Dialysis Centers Turn 11 Percent Profit on Medicare Payments for Biologic Epogen

[okarol]

Dialysis Centers Turn 11 Percent Profit on Medicare Payments for Biologic Epogen
     
 Biologic News From June 2007- News About Biologics

Large operators of dialysis centers like DaVita Inc. and Fresnius Medical Care & Co. are able to buy Amgen's biologic anemia drug Epogen at a discount that enables them to turn an 11 percent profit on reimbursement by Medicare, according to data presented to a Congressional panel on June 26th.

Medicare spends more than $2 billion a year reimbursing dialysis centers for Amgen biologics used to treat anemia in patients with kidney disease, and DaVita and Fresnius -- which control 2,868 U.S. dialysis clinics -- were able to purchase Epogen for 5 percent less than non-chain clincs, according to the Inspector General of the Department of Health and Human Services.

The House Ways and Means Health Subcommittee was presented with the data at a hearing called to probe whether the current reimbursement system creates a profit incentive for overuse of the drug, both driving up Medicare costs and putting patients at risk.

Earlier this year, Gary Lieberman, an analyst at Stanford Group, said that for DaVita, buying Epogen from Amgen -- then obtaining reimbursement for each dose administered to dialysis patients -- makes up about 44 percent of the company's earnings before interest, taxes, depreciation and amortization.

Health Subcommittee Chairman Pete Stark (D-CA) has suggested that moving to a bundled payment system, where drug costs would be lumped into Medicare reimbursement for all other dialysis-related services, might remove any profit incentive for using Epogen to raise red-blood-cell counts to a dangerously high level.

"Bundled payments would encourage more efficient use of ESAs," Stark said.

Medicare Administrator Leslie Norwalk agreed that a bundled payment system could help the government better manage costs, but said her agency was still trying to workout how the system would operate. Implementation of such a system, she made clear, would be years away.

Meanwhile Amgen, which was not invited to testify at the hearing, submitted written testimony noting that use of Epogen appears to be more conservative since the FDA added labeling in March warning doctors that overprescribing the biologic can increase risk of death.

"When considering the impact of current reimbursement policies and
revised product labeling on patient care, it's important to look at
data collected after current changes were made and communicated to the
community," explained Dr. Robert Brenner, executive director,
Nephrology Medical Affairs at Amgen.

"Although these policies have only been in effect for a short period of time, we're seeing early indication that changes in clinical practice patterns are underway. The full impact has not yet been determined," said Brenner.

"Based on the best available scientific evidence and utilization data, there does not appear to be a compelling policy or clinical rationale to immediately make fundamental, untested changes to the dialysis payment system," said Dr. Joshua Ofman, an Amgen vice president.

 http://www.biologicdrugreport.com/News/news-062607.htm