Two of the biggest biotechs - Amgen and Genzyme - are gearing up to fight language in the House draft bill for health care reform that would bundle oral kidney drugs in Medicare payments. A Wall Street analyst, meanwhile, predicts the provision won't likely make it to the final bill, but cautions that "bad medicine" would ensue if the wording survives.

The draft bill tacks on two specific types of oral kidney meds - phosphate binders and calcimimetics - to the Medicare Improvements for Patients and Providers Act (MIPPA), which created a dialysis bundling payment for erythropoiesis-stimulating agents, otherwise known as EPO injectables, when it passed last year. These currently are bundled into a single payment for dialysis and related products and services.

Before MIPPA was passed, Congress debated whether oral drugs for renal dialysis should remain covered under Medicare Part D and other prescription plans or should be included in the dialysis bundle (¹ Also see "2009 Medicare Budget Plan Pushes For ESA Bundling With Dialysis Rates" - Pink Sheet, 15 February, 2008.). Ultimately, orals were excluded from bundling, but the new language unveiled on June 19 would add them back, which means the meds would not be reimbursed separately under Medicare Part D.

By including oral kidney drugs in Medicare bundling payments, however, Congress could curb innovation and use of new medicines with "ruinous" long-term consequences for drug makers and patients, Bernstein's Geoffrey Porges said in an interview.

Bundling, in this case, "basically creates a flatland where all the (oral) drugs are valued the same," Porges continued. But all oral therapies for kidney disease do not act the same, he added. For example, less expensive products, which have been on the market for many years, tend to have more side effects than newer treatments.

The implications for Amgen and Genzyme are troublesome, according to Porges. He posits that adding oral therapies to bundling payments could negatively affects prospects for Genzyme's Renagel/Renvela and Amgen's Sensipar .

Genzyme's Renagel (sevelamer) brought in $387 million in 2008 U.S. sales, which amounted to 8 percent of total revenues. Amgen's Sensipar (cinacalcet), a novel treatment for secondary hyperparathyroidism in patients with chronic kidney disease on dialysis, brought in $412 million in U.S. sales last year, about 3 percent of total revenues, the analyst noted.

But Amgen argues that Sensipar should not be included in the bundling proposal because the drug isn't interchangeable with other medications in the current dialysis bundling scheme under MIPPA.

Amgen said the Centers for Medicare and Medicaid Services should focus on implementing the initial MIPPA dialysis bundling legislation and "should not expand the scope of the bundle to include oral drugs, like Sensipar, that do not have intravenous or injectable formulations to maintain access and quality of care for dialysis patients." The drug maker also markets Epogen (epoetin alfa) for anemia in dialysis patients and Aranesp (darbepoetin alfa) for both dialysis and nondialysis uses.

Genzyme acknowledged that while many revisions will take place before crafting a final bill, the drug maker "does not believe the current House bill is in the best interest of patients."

The bill could result in patients being switched from higher-priced polymer-based phosphate binders to generic calcium-based binders, despite treatment guidelines put out by the National Kidney Foundation, according to Genzyme. "We believe physicians should be able to make that choice for patients...and that [the current bill] would interfere with that process."

Another potential setback is that drug makers may be discouraged from developing new drugs. "Providers are going to have a financial incentive to avoid using their products forever - you'd be crazy to develop a drug," Porges said. It would be extremely difficult for the government to "keep an eye on all these dialysis providers" to ensure patients receive the best treatments, he added.

Dialysis providers see opportunity in draft bill

But for dialysis providers, such as Fresenius and DaVita, the bundling language is a welcome opportunity to expand their influence, according to Porges. However, Fresenius declined to comment on pending legislation and a Da Vita spokesman did not discuss the topic specifically.

Porges predicts that, down the road, dialysis providers could improve their margin from the bundle by either substituting generic calcium-based phosphate binders for higher-priced polymer and metal-based binders, or even restricting access to binders altogether.

-Carlene Olsen (c.olsen@elsevier.com)

House Committee Will Cause Controversy by Bundling Oral Kidney Meds in Medicare Bill

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