴

For some off-label drug use such as the use of intravitreal antibiotics for endophthalmitis, the above criteria are easily satisfied. For other off-label treatments, the evidence is less compelling. As a result, there are variable coverage policies between Medicare carriers concerning off-label retinal pharmacotherapy. Currently, there is considerable controversy involving the off-label use of anti-VEGF agents such as pegaptanib sodium, ranibizumab, and bevacizumab. All Medicare carriers cover pegaptanib sodium and ranibizumab for the labeled treatment of neovascular age-related macular degeneration. All but one of the Medicare carriers covers bevacizumab for the off-label treatment of neovascular age-related macular degeneration as well. However, the coverage for other off-label uses such as proliferative diabetic retinopathy, diabetic macular edema, retinal vascular occlusions, and neovascular glaucoma is variable. This irregular coverage is frustrating to both ophthalmologists and patients since many of these conditions have no approved or consistently effective therapy. Medicare carriers often look to professional organizations such as the American Academy of Ophthalmology for guidance on these coverage issues. The American Academy of Ophthalmology in turn looks to the scientific literature for appropriate evidence to support recommendations for coverage particularly in situations of unmet medical need. The strong support of the American Academy of Ophthalmology for the use of off-label bevacizumab was instrumental in obtaining Medicare coverage.⁶

CMS can establish a national coverage mandate to all Medicare carriers through an NCD. CMS uses an NCD to determine whether an item or service is “reasonable and necessary.” While there is no statutory or regulatory definition of “reasonable and necessary,” CMS has generally interpreted the term to mean that the item or service should improve health outcomes for Medicare beneficiaries.¹³ CMS may consider an NCD when

1. There are questions about the safety, effectiveness, or appropriateness of a therapy including off-label use of drugs.
   
2. Local coverage policies are inconsistent.
   
3. There is wide variation in billing practices not related to variation in clinical need.
   
4. The health technology represents a substantial clinical advance and is likely to result in significant health benefits if it diffuses more rapidly to all patients for whom it is indicated.

To address the above issues, CMS relies on generally accepted principles of evidenced-based medicine.¹³ For drug coverage, an NCD typically requires strong evidence from clinical trials on safety and efficacy for the indication. Interestingly, FDA approval of the indication is not required for CMS coverage. This is the case for the coverage of photodynamic therapy with verteporfin for the treatment of occult with no classic and minimally classic subfoveal choroidal neovascularization and evidence of recent disease progression.³ This indication is not listed in the verteporfin FDA label. However, this NCD is based on multiple clinical trials, an independent review by CMS of the clinical trial data, and the recommendation of a Medicare Carrier Advisory Committee. Such a process typically takes a year or longer.

A relatively new mechanism by which CMS may cover off-label drug use is through a clinical trial. To be eligible for coverage, the clinical trial must meet a variety of requirements including the following:

1. The principal purpose of the trial should be to test whether the intervention improves the participant’s health outcome.
   
2. The trial should either be well supported by available scientific and medical information or be intended to clarify or establish the health outcomes of interventions already in common clinical use.
   
3. The trial must not duplicate existing studies.
   
4. The trial must be appropriately designed and sponsored by a credible organization.

One obvious way to conduct such a trial is through the National Eye Institute and such trials on off-label drug use are in progress and include the Comparison of Age-related Macular Degeneration Treatment Trials (CATT) and the Diabetic Retinopathy Clinical Research Network.¹⁵ Such trials will be useful as CMS develops further policies for comparative effectiveness studies. The concept of comparative effectiveness is likely to become an important factor in Medicare payment policy.

Thus, off-label drug use in ophthalmology is at the discretion of the local Medicare carriers and coverage will depend on whether the carrier considers the off-label drug use reasonable and necessary. The Medicare Carrier Manual states that if a medication is determined not to be reasonable and necessary, the carrier excludes the entire charge including any charges for services that were primarily for the purpose of administering a noncovered medication. This means that for intravitreal injection of a therapeutic agent if the drug is not covered, then neither is the injection.

Considering the above aspects of off-label drug coverage, how should ophthalmologists proceed when they believe off-label drug is in a patient’s best interest? For Medicare beneficiaries, ophthalmologists should seek specific guidance from their local Medicare carrier. If the carrier declines coverage, the ophthalmologist may bill the patient for noncovered services associated with the off-label drug use by using an Advance Beneficiary Notice (ABN). The necessary ABN form is available on the CMS Web site, cms.medicare.gov. The use of an ABN requires that the patient be informed about why the proposed treatment is not covered by Medicare and that the ABN form is signed prior to the performance of the service. The ABN form is then submitted to the local Medicare carrier with the bill on form 1500 using either the GA or GY modifier. Physicians should contact their local carrier to determine which modifier is preferred and to confirm how the carrier handles the ABN process. With an appropriate ABN, physicians can bill the patient for the noncovered services. For payers other than Medicare, ophthalmologists must contact the individual payer to determine payment policy for off-label retinal pharmacotherapy. Many payers have established payment policy based on the above discussed criteria.

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