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Malpractice Insurance Rates Are on the Rise
Ophthalmologists' Premiums Increased in the Past Year.

When it comes to malpractice insurance rates, there's some good news and also some bad news for ophthalmologists.

The good news is that ophthalmologists' continue to pay relatively low malpractice insurance premiums, particularly when compared with obstetrician-gynecologists, orthopedic surgeons and some other medical specialties that have been the subject of recent malpractice insurance horror stories.

"For OMIC, depending on where an ophthalmologist is practicing, he or she is currently paying anywhere from $7,000 a year to more than $30,000 for malpractice insurance," says Padovese. "In North Carolina, it's about $7,000, but in Miami, Florida, it's $31,000. While there are swings, it should be noted that the majority of ophthalmologists are paying between $9,000 and $12,000."

Padovese says several factors have caused rates to rise in the past year, including the withdrawal of a number of insurance companies from the malpractice market, lower returns on insurance companies' investment portfolios, the higher cost of reinsurance, and the increased frequency and severity of malpractice claims.

"Our business has grown in the past year because we've added a large number of new policyholders who were abandoned by their former insurers," says Padovese. "We're now the largest insurer of ophthalmologists with about a 30% share of the market."

Padovese says OMIC's rates are generally competitive, and sometimes lower, than other companies currently writing malpractice insurance for ophthalmologists.

OMIC policyholders who perform refractive surgery or administer Botox don't pay any extra surcharge. However, OMIC has initiated special underwriting guidelines and risk management programs, and is monitoring claims experience on both procedures.

"OMIC is sponsored by the American Academy of Ophthalmology," notes Padovese. "We prefer to return profits to our policyholders in the form of dividends. We only raise rates when increases can't be avoided, and that's the situation right now. We raise rates sufficient to cover our losses and operating costs, and to build the company's capital sufficient to maintain OMIC's sound financial position."

IN THE NEWS

Xalatan approval. Pharmacia's glaucoma medication Xalatan has been approved by the FDA as a first-line treatment for elevated IOP associated with open-angle glaucoma or ocular hypertension. Xalatan, which was initially introduced in 1996, had already been approved as a second-line treatment. The first-line indication was granted by the FDA following a 5-year safety study of the drug.

Myopia medication. Valley Forge Pharmaceuticals Inc. has granted Novartis Ophthalmics exclusive rights to develop and commercialize the first pharmaceutical treatment for myopia. In Phase II clinical trials, the compound Pirenzipine has been shown to reduce the progression of myopia in children by at least 50% in the first 12 months of therapy. Pirenzipine is administered as an eye gel twice a day.

AMO agreement. Advanced Medical Optics (AMO) has made its initial entry into the back-of-the-eye segment of eye care by reaching a worldwide distribution agreement to market an AMO-branded vitreal retinal system manufactured by Optikon. AMO describes the system as a full-featured, yet compact, workstation.

Visudyne trials. Novartis Ophthalmics and QLT Inc., the co-developers of Visudyne therapy for wet AMD, report that preliminary 6-month data for a study of 117 patients indicates that Visudyne demonstrates statistically significant effectiveness in reducing the progression of minimally classic wet AMD. Currently, Visudyne therapy is approved in the United States for the treatment of predominantly classic wet AMD, but not for occult or minimally classic AMD.

Dry eye treatment. Inspire Pharmaceuticals, Inc. announced it will file a New Drug Application (NDA) for its INS365 Ophthalmic treatment for dry eye, based on safety and efficacy data from 1,200 patients who took part in clinical trials. The company said it decided to file the NDA after meeting with the FDA.

Restasis Wins Approval as Dry Eye Treatment
Allergan Drug Is First to Stimulate Tear Production.

Allergan, Inc. received an early Christmas present on Dec. 24 when the FDA approved cyclosporine ophthalmic emulsion, 0.05% (Restasis), the company's long-awaited treatment for chronic dry eye disease (CDED). Approval came after Allergan conducted additional confirmatory trials, which the FDA requested when it initially refused to approve the drug in late 2000.

It's estimated that more than a million people in the U.S. suffer from CDED, with the incidence of the disease increasing markedly with age, particularly after menopause in women. Individuals with systemic diseases such as Sjogren's syndrome, lupus, rheumatoid arthritis and diabetes are especially susceptible to CDED.

In pivotal Phase III studies, Schirmer wetting tests confirmed that application of Restasis led to statistically and clinically relevant increases in tear production for patients with CDED, also known as keratoconjunctivitis sicca. Increased tear production wasn't demonstrated in patients who were taking anti-inflammatory drugs or using punctal plugs.

