National dialysis giant DaVita is facing another investigation that involves its use of the anemia drug Epogen, a subject that has caught the interest of Congress and various state and federal authorities but has so far yielded no civil or criminal complaints.
DaVita, based in El Segundo, Calif., disclosed in its quarterly earnings report to the Securities and Exchange Commission last week that Nevadas attorney general notified the company Oct. 17 of a criminal investigation that relates to the companys billing of pharmaceuticals, including EPO. EPO is a name of the hormone in the Amgen drug branded Epogen.
A spokeswoman for Nevada Attorney General Catherine Cortez Masto said the office does not comment on investigations. U.S. attorneys in Texas and Missouri are investigating the companys practices involving Epogen, while one in Pennsylvania ended in January with no charges filed or fines levied. (One of DaVitas board members is chairman of the National Quality Forum, head of a hospital system in North Carolina and dean of a medical school. See story below.)
A review of Medicare reimbursement for the Epogen drug by HHS inspector generals office found that the government pays providers more than the drug costs. The investigations appear to involve whether DaVitas use of it is driven more by profit than medical necessity, though details have not been disclosed.
Banc of America Securities analyst Gary Taylor downplayed the development in a research note, observing that similar inquiries elsewhere havent led to damages. With the Nevada investigation targeting Medicaid rather than Medicare billing, the scope is limited to perhaps 50 of (DaVitas) 106,500 patients, Taylor wrote. Only about 6% of the companys patients are Medicaid beneficiaries, according to its 2006 annual report.
DaVita spokeswoman Stephanie Prial, in a written statement, said the company will cooperate with the Nevada probe and noted that its typical for a Medicaid fraud probe to be classified as criminal and shouldnt be construed as signaling any particular gravity to the matter.
And last week, DaVitas chief financial officer announced plans to leave the company (See story, p. 57).
The use of Epogen in the dialysis industry also has the attention of U.S. Rep. Pete Stark (D-Calif.), who believes Medicare should bundle reimbursement for the drug with other dialysis services to eliminate any incentive there might be to overuse it.
In another development that could diminish use of the Epogen, the FDA last week called for stronger safety warnings on its label, as well as the labels of two other anemia drugs, Amgens Aranesp and Johnson & Johnsons Procrit.