Advanced Medical Optics is looking to make deeper inroads into the refractive market by acquiring excimer laser heavyweight Visx. The acquisition, valued at just under $1.3 billion, is scheduled to be final in the first quarter of 2005.

“The strategic question for us was, are we going to just play in the refractive surgery market or are we serious and think this is a category that has long-term growth potential that we want to be a major player in?” says Russ Trenary, AMO’s vice president and chief marketing officer. “The conclusion we came to is that we want to be the number one refractive company out there, and, in our view, there was only one way to get there.”

In addition to adding the excimer laser and CustomVue product lines to its portfolio, AMO feels it’s gaining additional benefits, as well.

“One of the things that Visx is extraordinarily good at is taking care of the customer,” says Mr. Trenary. “I think they have some capabilities that are a little different from ours, especially in the area of practice development. Also, they have a fantastic field service organization, and that’s something that we have not had. Historically, we have outsourced that. And, since Visx has the largest installed base of excimer lasers, we’d like to create the potential for our microkeratome to sit next to each one of those lasers. I think that gives us a great synergy from a product standpoint.”

In Visx’s view, it’s also looking forward to advantages besides a more varied product mix, as well.

“AMO has a broad distribution in the international market,” says Jackie Cossman, Visx’s director of investor relations. “Almost 70 percent of their business is international, whereas for Visx, 85 percent of our business is in the U.S. So, the ability for Visx to take advantage of the international distribution that AMO has set up is clearly something that can help us grow our CustomVue license revenues.”

One of the questions raised by the acquisition is whether the success of either the excimer laser or the Verisyse phakic intraocular lens product line will hurt the other’s business.

“Right now, we believe they’re almost entirely separate categories,” says Mr. Trenary. “The excimer is really the standard of care for the low to moderate myope or hyperope. The phakic IOLs that are being released currently are really targeted for higher levels of myopia or hyperopia. Now, as surgeons gain experience with the phakic IOL, they could experience the temptation to use it for lower levels of myopia. But we think that the preponderance of cases in that low to moderate myopic and hyperopic arena are still going to be performed by the excimer.”

Can surgeons who rely on AMO or Visx products expect a disruption in their service while the acquisition clears its final regulatory hurdles?
“No,” says Ms. Cossman. “In the interim, we’ll function as independent companies. It will really be service, support and business as usual.”

Does Cross-Border Drug-Buying Affect Development Trend
The increasing popularity and debate over the safety of purchasing drugs outside the United States appears to have reached ophthalmologists’ patients. Some suggest it may even have long-term, deleterious effects on drug development.

Glaucoma medications are the primary area affecting eye-care patients. John S. Jarstad, MD, medical director of Evergreen Eye Centers in Federal Way, Wash., says a number of his patients are ordering drugs online through Canadian resellers, and his more computer-savvy patients are spreading the word. “What’s amazing to me is that we have a significant number of ‘snow-birds’ who go south for the winter,” he adds. “They purchase a year’s worth of glaucoma drops, oral anti-hypertensives and cholesterol-lowering agents in Mexico, and the money they save more than pays for the trip.”

Howard Barneby, MD, glaucoma specialist in Seattle and clinical associate professor at the University of Washington, also sees it every day. “I have patients running up to Canada to purchase as many medications as they can, including ophthalmic glaucoma medications. Most patients are savvy; they read the labels, look at the manufacturers and believe that the quality of the product is identical to that purchased in the USA.”

James E. Memmen, MD, chairman of the Department of Ophthalmology at the Prevea Clinic in Green Bay, Wis., says 5 to 10 percent of his patients, most on Medicare, order drugs from outside the country. He notes that the state of Wisconsin actively supports this practice. “Our state’s website lists pharmacies with hyperlinks to them. You can even take your prescription into the office of some firms in Green Bay and they set up the transaction for you.” As in Dr. Jarstad’s office, some of Dr. Memmen’s patients purchase a supply in Mexico. “They don’t even need a prescription there,” he points out. “You just walk into a drugstore and tell them what you want.”

Consumers’ eagerness to find a cheaper source for prescription drugs has been fueled in part by a continuing dramatic rise in their costs. AARP has tracked the wholesale prices charged by pharmaceutical companies (a key factor in the final retail price) for the 197 most frequently used brand-name medications. A recent report produced by AARP and the PRIME Institute at the University of Minnesota, found that in 2000, the average price of these 197 drugs increased 4 percent; in 2001 it increased 4.7 percent; in 2002 the rate hit 6.1 percent; in 2003 prices rose 6.9 percent. The annual rate will almost certainly be even higher for 2004.

And that’s only the average cost. Although some drug prices have showed minimal increases, in the first quarter of 2004 the prices of many top-selling brand name drugs used by seniors—including some eye-care products—increased 9 percent or more. (As a category, beta-blocker wholesale prices increased 5.9 percent during this time.) Overall inflation during the same 3-month period was 1.2 percent.1

Could the potential legalization of drug reimportation affect pharmaceutical R&D?

A September 2004 policy report from the Institute for Policy Innovation says yes. The non-profit, pro-business think tank, which is strongly opposed to drug reimportation, estimates that in the 12 years following the implementation of a price control policy (i.e., legalizing reimportation):

 • R&D spending by pharmaceutical and biotechnology firms could fall by $14.8 billion (in net present value terms).

