PRACTICE WATCH
Tips And News You Can Use

Patent Battles Accompany Eyecare Advances
Lawsuits Abound as More New Products Are Launched.

Competition among eyecare companies is getting fierce, especially in the area of patents and intellectual property. In the past year, several high-profile lawsuits have been filed, charging patent infringement in such areas as glaucoma medications, refractive technology, continuous-wear contact lens materials and replacement microkeratome blades.

These lawsuits are typically brought against a company by a rival seeking to stop the marketing of a competing product. For example, Pharmacia, the maker of the glaucoma medication Xalatan, has sued Allergan, which has introduced a competing glaucoma drug, Lumigan.

"This type of litigation isn't unique to ophthalmology," says attorney Scott Horstemeyer of Thomas, Kayden, Horstemeyer & Risley LLP, an Atlanta-based law firm specializing in patents and intellectual property. "We see this often in electronics, where companies, particularly newcomers, are sued by established companies that have large patent portfolios. In fact, it's almost impossible to be involved in some areas of electronics unless you can establish a large patent portfolio."

Horstemeyer says about 90% of patent infringement suits are settled through cross-licensing agreements, royalty payments or other arrangements.

But why are so many of these suits being filed?

Horstemeyer says one explanation is that competing companies often work on similar product development efforts.

"Whenever you have companies working along parallel lines, there's going to be conflict," he notes. "In one situation, 11 different parties all claimed the rights to the same invention."

Patent infringement suits are also filed to gain a competitive advantage or in an attempt to disrupt a rival's marketing plan, says Horstemeyer.

"A large company can sometimes wear down a newcomer with patent infringement suits," he notes, "making it possible for the larger company to eventually buy out the smaller competitor or run them out of business."

In the Xalatan/Lumigan case, Allergan took the unusual step of first filing a patent lawsuit against Pharmacia in a federal court, saying it filed the suit to clarify its position that Lumigan didn't infringe on patents owned or controlled by Pharmacia. But Pharmacia sued anyway, asserting that the chemical structure of Lumigan violated at least two Pharmacia patents. At this writing, no settlement has been reached.

"Expect to see more of these types of cases," concludes Horstemeyer. "Patent litigation is part of doing business today."

Icahn Seeks Active Role in VISX
Financier Wants Seats on the Board of Directors.

The strange mating dance between billionaire financier Carl Icahn and leading excimer laser manufacturer VISX has taken another turn -- and it may not be the last.

Icahn, who has made billions over the years by buying stock in companies he believes to be undervalued, purchased a 9.9% stake in VISK in late 2000 when the stock was in the low 20s and the laser vision correction market was booming. Attracted by the company's pristine balance sheet and large hoard of cash, Icahn apparently initially viewed VISX as being another undervalued situation. He favored the sale of VISX (at a premium price) to a large, diversified medical device or pharmaceutical company.

When that kind of deal wasn't forthcoming, Icahn said he would buy VISX himself. However, he soon withdrew that bid. He also ended a threatened proxy fight designed to place Icahn nominees on the VISX board of directors.

However, as the months passed and the laser vision correction market weakened, Icahn saw the value of his approximately $125 million investment cut almost in half. In late November, he said that he would seek to take a more active role in VISX by nominating a slate of five "Icahn" directors for shareholder consideration. The company has declined to comment on Icahn's plan, but isn't expected to stand aside while Icahn takes control of the board.

Some analysts believe that Icahn's plan to nominate his own slate of directors is an attempt to put VISX back "in play" as a potential takeover candidate. Others think he sincerely wants to play a more active role in managing the company. In his long career, Icahn has demonstrated that he will take over a company if he feels it the only way to protect his investment. So stay tuned.

Lawmakers Seek Rollback of Medicare Fee Reductions
Legislation also Calls for Changing the Conversion Formula.

Responding to the concerns of physicians' organizations, sponsors in both the U.S. Senate and House of Representatives have introduced legislation that would roll back almost all of the 5.4% across-the-board reduction in 2002 Medicare fees that go to doctors.

If the "Medicare Physician Payment Fairness Act of 2001" becomes law, the 5.4% drop in 2002 fees would be replaced by a 0.9% reduction. Moreover, the conversion formula that determines the fees would be changed to more accurately reflect the actual cost of providing physician services.

Currently, the conversion formula is correlated to the overall economy and the performance of the Gross Domestic Product, which physicians say has almost no bearing on the cost of providing medical services. In addition, physicians' organizations claim that payment information collected by the Centers for Medicare and Medicaid Services as documentation for the initial 2002 fee schedule contained significant errors.

Sponsors of the proposed "payment fairness" legislation, including James Jeffords (I-VT) and John Breaux (D-LA) in the Senate, say a 5.4% reduction in Medicare payments would have a devastating impact on physician reimbursement and put senior citizens' access to doctors' services at risk.

