A Centralized Disease Management Approach – Free of "Dr. Congress" and (Most) Drug Money

The federal government’s role in kidney disease treatment is unique. Starting it 1972, Medicare accepted the role of paying for dialysis treatments for patients of any age when their kidneys failed. Lawmakers took a leap of faith and hoped that most of the dialysis patients would return to work. This has not happened. Costs to taxpayers have far exceeded original estimates. Efforts to control these costs have included pushing back the time period when Medicare would be the primary payer of dialysis charges and the composite rate system, which is essentially a “flat rate” payment for a dialysis treatment. I believe everyone would agree that there is little waste in this part of the end-stage renal disease (ESRD) program.

In the 1990s, Medicare began paying for drugs that improved the care and the quality of life for dialysis patients. These include EPO, vitamin D therapies, IV iron, and others. The costs of these drugs are now the fastest growing component of dialysis patient care. According to the Medicare Advisory Payment Commission, the use of separately billable drugs administered during dialysis has increased throughout the 1990s and payments for these services represented about 41 percent of Medicare’s total payments to dialysis facilities in 2003.

Over 300,000 Americans now depend on dialysis machines for their lives. The ESRD population is growing at approximately 6% per year. Millions more have milder forms of kidney disease that may develop into kidney failure. With the obesity epidemic in the U.S., diabetes has become the leading cause of kidney disease. Some are calling it an epidemic of kidney disease. The federal government also spends millions on prevention efforts, kidney transplants, and research for possible cures. Combining all these, the U.S. government finds itself facing enormous future financial outlays for kidney disease. (See USRDS)

As part of the Medicare system, changes to the ESRD program – for the most – require federal legislation. In the last Congress, over 30 bills were introduced that addressed changes in ESRD/dialysis care or had provisions concerning dialysis. "Dr. Congress" managed to pass only one law (S.1, HR.1). All other attempts to make changes in how these federal dollars are spent or to improve patient care were lost in the deadlock of Republicans vs. Democrats and our 50/50 nation.

The current system has evolved to bring out the worst in government and the private sector. Read what Public Citizen and Common Cause wrote about the one dialysis-related bill that passed during the last congressional session. Last week, I heard a commentator on CNN state that there are eight pharmaceutical lobbyists in Washington for every senator. With a deadlocked congress, the current system is crippling innovation in the dialysis/nephrology business world.

For the most part, it literally does take an act of Congress to make changes in the changes in the direction of how federal tax dollars are spent on kidney disease. With legislators calling the shots on how these dollars are spent, only those parties that have made huge investments in lobbying and campaign contributions (i.e. drug companies and large providers) are likely to see their needs met.

I believe it now makes sense for the government to begin managing kidney disease using a disease management model. It is also time to remove the senators and representatives from many of the decision-making processes concerning the funding of dialysis treatments and the direction of both treatment and research for kidney disease. The federal government is spending billions on kidney disease – without a centralized plan for how to best spend these tax dollars and intelligently manage our coming epidemic of kidney disease. I believe it is time to place all this spending under one central office that is directed by science and economics, not politics. This HHS Office of Kidney Disease Management would manage the entire disease process and would distribute a pool of dollars for prevention, treatment, transplantation, and research for cures of kidney diseases. Included in this pool would be payment of the ESRD drugs - directly to the drug companies. Fair prices would be negotiated, but it certainly wouldn’t be an 80% margin for 26 years for a sole supplier!

This office should be headed by a nephrologist with an MBA or a medical economist. With this type of arrangement, the drug companies, the dialysis providers, the patients, the public health community, and the researchers would all be lobbying for additional funding for the same budget. It would also reduce the effect of lobbying by the biggest profit earners, leveling the field for small and innovative dialysis providers.

This independent, central office could make decisions quickly about changes in direction of prevention, treatment, and research of kidney diseases. The office would be far more responsive to patients, professional organizations, and industry than the current system. Innovations could be quickly implemented and tested. We would not have to wait for Congress to act. This arrangement could bring out the best of both the government and private sector.

This office could take one, huge immediate step to significantly reduce costs. Amgen has been able to extend the patent on EPO until the year 2016. I believe the ethics and morality of this action should be the topic of public debate. Using current pricing and usage projections, this will result in tens of billions of dollars of profit for Amgen. I believe public outrage will grow when the story of EPOGEN®’s origin, the Amgen patent extensions, their monopoly, the growing use of EPO, and the high costs to taxpayers are better understood. If we want to save billions, fund this new HHS department, and vastly increase research money for kidney disease, this office could negotiate with Amgen for a substantially lower price for EPO. If they won’t agree, then this office should move to import Transkaryotic Therapy’s version of EPO from Europe. Why not, it’s an American company!

“Unrestricted Educational Grant”

Of all the e-mails that received this last week, only one person defended Amgen by stating that they fund research and other projects that no one else will. I believe that these “unrestricted educational grants” raise far more questions than “answers” they might provide. These grants are creating an ethical morass on so many levels and in so many areas. Questions of accountability, quid pro quo, the conditional approval of future grants, etc., are among them.

Do we want the drug companies setting the direction of research in nephrology? Shouldn’t they be developing drugs? Wouldn’t it be better if more of these dollars, which come primarily from Medicare, were controlled instead by an office answerable to the taxpayers? Wouldn’t there be greater accountability of how efficiently and effectively these dollars were being spent? I could see the drug companies funding a few studies and projects, but they shouldn’t be seen as the primary source of research money for nephrology.

This is a story of a need for change. In 1972, Congress approved a course of action that they believed would incur modest costs. We now have a potential epidemic of kidney disease on our hands. Hundreds of thousands of lives depend on dialysis treatments. I believe everyone would agree that "Dr. Congress" and the lobbyists are not providing effective leadership in managing this disease, its costs to society, and, most importantly, the needs of the patients.

We only have to take on the most powerful lobbying force in Washington.

I would appreciate your ideas, thoughts, and comments at renalweb@renalweb.com.

Gary Peterson
1/18/05