 • Price control policies could lead to the abandonment of 262 more experimental drugs than would be abandoned if reimportation remained illegal.

 • Because of the reduced inflow of money, only nine new drugs would likely be approved each year—as compared with the current average of 31.

 • States that are home to pharmaceutical and biotechnology firms might also be economically affected by lower investment in pharmaceutical R&D.

Joseph P. Hammang, PhD, director of science policy and public affairs for Pfizer, says, “Importation of drugs is really nothing more than an importation of price controls. Other governments set a price that they’re willing to pay for meds and that’s it. You either sell in that market or you don’t.”

He expressed frustration that people see pharmaceutical companies as the villains. “We’re not in this business to keep medicines from people; we want people to have access to them,” he says. “But we have to stay in business and be profitable. We’re a publicly traded company. And as you know, we put a lot of our money back into R&D. Pfizer alone spends about $7.5 billion a year on research. If revenues fall because of reimported drugs, it’s certain that we’ll see a drop in our R&D expenditures.”

Concerns about the safety of reimported drugs have also been raised as a key issue. “Like the FDA, we’ve examined some samples of reimported drugs here in our laboratories,” says Steve Lederer, senior director of media relations at Pfizer. “The two major bogus things we’ve found are product that’s out of date and package inserts that are inappropriate, including dosage instructions, because they’ve come from another country.”

Mr. Lederer also points out that counterfeiters don’t want to poison people. “These people are happy to put an inert substance into the form of a pill or drop. By not hurting anyone directly, no one starts digging; they can continue to ply their trade.”

Dr. Hammang points out that this doesn’t make counterfeit medicines harmless. “If you’re using an eye drop like Xalatan, but it’s not really latanoprost, it’s not really lowering your IOP,” he says. “People are looking for death and destruction, but the result is more likely to be a patient who’s in danger of losing vision because he’s going untreated.”

Countering the price issue, the industry cites programs that allow uninsured individuals to procure medications from participating manufacturers at reduced cost. “Our program is called Pfizer Friends,” says Dr. Hammang. “You can find the details on our website ( The discount you receive depends on your income. If you’re at twice the poverty level or below, you can get the medicines absolutely free. Above that income level, there’s a sliding scale from a 35 to 40 percent discount—which is better than many Canadian prices—up to about 15 percent off if you make more than $100,000 a year. This is a much safer and more effective way of providing access to medicine than some importation scheme.”

Unfortunately, such programs won’t solve the overall problem of price inequity that’s spurring patients to order from outside the country. As Dr. Memmen observes: “We’re coming up to what appears to be a catastrophic dislocation of people’s expectations in regards to medications and what they’re willing to pay for them. At some point there will be sufficient popular support that the government will have to get involved and negotiate prices directly with the pharmaceutical companies. To survive as entities, they’ll have to cut back on their R&D. I think it’s inevitable.”

1. Medi-Span Price-Chek PC; Indianapolis, IN: Wolters Kluwer Health Inc., May 2004. You can read the complete AARP report at prices.pdf.

Zeiss Acquires LDT
Carl Zeiss Meditec Inc. and Laser Diagnostic Technologies Inc. signed a definitive agreement for Carl Zeiss Meditec’s acquisition of LDT last month. LDT invented and commercialized its proprietary GDx ocular nerve fiber measurement instrument. The transaction is expected to close in approximately 30-45 days, pending the requisite company and shareholder approvals.
“Carl Zeiss Meditec is committed to providing innovative and technologically superior eye care solutions that improve patient care and enhance clinicians’ practices across the full spectrum of ophthalmic disease states,” said Jim Taylor, president and CEO of Carl Zeiss Meditec, Inc. “This acquisition is another important milestone of our growth strategy. It will further strengthen our technology portfolio and undisputed leadership in the growing market of glaucoma diagnosis and management. Looking forward, we will continue our aggressive growth through pursuit of both internal and external potentials.”

LDT President and CEO John Moore noted that this deal is a reflection of the successful evolution of the company’s GDx technology. “We are pleased by the response of our customers to these recent advances, and this enthusiastic acceptance validates the hard work of our entire LDT team. We expect ongoing adoption and utilization of this technology, especially with the support and capabilities of the Carl Zeiss Meditec organization. I believe that this merger is in the best interests of LDT’s customers and shareholders.”

LDT’s main product GDx VCC is a dedicated glaucoma diagnosis and management tool. It complements the market presence of Carl Zeiss Meditec’s Stratus OCT, which is a multipurpose retinal imaging system used not only for the diagnosis of glaucoma, but also for a wide array of conditions including AMD, diabetic retinopathy and pre-and post-cataract assessment. Thus, the GDx VCC targets especially at customers who do not require the full range of capacities as offered by the Stratus OCT.

FDA Clearance for First Cornea Laser Microscope
Heidelberg Engineering received Food and Drug Administration clearance for the Rostock Cornea Module, the key component for the company’s confocal laser microscope. The new product can image and measure corneal structures and diseases that were previously difficult, or even impossible, to see. The Heidelberg product is the first FDA cleared microscope using laser scanning technology for directly imaging a patient’s cornea. The new product displays magnified images of the internal structures of the cornea, enabling the clinician to directly view the cell layers and individual cells in real-time. This may prove especially important for recognizing parasitic infections which are affecting long term contact lens wearers in increasing numbers. The module connects directly to the HRT II, the company’s laser imaging instrument for glaucoma.