A recent article in the New York Times discussed a Federal investigation of the potential unethical behavior by a large dialysis company, DaVita. DaVita is one of the largest dialysis companies in the United States, and along with its main competitor, Fresenius Medical Care, controls about two-thirds of the dialysis business. DaVita treats about 106,000 of the estimated 350,000 Americans currently receiving dialysis. DaVita is under investigation for the substantial revenue it makes by administering the drug, Epogen, to treat anemia in patients receiving dialysis at their centers. Medicare and private insurance companies reimburse more to DaVita than the company actually spends on purchasing the drug from its manufacturer, Amgen. Epogen accounts for 25% of DaVita’s revenue and up to 40% of its earnings.
The article states that dialysis clinics lose money on the fee paid by Medicare and other insurers for dialysis treatment, however the companies recoup these losses by the reimbursement for Epogen and other drugs. In addition, Amgen offers discounts on Epogen for dialysis companies based on how much is used per year and how much that use increases per year. Therefore, it is feasible that to increase their revenue, DaVita would treat more patients with Epogen to receive a bigger discount from the manufacturer. Some studies of Epogen have shown that if the drug is used too aggressively and the RBC count is raised too high, it may cause cardiovascular adverse events or death. United States Renal Data System data show that more than 60% of DaVita patients have RBC levels that are considered “risky” due to elevation.
Currently, Congress and Medicare are moving to cease the separate payments for dialysis treatment and drugs for dialysis companies by bundling the payment together that would cover all aspects of dialysis treatment and drugs. While this would eliminate the financial incentive to overuse Epogen, the dialysis companies, such as DaVita may begin to reduce the drugs given to patients to save money which would potentially leave patients with not receiving the care or drugs they require. In addition, if the dialysis centers are not using as much of the drug, the drug manufacturers will not provide as big of a discount – therefore, patient care may decline as a result of dialysis companies cutting corners in other areas of dialysis treatment.
Link to NYT article: http://www.nytimes.com/2007/09/16/business/16dial.html
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