Specialty Pharmacy

New Ophthalmology Therapies Offer SP Opportunity, Higher Payer Cost

Reprinted from the September 2005 issue of SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers manage costs more aggressively and deliver biotechs and injectables more effectively.

Advances in the ophthalmology market are occurring at a rapid rate, and that could be costly news for payers. While past therapies often came at a price to the patient — limited outcomes but ones that were usually better than going without treatment — the newer treatments offer improved outcomes to patients but at a higher cost to payers.

A 2004 National Eye Institute study noted that age-related macular degeneration (AMD), glaucoma, cataracts and diabetic retinopathy are the most common eye diseases for Americans age 40 and over.

A few specialty pharmacy companies, including PharmaCare, which declined to be interviewed for this article, are looking into managing ophthalmology, something that Priority Healthcare Corp. is now doing. Priority had already been distributing ophthalmology drugs. When such drugs began receiving increased attention, Priority “saw AMD therapies as a tremendous opportunity to take a broad role in a new market that we saw developing in the specialty arena,” says Jon Hamrick, vice president of business development for the company. “Ophthalmology is one of the fastest-growing segments of our business. It represents the diverse nature of disease states and therapies coming out. For us, these are breakthrough therapies that need special care and handling.”

Hamrick also notes that “AMD therapies represent a bigger play in specialty distribution to specialty therapists rather than specialty pharmacy providers. But we see this trend potentially being impacted by CAP [i.e., the Medicare competitive acquisition program for Part B drugs] and Medicare Advantage plans.…The big question is what the impact of the CAP program will be.”

Therapies Continue to Show Improvement

Past treatments for wet AMD consisted of laser photocoagulation, where a surgeon used a laser to seal leaking blood vessels in the eyes. While it did extend some patients’ sight, in others it actually worsened it. Furthermore, only 15% of patients were candidates for this therapy.

In 2000, FDA approved Visudyne (verteporfin) for the treatment of wet AMD. While not a cure and not a viable treatment for about 70% of patients, the drug — distributed by Priority and Besse Medical Supply — was still an improvement over laser treatment and continues to be an option today.

Co-developed by QLT Inc. and Novartis AG, the drug was originally available only through Novartis. But “when Novartis was initially considering moving from direct distribution to outsourcing, we saw this as a tremendous opportunity to partner with them and create a bigger footprint in the industry,” says Hamrick. He says Priority first contacted Novartis at the request of a health plan client wondering if Priority could provide the drug.

Visudyne costs between $1,400 and $2,000 per treatment, which usually occurs every three months as needed; most people are treated about six or seven times over two or three years. Each treatment is based on photodynamic therapy and consists of a two-stage process. First, the drug is injected into the patient’s arm, from where it moves to the eye’s abnormal blood vessels. The physician next shines a non-thermal, or cold, laser into the patient’s eye, which activates the drug, destroying the targeted blood vessels.

Visudyne sales in the U.S. for the second quarter of 2005 were $50.1 million — actually a 3.8% loss from the year-ago period. Some analysts have speculated that a possible reason for the impact on Visudyne is AMD drug competitors, both a new drug on the market as well as some that are now undergoing clinical testing. Still, clinical trials are under way for Visudyne to be used in conjunction with some of the newer therapies, and early results indicate that such combination treatments may very well be viable options. “We see in this space a growing market, in that as the data come out, there will be a place for combination therapy,” says Hamrick. “The data seem to demonstrate this.” He contends this is a “growing market with room for more players.”

Macugen Is First of New Class of Drugs

Eyetech Pharmaceuticals Inc. (which recently agreed to be acquired by OSI Pharmaceuticals, Inc.) and Pfizer Inc. have co-developed Macugen (pegaptanib), which was approved by FDA in December 2004 and became available in January 2005. Approved to treat all forms of wet AMD, the drug is the first of many new ophthalmic drugs that target vascular endothelial growth factor (VEGF). These so-called anti-VEGF treatments prevent the growth of the eye’s abnormal blood vessels.

Macugen is injected directly into the eye, on average every six weeks for two to three years. Distributed by Priority, Besse and McKesson Specialty, the drug decreases vision loss. In trials, it limited patients’ progression to legal blindness by 50%. A few ophthalmologists have even reported improved vision in patients.

The price per injection is about $1,000. Under Medicare Part B, physicians may be reimbursed for the drug at 106% of Average Sales Price (ASP), or $1,054.70 per injection. Although treatment for this drug may potentially be extremely costly, many in the industry predict that most payers will, in fact, cover the drug. Hamrick acknowledges that because these therapies are so new, there unfortunately isn’t a lot of data on which payers can base decisions. But from a quality-of-life standpoint, he says, having people retain their vision is critical. He says that as far as Visudyne and Macugen go, Priority “has not had a great deal of push-back from payers. These definitely fit the mold of specialty products. The individual treatment costs and overall value of the therapy are straightforward and understood.” But he also points out that the specialty pharmacy side for the drugs is small compared to the specialty distribution. “Most of these therapies are incident to the physician on the Part B side,” he says.

For the second quarter of 2005, Eyetech reported that Macugen’s net product revenue was $47 million. Some analysts have projected total U.S. sales by 2008 of $500 million.

Some Patients’ Vision Improved With Lucentis

Most of the excitement in the market, however, seems to be surrounding Lucentis (ranibizumab), an anti-VEGF drug co-developed by Genentech, Inc. and Novartis Pharma AG that has been given fast-track designation by FDA. Forecasts put FDA approval as early as mid-2006. The drug, which is injected directly into the eye every four weeks, is a modified version of Avastin, Genentech’s metastatic colorectal cancer drug. One-year results of a Phase III study on patients with two of the three forms of wet AMD have demonstrated that 95% of patients experience a decrease in vision loss, with some patients’ vision actually improving. Another clinical trial on the third type of wet AMD is under way.

Retaane (anecortave acetate), which received an FDA approvable letter in May 2005, is inserted behind the eye using a blunt-tipped, curved tool, rather than injected into it. Manufactured by Alcon Laboratories, the angiostatic corticosteroid’s dosing is every six months. In the company’s July 28 earnings conference call, Cary Rayment, chairman and CEO of Alcon, said that the company was presenting FDA officials with information on the product’s safety and efficacy. The agency has required two additional studies on the drug, one of which is complete, the other of which is expected to be completed in the first half of 2007.

And another photodynamic therapy, Photrex (rostaporfin), manufactured by Miravant Medical Technologies, received an approvable letter from FDA in September 2004, which requested an additional clinical trial. The drug was given to patients on an average of 2.8 treatments over two years. A number of other therapies are in pre-clinical and early-stage trials.

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