New Medicare Rules May Curb Use of Anemia Drugs for Dialysis

By ANDREW POLLACK

Yet more restrictions in the use of anemia drugs are on the way.
Medicare issued final rules Monday that are expected to sharply curtail the use of anemia drugs, particularly Amgen’s Epogen, in the treatment of patients undergoing kidney dialysis.
However, after getting lots of protest, Medicare decided to exempt certain oral drugs from the new system until 2014, which could be good news for Genzyme.
Under the new system, the Centers for Medicare and Medicaid Services will pay a set fee for each dialysis treatment. That so-called bundled payment is supposed to cover both the dialysis service, in which wastes are removed from the body, and the drugs and laboratory tests that accompany it. The new system starts phasing in on Jan. 1.
The new system somewhat resembles concepts in the new health care law, but the dialysis system reform was initiated earlier by Congress, under different legislation.
Until now, Medicare has paid a set fee for the service but certain drugs, like Epogen, are reimbursed separately.
Critics say that gave hospitals and dialysis clinics financial incentives to use a lot of Epogen, which dominates the dialysis market because of Amgen’s patent position. Amgen sells about $2.5 billion of Epogen a year, virtually all for use in dialysis in the United States, and the drug is one of the biggest pharmaceutical expenses for Medicare.

Concern about this system grew stronger when some clinical trials revealed that overuse of Epogen might harm patients, increasing their risk of heart attacks and strokes.
“When drugs remain outside the payment bundle, financial issues can influence both facility and patient behavior, as the over-utilization of EPO to the detriment of patient care in the past has demonstrated,’’ Medicare said in its ruling Monday.
Of course, the new system could have the opposite effect. Epogen will go from being a potential profit source for dialysis clinics to an expense that detracts from profit. So now there will be an incentive to under-use the drug, perhaps subjecting dialysis patients to more anemia and fatigue.
But clinics will have to meet certain standards for quality of care, which Medicare hopes will deter under-use. Medicare said it expects less costly alternatives might be used.
One approach would be to give Epogen by separate injections under the skin. Less of the drug is needed that way than when it is given through the intravenous line now used to deliver dialysis.
When they had a financial incentive to use more Epogen, dialysis clinics resisted giving such separate injections, saying they added to the pain and discomfort for patients. Now, however, many clinics are expected to switch.
Analysts have been expecting the final rules since Medicare first proposed the changes last year, and they have by and large already factored in a reduction in sales of Epogen of as much as 40 percent.
In a note to clients Monday afternoon, however, Jim Birchenough, an analyst at Barclays Capital, said such estimates might be too high and that the transition to giving patients separate injections will occur gradually.
The big suspense in the final rules would be whether Medicare would stick with its original proposal to include certain oral drugs, like Amgen’s Sensipar and Genzyme’s Renvela, in the bundle. These drugs are used to control calcium and phosphorus levels in the patient’s blood.
Opponents of inclusion of the oral drugs argued Medicare had no right to do so, because the drugs typically are not given at the dialysis clinic. Like most other pills, patients get a prescription and Medicare pays for the drugs under its prescription coverage, known as Part D, not under its dialysis program.
The opponents also said that because the drugs were expensive, inclusion in the bundle would curtail their use, to the detriment of patients.
In the final rules issued Monday, Medicare defended its position to include the drugs, but postponed the starting date by three years, until Jan. 1, 2014, to allow time for the study of “operational and safety issues.’’