The American Academy of Ophthalmology, the American Society of Cataract and Refractive Surgery and the American Medical Association all strongly support the Medicare Physician Payment Fairness Act of 2001. 

Marketing Musts
Here Are Five Ways to Keep Your Current Patients and Bring in New Ones.

Brad Ruden, president of MedPro Consulting and Marketing Services, says successfully marketing a medical practice isn't just advertising; it encompasses the entire patient experience.

The key is to market smarter, not harder, he says. The best marketing practices aren't necessarily the ones who spend the most, but those who follow a few simple rules and master them well. In this installment of a continuing series of marketing tips, Ruden offers these ways to help improve your practice:

Learn what your patients don't like about your practice and make changes. Are the chairs in the waiting room comfortable? Is the reading material current and varied? Can the staff adequately answer questions? Often, a minor negative experience will stick in the mind of a patient and get passed on to friends and family.

Keep in touch with your patients. Don't take your existing patients for granted. Everyone needs medical care. If patients aren't seeing you, then they're seeing someone else. Once a patient has walked through your doors, all care and diligence must be taken to ensure he keeps coming back.

Network. Are referring physicians kept up to date on your practice and your availability? A monthly or quarterly newsletter to referring physicians is a great way to keep them informed of the developments in your practice, your areas of expertise and your availability.

Send a consistent message to current and prospective patients. Advertising sends a message (or makes a promise) to your patients, but it's your staff that delivers on the promise with your support. Is your message being delivered? Or, are you making a promise that's unreasonable or impossible to keep? You may need to change your ways or change your message.

Have clear objectives. Don't advertise for the sake of advertising, or expand for the sake of expanding. Decide what you want to accomplish, then choose the strategy that will best achieve that objective. Keep in mind the old saying, "If you don't know where you are going, how will you know when you get there?"

Look for more ideas in future issues.

IN THE NEWS

Combining. The Carl Zeiss Group and Asclepion Meditec, both headquartered in Germany, are combining their ophthalmology-related businesses to create a worldwide provider of ophthalmic equipment. The companies' product lines are complementary, with Asclepion the largest provider of refractive surgery systems in Europe and Carl Zeiss a worldwide leader in ophthalmic diagnostic systems. The strong presence of Zeiss in the United States is expected to help Asclepion build sales in the American market.

NovaMed exits. NovaMed Eyecare is discontinuing its management services operations and will now focus on its surgical facilities business. NovaMed operates single-specialty ambulatory surgical centers and laser vision correction centers.

Booming market. The European market for continuous-wear silicone hydrogel contact lenses has doubled in the past year, according to an independent research survey. CIBA Vision's Focus Night & Day lenses, which were recently approved in the United States for 30 days and nights of continuous wear, account for about 60% of silicone hydrogel lens sales in Europe.

New lens company. Steven T. Schuster, formerly president of Bausch & Lomb's North American Lens and Lens Care businesses, now heads Hydrogel Vision Corp., a newly formed division of Benz Research and Development Corp. Hydrogel Vision will manufacture, market and distribute Benz's Extreme-H20 soft contact lenses, which will be sold only through eyecare professionals.

Italian business. Bausch & Lomb has acquired Fidia Farmaceutici's Italian ophthalmic pharmaceuticals business, Fidia Oftal, based in Catania, Italy. Fidia Oftal's product line includes both over-the-counter and prescription products.

REFRACTIVE SURGERY UPDATE

Settlement. Presby Corp and SurgiLight, Inc. have reached a settlement in Presby's patent infringement suit against SurgiLight. The suit involved certain patents used in developing new treatments for presbyopia. In the settlement, SurgiLight acknowledged the validity and enforceability of Presby's current patents and agreed to pay an undisclosed sum of money to Presby. Ronald Schachar, M.D., Ph.D., the president and CEO of Presby, said the terms of the settlement indicated that Presby had "prevailed on all counts." Dr. Schachar added that Presby had requested the U.S. Patent & Trademark Office to re-examine the validity of two of SurgiLight's patents relating to the treatment of presbyopia. Timothy J. Shea, COO of SurgiLight, said SurgiLight's patents are different from Presby's and that his company had paid a one-time fee from existing cash resources to Presby to avoid the cost of further litigation. Both companies are continuing with clinical trials for their respective treatments.

Procedure volume. TLC Laser Eye Centers performed 17,700 paid laser vision correction procedures in the 3 months ending Nov. 30, a drop of 35% compared with the year-ago period. However, the company said it's seen a recent rise in bookings.

Laser Vision Centers, Inc. performed 26,925 refractive surgery procedures in the United States in the 3 months ending Oct. 31, down from 29,659 in the same quarter a year ago.

New leadership. John Hendrick has been named president and CEO of Sunrise Technologies International, Inc, which manufactures laser-based systems to correct refractive conditions. Hendrick, who was formerly the company's chief operating officer, replaces C. Russell Trenary, who has resigned.