Eye doctors say Medicare pay list unfairly flogs them

April 11 (Bloomberg) — U.S. officials, defending a decision to release pay data that suggests some eye doctors made millions of dollars from Medicare, say the list should spur physicians to push lower-cost drugs to their patients.

Doctors say they’re being unfairly flogged for a system they can’t control.

The squabble centers on Roche Holding AG’s Lucentis, a $2,000-per-vial injection for a degenerative eye disease in seniors. Because the treatment’s cost is included in their reimbursement, eye doctors dominated the list of Medicare’s top earners. By listing payments without that explanation, doctors say the government is trying to embarrass and pressure them into switching patients to a lower-cost option.

“It’s a back-door way of rationing rather than being up- front with patients,” said John Welch, a Nebraska eye doctor who was listed in the Medicare data released April 9 as the ninth highest-paid physician in the nation in 2012.

Medicare paid at least $915 million to ophthalmologists whose patients used Lucentis in 2012 rather than a similar medicine, also from Roche, that carries a price tag 40 times cheaper and works equally well, according to studies.

The government hopes the newly public data on physician payments will help control costs in the $604 billion Medicare system by pressuring doctors to be more concerned about the price of the drugs they use, said Jonathan Blum, principal deputy director of the Centers for Medicare and Medicaid Services, which oversees the health program for the elderly and disabled.

Little Choice

“Under the current statutory framework we work under, we cannot encourage or require physicians to use lower-cost drugs that are available,” Blum said in a call on April 9, answering a question about the choice between Lucentis and the cheaper version, called Avastin.

“These are the kinds of questions we want to be asked” by the public and the press, he said.

Doctors immediately pushed back, saying the profit margins they get are similar no matter which drug they use, and it is the patient who makes the final choice.

“If I have an approved drug that the patient has full coverage for, but it costs the government $2,000 every time, I can explain that to them,” Welch said by telephone. “But most of the time it comes down to the patient’s feelings, and what it’s going to cost them out of their own pocket.”

Using Avastin

The controversy over the use of Lucentis in eye patients dates to 2005 when Philip Rosenfeld, a professor at the Bascom Palmer Eye Institute in Miami, began using Avastin, a Roche cancer drug, in patients with age-related macular degeneration, a disease that develops when blood vessels behind the eye leak into the retina. Avastin works similarly to Lucentis by blocking a protein critical to the formation of blood vessels, and studies showed they work equally well.

While Lucentis was in development at the time, Rosenfeld said he didn’t wait for its approval to help his patients. Instead, he turned to Avastin. While Avastin remains unapproved for eye patients, doctors looking to save their patients money now use it regularly in smaller doses than is used in cancer patients.

Ophthalmologists interviewed this week have unanimously said insurance policies and out-of-pocket costs drive drug choice.

Approved Drugs

While Lucentis and Regeneron Pharmaceuticals Inc.’s Eylea are more expensive than Avastin, they are approved by the U.S. Food and Drug Administration. Patients who have Medicare plus supplemental insurance that completely covers the cost typically chose the FDA approved drugs, said Robert Braunstein, an eye doctor in Morristown, New Jersey.

Braunstein made $408,950 from Medicare in 2012, according to the data, placing him in the middle of the ophthalmologist pack. He said there’s not much profit in doing injections, and the price difference doesn’t lead doctors to use one drug over the others.

On the other hand, doctors agreed that patients who have to pay for a portion of the drug’s price elect to receive Avastin, which costs less than $50 total.

Doctors get Avastin from compounding pharmacies, which order vials of the drug made for cancer patients and cut it into smaller portions that can be used in the eye. The drug isn’t approved by the FDA for that use, though there are no prohibitions against it. The compounding process raises the risk of infection. Sporadic recalls of Avastin occur because of eye infections among patients getting it.

Still, patients who have to cover 20 percent of the drug’s cost for injections each month typically choose Avastin, Braunstein said.

Data Weakness

Delving into the Medicare listings reveals the strength and weakness of the payment data on more than 880,000 medical providers. While it shows how the development of high-priced drugs and devices can dramatically skew the costs of care, the complicated system paints a confusing picture of doctors’ prescribing practices.

Welch, based in Hastings, Nebraska, said he was “shocked” to see himself listed as the ninth-highest paid doctor in America, taking in $9.5 million in 2012.

He cares for a large number of Medicare patients with macular degeneration, and administers Lucentis and Avastin, depending on his patients’ choice, he said.

The Medicare data lists Welch as performing 9,317 procedures in 1,268 patients, a number he says is in the right ballpark. He has a large number of patients because “I’m the only specialist in the area,” he said by telephone on April 9.

Misleading

Welch is also listed in the Medicare data as having 5,552 claims for Lucentis, but he says this is misleading.

The drug is billed by the unit and there are five units per injection, an approach he said may appear to inflate his rate. He bills Avastin under a code that can also be used for Eylea, which means it is impossible to tell how many claims he filed for Avastin by itself.

While he won’t say how much he made in total from the agency in 2012, Welch insisted that Lucentis isn’t a high- revenue driver for him. Each vial costs Welch $1,903, he said, and Medicare pays him a margin of about 2.5 percent, which results in $51 he can take home for each dose, he said.

In addition to reimbursement for the drug itself, Welch said he gets a fee, roughly $100, to inject the medicine into a patient’s eye. “In the long run, maybe the data release is beneficial,” he said, “but it sure is confusing.”

–With assistance from Graham Giller in Princeton.

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