The tear production of dry eye sufferers is presumed to be suppressed due to ocular inflammation. Restasis is thought to act as a partial immunomodulator with anti-inflammatory effects, though the exact mechanism of the drug's action isn't known.

Allergan said patients with active ocular infection, or who are hypersensitive to any of the drug's ingredients shouldn't use Restasis. In clinical trials, the most common adverse event was ocular burning, which occurred in 17% of patients.

Allergan won't be the only company to benefit from Restasis' approval. In 2001, Inspire Pharmaceuticals, which had been developing its INS365 Ophthalmic dry eye treatment, entered into an agreement with Allergan that will enable both companies to share in any profits from Restasis and INS365 Ophthalmic. Inspire has the right to co-promote Restasis in the United States and will also receive royalties on international sales of the drug, excluding Japan, Taiwan, China and Hong Kong. Allergan received certain rights to develop and commercialize INS365 Ophthalmic.

Be Wary of Accepting Drug Company "Perks"
New, Strict Guidelines Ban All But Modest Gifts.

When the Pharmaceutical Research and Manufacturers of America (PhRMA) released its code of conduct for drug company interactions with healthcare professionals last July, the guidelines were designed specifically to govern drug company behavior. The goal was to end the longstanding practice of pharmaceutical companies rewarding physicians with valuable and often questionable "perks" in exchange for referrals.

If you don't adhere to the guidelines, you could be charged with a violation of federal and state anti-kickback laws, as well as other federal criminal laws.

Mark Langdon, an attorney with the Washington, D.C. law firm of Arent Fox, which represents many ophthalmology practices, says the overall intent of the guidelines is to ensure that interactions between drug companies and physicians always benefit patients and enhance the practice of medicine. He offers the following advice to physicians:

• Only accept gifts of modest value that relate to your work and/or entail a benefit to patients. Appropriate gifts include pens, notepads, coffee mugs and office snacks. You can also accept diagnostic equipment or medical/scientific textbooks of modest value.
• Never accept cash or cash equivalents unless you're performing actual, documented services for the drug company.
• If you perform services for a drug company, you should have a written contract and receive reasonable, fair market value compensation for real and necessary services rendered. Be wary of token consulting or advisory arrangements where the benefits significantly outstrip any contribution you make.
• In regard to continuing education events, don't accept grants or benefits for merely attending the event. You also shouldn't accept funds to defer travel and lodging expenses unless you're providing legitimate services at the event.
• Don't accept cash or cash equivalents to attend product launches or presentations about new label indications.
• You should never, directly or indirectly, bill patients or third-party payers for products that are labeled as samples.

Langdon notes that these are basic standards of behavior. To be safe, check with your attorney before agreeing to any type of consulting, advisory or other business relationship with a pharmaceutical company.

REFRACTIVE SURGERY UPDATE

Court rules for Nidek. A U.S. District Court has reversed a jury verdict and ruled that Nidek's EC-5000 excimer laser doesn't infringe on two patents originally owned by Summit Technology. Summit was acquired by Alcon in 2000. Alcon said it will appeal the court's ruling.

SurgiLight clinical trials. SurgiLight, Inc. has received FDA approval to begin clinical trials using its OptiVision laser system as a treatment to reverse hyperopia. The procedure involves making eight small laser cuts in the white of the eye to expand the lens globe and allow the eye to focus again at different distances.

Intacs sales increase. Addition Technology, Inc., the maker of Intacs prescription inserts for surgical vision correction, said U.S. sales in the fourth quarter of 2002 jumped nearly 87% over the year-ago period. A company spokesperson said fourth-quarter Intacs revenues were solidly in six figures, an indication that a significant number of low myopes preferred surgical correction to laser correction.

LCA-Vision outlook. LCA-Vision, a provider of laser vision correction services, said it expects to return to profitability in the first quarter of 2003. The company said a recent 10% rise in procedure volume, improved eye exam bookings and higher conversion rates are expected to translate into operating earnings. LCA-Vision recently opened new LasikPlus vision correction centers in Cleveland and Louisville, Ky., increasing the number of LasikPlus centers in the United States to 33.

LASIK patient sues B&L. A woman who claims she sustained "severe and permanent injuries" during her LASIK procedure is suing Bausch & Lomb for $40 million. In a suit filed in New York State Supreme Court, the woman claims that the Accu-Glide microkeratome blade broke during the procedure. A B&L spokesperson said the Accu-Glide blade had never before been the subject of a lawsuit.