EVENT: Photodynamic Therapy with Visudyne held a prominent position at the American Academy of Ophthalmology
meeting. A national policy regarding physician payment levels for PDT is likely to be published in the November Federal
Register.
IMPACT: Positive:
• Subgroup analysis of the VIP trial demonstrates that a treatment benefit could eventually be shown in occult AMD patients. Some physicians are starting to treat highly selected patients, but good penetration in this market will require additional positive data.
• Visudyne is likely to have a deep penetration in pathologic myopia patients.
• Serious competition is not likely for three to four years.
• Reimbursement criteria is improving at the local level, as restrictive criteria for patient eligibility is slowly being
removed. However, some physicians continue to be confused as to how much they are receiving to do the procedure
and therefore prefer to remain on the sidelines until the situation clarifies.
Neutral:
• Retreatment rates differ, with some recommending less and some more aggressive treatments. There is no clinical
data to support either approach at this point, but QLT/CIBA Vision is starting a more aggressive treatment trial.
Negative:
• The national reimbursement policy to be implemented in January 2001 for physician payment (this does not affect the
drug) is likely to set a lower-than-anticipated level. This is somewhat counterbalanced by the zero global period
expected. Clarity around physician payment is likely to be welcomed by many.
We believe the information presented at the meeting is a net positive and is likely to lead to increased usage of Visudyne
in the coming months. The lower-than-expected level of reimbursement is likely to lead to an initial negative reaction
from physicians, but we believe it will not affect eventual penetration.
The global period is a major win, especially if more aggressive treatments will be adopted, and will probably make up for
the lower-than-expected physician payment. However, investors are likely to react negatively to the lower-than-expected
level of physician reimbursement and the stock may weaken in the short term as the information is circulated or gets
published in the federal register.
DETAILS: Photodynamic therapy with Visudyne held a prominent place at the retina subspecialty day of the AAO
meeting. The following summarizes the important points.
Occult AMD
A subgroup analysis of the VIP trial demonstrated that, although Visudyne did not lead to a difference in the number of
occult AMD patients with a three lines of vision or more (primary endpoint of the trial), it did have a positive statistically
significant impact on the secondary endpoints such as mean visual acuity loss, likelihood of maintaining 20/200 vision,
likelihood of losing six lines of vision or more, etc.
Study investigators concluded that Visudyne does appear to have a slight treatment benefit in this sub population, but not
enough to recommend treatment at this point. However, the positive secondary endpoints bode well for the two-year VIP
data expected early next year, but especially for the new occult AMD Phase III trial which is about to start. From our
discussion with physicians at the conference, some currently do treat the odd highly selected occult patient.
Who Should be treated:
A panel of experts was convened to come to a consensus as to who should be treated with Visudyne. The recommendations were presented at the academy meeting:
• Predominantly classic subfoveal AMD patients and some juxtafoveal.
• All Pathologic myopia patients
• Other eye diseases, such as angioid streaks, OHS, etc.
• All lesion sizes should be treated
• All patients should be treated regardless of vision provided treatment is likely experience benefits in their
day-to-day activities.
Pathologic myopia
There was a great deal of excitement surrounding the use of Visudyne for pathologic myopia patients, as the treatment
benefit is substantive and other alternatives (surgery) are not attractive. Visudyne approval for this indication could occur
as early as year-end.
Patient follow-up and Retreatments
Following the first treatment, many experts believe patients should be seen before 90 days, since some patients will have
reopened vessels before that time. Some believe patients should be treated earlier than three months if vessels reopened.
QLT/CIBA Vision’s trial looking at more aggressive treatments (every six weeks in the initial six-month period) will
address this question in a definite way.
In the meantime, we are likely to see some physicians treating more aggressively than in the clinical trials, and others less
aggressively, but there is no clinical data to support either approach at this point. With the absence of any solid “average”
on re-treatment we maintain our current estimate. The recommendation is to continue to see patients even if a treatment is
skipped, as vessels may start leaking again. Wet AMD is a chronic disease and until the vessel growth stimulus remains,vessels may start growing or leaking again. A small number of patients in the TAP trial who have been followed for more than two years continue to receive treatment.
Competition:
These can be divided into three groups: other photosensitizers, anti-angiogenic agents and others.
