Healthy Skepticism Library item: 6369

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Rowland C.
Some see profiteering in clinics' use of drug
Boston Globe 2006 Oct 24
http://www.boston.com/business/globe/articles/2006/10/24/some_see_profiteering_in_clinics_use_of_drug/

Full text:

Some see profiteering in clinics’ use of drug

US may spend $537m needlessly
By Christopher Rowland, Globe Staff

The method most dialysis clinics use to give patients a critical anti-anemia drug may needlessly cost the federal government as much as $537 million annually while generating additional profits for its manufacturer and clinics.

The drug, Amgen Inc.‘s Epogen , is a synthetic hormone that replenishes oxygen-carrying red blood cells and restores energy in patients with kidney failure. Medicare spends more on Epogen than on any other drug, almost $2 billion a year.

About 95 percent of the nation’s 325,000 dialysis patients receive Epogen intravenously, but studies have shown dialysis clinics could use 30 percent less if it was administered subcutaneously — injected beneath the skin. Epogen remains in the body longer when injected, requiring a lower dose.

Switching to injections could result in more than half a billion dollars in savings for Medicare, which pays for most dialysis treatment and dialysis-related drugs in the United States.

The dialysis industry — dominated by two for-profit chains, DaVita Inc. with 1,250 clinics and Fresenius Medical Care AG with 1,500 — says it uses the intravenous method because patients are already hooked to IV tubes for dialysis, making it more convenient.

Critics say the industry is motivated by profits.

Federal law guarantees clinics at least a 6 percent profit on Epogen — the difference between the cost of buying it from Amgen and the reimbursement rate Medicare pays.

“They do it to milk the system,” said Dr. Noshi A. Ishak, a kidney specialist who owns an independent dialysis clinic in Laconia, N.H., where patients receive Epogen by injection. Other clinics “give it intravenously because that will add to the bottom line,” he said.

Ishak said Amgen sales representatives have told him he could boost his earnings by following the lead of DaVita, Fresenius, and other clinic operators. He said he does not want to profit by giving patients unnecessarily large doses of an expensive drug.

“It’s a waste,” Ishak said.

Forest Toates, 68, receives dialysis treatment three times a week at the Laconia clinic. He grimaced when a nurse jabbed his shoulder with a needle on a recent afternoon. Toates said he is willing to tolerate a needle if it saves the government money.

“We as taxpayers are paying the freight,” he said.

The average annual cost of Epogen for a dialysis patient was about $6,000 in 2002, according to comprehensive figures published in the American Journal of Kidney Disease. The study, authored by researchers at Henry Ford Hospital in Detroit, said switching to injections would cut that by 30 percent — an average of $1,761 annually per patient — accounting for the potential $537 million in savings. The figures were based on use of the drug in highly controlled trial settings, not in actual clinics. A 2004 analysis of subcutaneous use in clinics found patients were given 21 percent less Epogen, a potential total savings of about $375 million.

Fresenius, a German corporation with North American headquarters in Lexington, did not respond to requests for comment for this story.

At DaVita, based in El Segundo , Calif., chief medical officer Charles McAllister said doctors at its clinics determine the best way to give patients Epogen.

“We don’t have any opinion on subcutaneous or intravenous Epo,” McAllister said. Profit is not a factor in making clinical decisions, he said.

A recent estimate in the academic health journal Health Affairs said 22 percent of dialysis clinic revenue comes from Epogen.

Dr. Robert Brenner , Amgen medical director, said patients are already hooked up to dialysis machines, so giving it through a dialysis IV is simpler and painless.

“It is important for patients and physicians to make their own decisions,” he said. “Where patients are hooked up to a blood line to a dialysis machine, there would be some logic to have that administration occur intravenously, as opposed to having that patient exposed to an additional injection.”

Amgen, based in Thousand Oaks, Calif., acknowledges that injections require less Epogen, but said some studies indicate it is more difficult to predict how patients will respond and how large a dose to give when it is administered that way.

Also, the Food and Drug Administration last year allowed the company to change the wording on the Epogen label to indicate intravenous delivery is preferred because of a rare and dangerous disorder called pure red cell aplasia that was found in 175 patients, mostly in Europe and Canada, between 1998 and 2003. Those patients were injected with a drug similar to Epogen, Eprex , which was made by a subsidiary of Johnson & Johnson. The FDA decided to issue a recommendation on all injectable forms of related anti-anemia drugs.

Johnson & Johnson said the outbreak was probably linked to rubber stoppers in some of its syringes, and the outbreak ended once the stoppers were replaced. Nonetheless, the disorder prompted Europe and Canada to follow the US practice of giving most Epogen intravenously.

But kidney specialists say the extremely low risk of contracting it should not drive decisions about how to administer the drug.

Still, some patients said it is difficult to overcome the dialysis industry’s bias toward giving Epogen intravenously.

Kidney transplant patient and advocate Robert Sollod , who was interviewed by the Globe in 2005 and has since died, said nurses and administrators at a Cleveland dialysis clinic discouraged him from receiving Epogen through an injection, even though he had heard it provided the same benefit at a lower dose than an IV. They told him it would cause discomfort, he said. Sollod said his doctor finally ordered the clinic to give him shots, resulting in an improved red-blood cell count.

“Amgen made less money, the dialysis company made less money, and I was doing better,” Sollod said. “It was better for me.”

Pamela Smith , a member of the Association of Dialysis Advocates , an independent patient group, said she also encountered resistance but ultimately prevailed when she asked for Epogen injections at a Phoenix clinic.

“I was looked at like I had three heads,” she said.

Another patient, James Roberts , of Toccoa , Ga., said the staff at the Fresenius clinic where he receives Epogen was reluctant to reduce his doses.

“I’m their cash cow,” Roberts said.

Doctors at the federal Department of Veterans Affairs , which in the 1990s studied how to best administer the drug, now deliver it by injection to about two-thirds of the 2,500 VA dialysis patients who receive treatment at a hospital.

Despite the potential savings, Medicare has not recommended subcutaneous delivery. It says more analysis is needed.

Dialysis clinics say Medicare reimbursements do not fully cover the cost of providing dialysis treatments. According to reports from government agencies, including the Medicare Payment Advisory Commission, clinics compensate by overusing some drugs, especially Epogen

“The industry is incentivized to use intravenous because they make a profit margin on every unit they administer,” said Dr. Peter Crooks, who oversees dialysis care for 3,000 patients in Southern California for Kaiser Permanente , a large HMO. Most Kaiser Permanente patients on dialysis in Southern California receive Epogen by injection.

“Many dialysis facilities feel that if it wasn’t for the profit margin they make on Epo, they would go out of business,” Crooks said.

Christopher Rowland can be reached at crowland@globe.com.