DaVita, the company that provides my dialysis services, may be heading for deep trouble, according to Andrew Pollack in the New York Times. Fully 40% of DaVita’s US$290 million profit in 2006 comes from administering Epogen, a drug used to treat anemia in dialysis patients by raising red blood cell production, according to the Stanford Group Company.
The US Food and Drug Administration has forced Amgen, the manufacturer of Epogen, to provide more complete warnings—including a black box warning—for the drug and is considering additional restrictions. Overusing Epogen can lead to complications including blood clots, heart problems, and death. DaVita was criticized for overusing Epogen at a June congressional hearing.
As a result, Medicare—almost all dialysis patients are covered by Medicare, regardless of age—and Congress are interested in separating the Medicare reimbursement for dialysis from the administration of Epogen. This, so the thinking goes, would remove the incentive to overuse Epogen. But some warn that doing so would create a new incentive to dangerously reduce Epogen levels in order to increase profits.
And now, according to Pollack’s report, “law enforcement authorities, including those at the Justice Department and at the Health and Human Services Office of Inspector General, are conducting criminal and civil investigations into how DaVita and some other dialysis providers bill for Epogen.”
“Renal Data System figures show that more than 60 percent of DaVita patients have red blood cell levels that the F.D.A. considers risky. A Renal Data System study from 2006 found that DaVita was the company most likely to overshoot recommended red cell levels and was the slowest to reduce doses once this occurred.”
For what it’s worth, my Epogen dosage is prescribed by my nephrologist—who may or may not have a financial stake in the DaVita clinic—and my blood chemistry has remained within the FDA guidelines for the seven years I’ve been on dialysis. I don’t know if that has anything to do with my continuing to remain on private insurance rather than Medicare, but it certainly could be a factor.
Pollack states that “dialysis clinics lose money on the fee paid by Medicare for a dialysis treatment because the payments haven’t kept pace with inflation.” Let me get this straight. DaVita reaps 40% of its profits from Epogen and the other 60% comes from—what—volume? Pollack goes on to offer a partial explanation:
“Amgen offers discounts and rebates to dialysis companies based, in part, on how much Epogen they use and how much that use increases year to year. DaVita says in regulatory filings that failure to qualify for such discounts could have a ‘material adverse effect’ on the company’s earnings. ... In a letter to Amgen in February 2006, DaVita protested terms of a new contract, saying it would face huge financial penalties if it didn’t increase usage of Epogen by 4 percent.”
Pollack reports the often-repeated statistics regarding dialysis: a 20 percent annual mortality rate that is double that of Europe and Japan. Here’s a clue: I’ve been a DaVita dialysis patient since 2000. Each year, the quality and efficacy of care has diminished. For example, several years ago the company saw fit to replace a nursing staff with more than 100 years of cumulative dialysis experience with a staff who’s senior member had six months experience in dialysis.
The duopoly of DaVita and its main competitor, Fresenius Medical Care, control roughly 66 percent of the dialysis business in the US. I’d like to see a study examining the outcomes of the remaining third of US dialysis patients who receive care from non-profits, independents, and smaller chains. My bet would be that their mortality rates are more in line with those of Europe and Japan. Pollack cites “a study published in April in The Journal of the American Medical Association, [finding] for-profit clinics use $1,700 more of Epogen on each patient every year than nonprofit centers do.”
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