DaVita: Lawsuit Says Drugs Were Wasted to Buoy Profit

July 25, 2011
DaVita: Lawsuit Says Drugs Were Wasted to Buoy Profit

By ANDREW POLLACK
One of the nation’s largest providers of kidney dialysis deliberately wasted medicine in order to reap hundreds of millions of dollars in extra payments from Medicare, a former clinic nurse and a doctor are charging in a whistle-blower lawsuit.

The lawsuit says that the company, DaVita, used larger than necessary vials of medicine knowing that Medicare would pay for the unused portion of each vial if it were deemed unavoidable waste. DaVita, which treats nearly a third of the nation’s dialysis patients, denies the accusations.

The accusations are the latest related to how financial incentives may have driven overuse of pharmaceuticals in the dialysis business. In January, Medicare began a payment system that pays for the overall treatment and does not pay separately for the drugs accompanying it. Many practices, including the size of some vials used, suddenly changed, providing an instant case study of how financial incentives can influence treatment choices.

The lawsuit says that until January, for example, DaVita required nurses to use one 10-microgram vial of Zemplar, a vitamin D drug, instead of a six-microgram dose in three two-microgram vials,. It then billed Medicare for all 10 micrograms even though four went unused.

Instead of giving an entire 100-milligram vial of Venofer, an iron drug, once or twice a month, the clinics gave 25-milligram doses more frequently, the suit says. But since the drug came only in a 100-milligram vial, Medicare was billed for 100 milligrams for each dose, even though 75 milligrams were wasted, the lawsuit says.

The federal government investigated the claims for more than two years and decided in April not to join the lawsuit. The lawsuit, filed in October 2007, was then unsealed. The nurse and the doctor filed an amended complaint, with more data and evidence, on Monday in United States District Court in Atlanta.

Bill Myers, a spokesman for DaVita, said that the federal government’s decision not to pursue a case against his company suggested the accusations were weak. He also said that Medicare had approved the dosing plans but that he could not provide proof of that until it was presented in court.

Medicare, which pays for most dialysis treatments, used to reimburse clinics separately for the drugs they used. Clinics could make a profit because Medicare would pay slightly more than the clinics paid to buy the drugs.

In January, to deter overuse of drugs, Medicare instituted a new system in which it pays a fixed amount per treatment, including most of the drugs used. If the clinic can treat the patient for less than the amount paid by Medicare, it makes money; if not, it loses money.

This so-called bundled payment system has instantly turned drugs from a source of profit to a cost to be avoided. And dialysis clinics have responded.

Take Amgen’s Epogen, an anemia drug that is Medicare’s largest drug expenditure for dialysis. American clinics in the past have used far more of the drug than clinics in most other countries.

That high use possibly endangered patients because studies have shown that aggressive use of the drug can increase the risks of heart attacks and blood clots. But with the new payment system in place, clinics are using much less of the drug. Amgen’s sales of Epogen, all of which are for use in dialysis in the United States, decreased 14 percent in the first quarter of this year to $535 million. Analysts expect further declines.

In another example, new treatment guidelines now allow clinics to use less vitamin D than they once did.

Mr. Myers, the spokesman for DaVita, said the larger but fewer vials for Zemplar helped minimize needle sticks and protect patients and nurses from possible infection.

But giving Venofer, the iron drug, in smaller and more frequent doses would increase needle use, violating that policy. In the case of Venofer, Mr. Myers said, the small doses were thought to be better for the patient.

In any case, he said, doctors, not DaVita, chose the doses and there was no requirement for use of smaller doses. The plaintiffs do not provide documentary proof that such a requirement existed, but they do provide records from one clinic in Georgia showing it wasted twice as much Venofer as it actually gave to patients.

Dr. Michael Auerbach, an expert on iron drugs at Georgetown University who is not involved in the lawsuit, said there was “no clinical reason” and “no safety reason” for giving Venofer in 25-milligram increments.

Dr. Daniel Coyne, a nephrologist at Washington University School of Medicine who treats some patients at DaVita clinics, said it was “absolutely true” that the iron drug was given a bit at a time to make more money.

In 2008, the latest year for which figures are available, DaVita spent more per patient on iron drugs than other dialysis chains, according to figures from a government-funded program that tracks dialysis. DaVita also had the highest expenditures on vitamin D drugs and Epogen.

“How could it possibly be that patients in DaVita facilities were getting so much more iron than patients in other facilities and not getting iron overload?” said Dr. Coyne, who is not associated with the lawsuit. “The answer is the iron wasn’t going into them. It was being thrown away to make a profit.”

For Epogen, the anemia drug, Medicare paid for the amount actually used, not per vial. So no Epogen was wasted, according to the lawsuit.

One of the men who filed the lawsuit was Daniel D. Barbir, a nurse who served from 2000 to 2006 as director of a dialysis clinic in Cumming, Ga., that was owned by Gambro, a major dialysis chain acquired by DaVita in 2005. Mr. Barbir resigned in 2006 after complaining about the practices, according to the complaint.

Dr. Alon J. Vainer, a nephrologist who was a medical director at various Gambro and DaVita clinics in Georgia, is the other plaintiff. He said in an interview that his positions were not renewed after it came to light that he had filed the lawsuit.

Dr. Vainer said he and Mr. Barbir “saw how ridiculous the whole thing was,” but could not get the system changed. “He tried on his level but had to cave in, and I tried on my level and got zero, zero, zero response,” Dr. Vainer said.

Dr. Vainer said that, strictly speaking, doctors could choose doses, but most went with DaVita’s recommended protocol.

With the new payment system taking effect this year, DaVita has now changed the policies regarding the iron and vitamin D drugs. DaVita has switched to a cheaper vitamin D drug that comes in a greater range of vial sizes, the lawsuit says. And Venofer is now to be given in increments of 100 milligrams or 50 milligrams, a new vial size, not 25 milligrams, according to a copy of DaVita’s new protocol for the drug, which is attached as an exhibit to the amended complaint.

Asked why DaVita has a protocol if doctors choose the doses, Mr. Myers of DaVita replied in an e-mail: “For many reasons, treating physicians asked for a stronger clinical application tool for iron therapy and we were able to offer one contemporaneously with the new billing system.”

http://www.nytimes.com/2011/07/26/health/26dialysis.html?_r=2&scp=1&sq=kidney+dialysis&st=cse