Medicare Data Reveals $1 Billion a Year for Costly Eye Drug

Manju Subramanian, a MED associate professor of ophthalmology, says Avastin would cost $650 per patient per year, while Lucentis costs $50,000 per patient per year. Photo by Vernon Doucette

When data documenting Medicare payments to more than 880,000 medical professionals in 2012 was released for the first time this week, it showed that, as the New York Times puts it, “one of the most heavily reimbursed procedures—costing a total of $1 billion for 143,000 patients—is for a single treatment for an eye disorder common in the elderly.” That treatment involves the use of Ranibizumab, known by the brand name Lucentis, for age-related macular degeneration. In Massachusetts, according to the Boston Globe’s review of the data, just 30 doctors, more than half of them ophthalmologists, were paid more than $45 million in 2012. Many of those ophthalmologists attribute the extraordinary fees to the high cost of Lucentis. The Globe reports that Lucentis is more than six times more costly than an alternative treatment using the cancer drug Avastin, which has not been approved by the US Food and Drug Administration (FDA) for treatment of macular degeneration. Despite its lack of approval to date, Avastin, like many drugs that treat many diseases, is widely used off label (the use of pharmaceutical drugs that are not approved for that particular use) because of its proven effectiveness, apparent safety, and relatively low price.

Manju Subramanian, a School of Medicine associate professor of ophthalmology, says the disparity in the cost of the two drugs is even greater than was cited by the Globe. Subramanian, who has studied the effectiveness of the two drugs and found that both work equally well, says the annual maximum cost of treating a patient with Avastin is $650, and the annual cost of treatment with Lucentis is $50,000. Both Lucentis and Avastin are sold by the San Francisco–based pharmaceutical giant Genentech, which stands to lose many millions of dollars if the cheaper drug is approved for macular degeneration.

BU Today spoke with Subramanian about the effectiveness and costs of the two drugs.

BU Today: The New York Times analysis of recently released Medicare payments shows that the government paid more than $1 billion for treatment of vision loss in the elderly using Lucentis. Is that number surprising?

Subramanian: This is not surprising to me. Anyone who looks at these numbers needs to keep in mind that we are looking at gross payments, not net income for doctors. Doctors get paid for the actual procedure of injecting the medication into the eye, and that amount is the same regardless of which type of drug is used. But most doctors have to buy the drug from the manufacturer or pharmacy and bill Medicare, which then reimburses them for the cost of the drug. So in effect, they get paid the same regardless of whether they use Avastin (which costs $50 for a single dose) or Lucentis ($2,000 for a single dose). Doctors don’t set the price of drugs. If a doctor injects more Lucentis than Avastin, then it will appear as if he or she is getting paid more by Medicare. The same case holds true for oncologists, who have to use very expensive drugs.

Could you tell us about your study? Who paid for it, how many patients were involved, and what did it reveal?

My study was a small study, sponsored by the US Department of Veterans Affairs in Boston, comparing the efficacy of Avastin vs. Lucentis. It provided pilot data showing no significant difference in efficacy between the two medications for the treatment of macular degeneration at one year. These findings were subsequently confirmed by a much larger National Eye Institute study. The results of that study came out in May 2011 and showed that there is essentially no difference between Avastin and Lucentis for the treatment of macular degeneration. It’s important to note that both drugs are also used in the treatment of diabetes and other eye disorders, and there are no studies, to date, that compare the difference between these two drugs for the other eye diseases.

How much money could be saved if Avastin rather than Lucentis were used to treat macular degeneration?

There is published data on this, but to give you a rough estimate: Patients can get up to 12 to 13 injections per year; Avastin would cost $650 per patient per year, while Lucentis costs $50,000 per patient per year. Multiply this times the number of patients who develop wet macular degeneration each year (some sources quote about 200,000 individuals in the United States alone), and you can see there is a large difference in cost between the two treatments.

Has the FDA indicated that it may approve Avastin for use in treating macular degeneration?

Not that I am aware. However, in order for the FDA to consider this, the pharmaceutical company that manufactures Avastin has to apply for on-label approval. And the company that manufactures Avastin is the same company that manufactures Lucentis, Genentech/Roche. But at the end of the day, from a physician perspective there is really nothing to be gained by getting on-label approval of Avastin, because physicians have the right to use a drug for any indication once it is out on the open market. This is referred to as off-label use. Additionally, if Avastin became approved for macular degeneration, this would not change the cost.

What about the safety concerns about the use of Avastin for eye disease alleged by Genentech? Are they supported by research?

Genentech is correct that there were never any Phase I trials (safety trials) done on usage of Avastin in the eye. However, Avastin has been used in the eye for almost nine years, and there has been no compelling data so far to show that Avastin, at such a small dose in the eye, is less safe than Lucentis.

Is off-label use of Avastin increasing?

Ophthalmologists have used drugs off label in the eye for several decades. Antibiotics are injected off label in the eye for infections, steroids are injected off label in the eye for inflammation, and other chemotherapeutic agents, such as Mitomycin C and 5 Fluorouracil, have been injected off label in the eye for glaucoma. Off-label use has not been concerning to ophthalmologists in the past. The main reason this is in question now is because the off-label use of Avastin competes with the on-label use of Lucentis, both of which are manufactured by the same pharmaceutical company. The ethical argument of off-label use is being driven by the industry and not by physicians.

Was your study instrumental in persuading doctors to consider using Avastin?

I believe that doctors have good reasons to choose either Avastin or Lucentis for their patients. I believe most physicians discuss the risk and benefits of each drug with their patients, and most physicians allow their patients to choose their preference (acknowledging that their preference is often influenced by what the physician tells them). I also believe that many patients feel that if something is more expensive, it must be better, which we know is not the case with Avastin and Lucentis.

Can you help us understand why ophthalmologists are the biggest recipients of Medicare payments?

Payments to doctors for services rendered are based on several factors, one of which includes expenses that are incurred in clinical practice. For example, while examination of the eye may seem simple and straightforward to the patient, it requires the use of sophisticated microscopes. Equipping one eye exam room costs an ophthalmologist more than $30,000. The use of photography and lasers (some of which can cost over $100,000) are some other examples of costs that are incurred in an ophthalmologist’s practice, and these costs are often recurring because of the need to keep up with advances in technology. Most eye surgical practices have a cost overhead of 60 to 80 percent, depending on the location of the practice. Also, most eye diseases occur in individuals over the age of 65, so a significantly higher proportion of patients in ophthalmology are Medicare recipients compared to, for example, specialties such as pediatrics. The same case holds true for oncologists (who are the second highest recipients of Medicare payments).

So, while I believe that greater transparency is good, and providing this data to the public is useful in many ways, I think one needs to be careful how the data are interpreted. While ophthalmologists appear to get a large share of Medicare payments, they also incur greater costs than any other specialty in medicine, and a large subset of their patient population is Medicare recipients.