1. Purlytin's Phase III clinical trial is continuing. We are not likely to get any data until ARVO in early May. An
interim analysis was to have been done in the fall. Since the trial is continuing we can only conclude that results were
not strong enough to present at this time, but good enough to continue the trial. We continue to believe that
photosensitivity issues with this product will severely limit market penetration. Lutex continues to be in Phase II, but
we have not heard much progress. The issue with the product continues to be finding a dose at which 100% of the
blood vessels close without causing any side effects. The water solubility of the drug makes this hard to achieve.
2. Antiangiogenic agents. Development of Agouron's MMP inhibitor has been suspended due to lack of effectiveness in
Phase II trials. There are two Vegf blockers (one an aptamer the other a MAB fragment ) in Phase I trials. Given the
early stage of development, neither is likely to be available for at least four years. Both products must circumvent the
problems inherent in delivering a drug to the back of the eye. Alcon has started a large trial looking at combining
Visudyne with an anti-angiogenic steroid. Data is not expected for two years.
3. TTT is in a large trial of occult AMD. The technique remains controversial given that the only data to date stems
from uncontrolled trials and many occult patients can maintain their vision for a long period of time, therefore making
it difficult to assess any treatment benefit. Surgical treatments such as sub-macular surgery and translocation remain
in clinical trials, but enthusiasm is not high. Feeder vessel treatment is being looked at, but feeder vessels can be very
difficult to detect.
Reimbursement
Although reimbursement policies were very restrictive initially, local carriers have been loosening their eligibility criteria
over the past few weeks. Most changes have surrounded the visual acuity criteria. Many who originally had restrictive
eligibility criteria are no longer restricting treatment to patients with vision of 20/200 or better.
HCFA is likely to publish a national policy for physician payment in the Federal Register in November for
implementation January 1, 2001. Payment levels for procedures are all determined in a similar fashion. A survey is done
to determine the amount of time required to undertake a treatment. Based on this survey relative value units (RVU) are
assigned to the procedure. This is multiplied by a certain amount to give us the payment level for a procedure. Each
RVU is worth US$36.61 in ophthalmology. There is then an overhead amount, which is quite large in ophthalmology,
added to give the full payment level for a procedure.
The payment level for photodynamic therapy (PDT) was arrived at by the same process, and should therefore be "fair"
vis-à-vis other procedures. However, with PDT, physicians do have an additional US$230 "profit" that comes from the
drug.
During a Medicare update lecture, academy representatives stated that they believed physician payment for undertaking
photodynamic therapy will come out somewhere between US$280 and US$350. However, there will be a zero-day global
period. This signifies that (1) a physician will be able to redo the procedure at shorter intervals than every three months
and receive another payment. This is especially important if QLT's new trial looking at retreatment every six weeks
shows a better outcome. (2) Physicians will be able to bill for any follow-up visits and examinations (this can be US$140
if the full battery of patient assessments are done) at any time after the procedure.
This has no impact on the drug reimbursement which will continue at US$1,458.
The payment level is anticipated to be published in the federal register in November and may differ, as the decision is up
to HCFA (Health Care Financing Administration).
The [procedural reimbursement] range is lower than the US$400-500 expected by QLT. But the lower level is counterbalanced by the zero global
period. If we assume a payment level of US$325, physicians will make US$555 per treatment (US$230 including the
“profit “ on the drug) plus any payments for patients assessment for any follow-up examinations (which can be up to
US$140). This compares to US$680 if the physician payment would have been US$450.
This lower-than-expected level of reimbursement is likely to lead to a negative reaction from physicians. Some
physicians may decide not to undertake PDT and refer their patients to others, if they expect to have a low volume, but we
don’t expect that many retinology practices will not undertake PDT given the prominence of AMD patients in their
practice and the potential revenue generation.
RECOMMENDATION: We believe the information presented at the meeting is a net positive and is likely to lead to
increased usage of Visudyne in the coming months. The lower-than-expected level of reimbursement is likely to lead to
an initial negative reaction from physicians, but we believe it will not affect eventual penetration.
The global period is a major win, especially if more aggressive treatments will be adopted, and will probably make up for
the lower than expected physician payment. However, investors are likely to react negatively to the lower-than-expected
level of physician reimbursement and the stock may weaken in the short term as the information is circulated or gets
published in the federal register.
We maintain our Top Pick rating and $150 target price and would buy on any price weakness resulting from concerns
over reimbursement levels. |
