The Most Costly Earmark in S-CHIP

08/29/2007 10:26 pm ET Updated May 25, 2011

Two weeks ago, a front page story in the New York Times revealed that House version of the children's health insurance bill had secretly funneled hundreds of millions of dollars to favored hospitals -- a violation of the Democrats' pledge to remove the shroud of secrecy surrounding earmarks. The story was alarming because it provided additional ammunition to a Bush administration that was already ideologically opposed to expanding the program that provides government-run health insurance to millions of uninsured kids.

Last week, I learned that the bill contains another unheralded earmark, also unrelated to children's health. This one, too, funnels hundreds of millions of dollars to special interests. And unlike the hospital earmarks, which were a mere raid on the treasury, this earmark, given the Orwellian name "Quality Incentive Payments in the End Stage Renal Disease Program," will subject hundreds of thousands of Americans on dialysis to unnecessary risk, and will in all likelihood lead to premature deaths.

The legislation earmarks up to $300 million over the next three years for clinics that achieve certain quality benchmarks while treating the more than 300,000 Americans with failed or failing kidneys who receive dialysis through Medicare's End Stage Renal Disease (ESRD) program. Chief among those benchmarks is correction of the anemia associated with failing kidneys. The payments will go to clinics that raise 92 percent of their patients to a red blood cell count that's at least 33 percent of blood volume (or a hemoglobin count of 11 grams per deciliter).

The measure gives clinics a powerful incentive to continue using large quantities of one company's drug -- Amgen's Epogen, which stimulates red blood cell production. The House passed the bill even though the Food and Drug Administration recently issued a black box warning cautioning against overuse and the Center for Medicare and Medicaid Services rewrote its reimbursement guidelines to limit payments for overuse of the drug.

Recent studies have shown that raising red blood cell counts over 12.5 grams per deciliter in dialysis and cancer patients increases the risk of heart attacks and premature death. Any clinic that raises 92 percent of its patients above 11 will probably have half its patients above 12 -- the maximum allowable level on the FDA black box warning -- and a sizable fraction above the 12.5 danger line.

It's not as if good quality measures aren't needed in the ESRD program. Despite rapidly expanding costs, the dismal prospects for people on dialysis has not improved over the years: there were still 230 deaths for every 1,000 patient-years of dialysis in 2004 compared to 231 deaths in 1993. No cost grew faster over those years than those for Epogen. When first approved in the late 1980s by the Food and Drug Administration, it was a godsend for dialysis patients since it eliminated the need for blood transfusions.

From the start, there was a debate over how much Epogen was enough. Should the dose be merely enough to eliminate transfusions? Or should the red blood cell or hemoglobin count be raised to near normal levels, which, of course, would require a lot more of the drug?

Amgen funded dozens of clinical trials showing that dialysis patients felt better and had more energy with higher hemoglobin levels. The company deployed a small army of lobbyists to waive that literature around on Capitol Hill and at CMS, which runs the program. They were joined by leaders of the Renal Physicians Association, many of whom had financial ties to Amgen, and patient advocacy groups like the National Kidney Foundation and the American Association of Kidney Patients, which also receive substantial funding from Amgen and the other companies that sell the products used at dialysis clinics.

And, of course, the major dialysis clinic chains, DaVita and Fresenius, joined in the clamor for higher hemoglobin levels. They receive a hefty markup -- critics on Capitol Hill referred to them as kickbacks -- for every dose of Epogen they administered.

The lobbying paid off. CMS twice raised the allowable hemoglobin levels until it reached 12.5 grams per deciliter. The mean level (50 percent of patients had higher levels; 50 percent had lower levels) rose from 10 grams per deciliter (30 percent of blood volume) in 1993 to 12 grams per deciliter in 2004. Medicare expenditures for Epogen shot up a staggering 115 percent to $1.8 billion between 1998 and 2004, a time period when the dialysis patient population increased by only a third.

What didn't change, unfortunately, was the mortality rate. Despite the fact that Americans on dialysis were still dying at rates substantially higher than their European counterparts, Amgen continued to fund research that hemoglobin levels near normal (13 or 14 grams per deciliter) would improve outcomes.

The results, much to the company's dismay, were just the opposite. Over the past year, a series of studies have been completed showing that dialysis patients with hemoglobin levels between 12.6 and 14 had significantly more heart attacks and deaths than patients within the FDA's recommended dosing level, which is 10 to 12. The results paralleled a series of oncology studies which also showed higher mortality rates for chemotherapy patients given high doses of the drug (though sold in the cancer market as Procrit by Johnson & Johnson, the drugs are identical).

The trial results forced the FDA to act. Last March, the agency slapped a black box warning on both Epogen and Procrit. "Use the lowest dose of Epogen that will gradually increase the hemoglobin concentration to the lowest level sufficient to avoid the need for red blood cell transfusion," the label warned. Guidelines published by the American Society of Anesthesiologists say blood transfusion are unnecessary when hemoglobin is above 10 grams per deciliter.

In an editorial that appeared last April in the Journal of the American Medical Association , Daniel W. Coyne, a renal physician at Washington University School of Medicine in St. Louis, recommended maintaining hemoglobin levels for dialysis patients between 10.5 and 11.5 grams per deciliter, which meant "rarely" using Epogen when the level exceeded 10 and cutting back by 25 percent if it exceeded his target range. "This management strategy is good for patients, and would be far less expensive for society," he wrote. "Physicians need to challenge industries that appear to be using patients as profit centers based on bad science."

Even CMS finally recognized that its long-standing policy of reimbursing for higher hemoglobin levels had to be reversed. In July, it promised to cut payments by 50 percent if dialysis clinics report that a patient's hemoglobin exceeded 13 grams per deciliter for three straight months.

With sales plummeting, Amgen took its cause to Capitol Hill. In the first half of 2007, Amgen spent over $9 million on lobbyists, nearly as much as it spent in all of 2006 and almost as much as the entire Pharmaceutical Research and Manufacturers Association, which is the industry's powerful trade group.

Last February, Rep. John Lewis (D-GA) and David Camp (R-MI) introduced H.R. 1193, the Kidney Care Quality & Education Act, which called for a three-year program of additional payments to dialysis clinics for improving quality. However, no benchmarks were contained in the bill. Despite getting 100 co-signers (who's against higher quality?), no hearings were ever held.

Instead, the House Ways and Means health subcommittee, chaired by Pete Stark (D-CA), a long-time Amgen critic, held hearings in June on anemia management in dialysis. Stark's ultimate goal is to establish a bundled payment system for dialysis clinics, which would theoretically eliminate incentives for giving excessive amounts of any individual drug since the clinics would then have to pay for it out of their own pockets. But the speakers lineup included just one critic of high use of Amgen's Epogen.

Alan Kliger of Yale University Medical School and president of the Renal Physicians Association led the charge for continued high use of Amgen's Epogen. His self-contradictory testimony cited the updated guidelines published by the National Kidney Foundation (without mentioning that 10 of the 18 members of that guideline panel had financial ties to Amgen). Those guidelines called for maintaining patients at hemoglobin levels between 11 and 12 and not going over 13.

But, Kliger testified, "because every patient is unique, when it comes to ESA (erythropoietin stimulating agents like Epogen) dosing, each patient must be considered individually - not in aggregate," he said. Then, a few moments later, he testified that "Medicare coverage policy should strive to maintain levels in all (emphasis added) patients greater than 11 grams per deciliter, given the ample data disclosing the adverse short and long-term effects to patients with persistent anemia."

Amgen's lobbyist army applied the finishing touches. When the children's health insurance bill emerged on the House floor, it contained the new quality standard: 92 percent of patients should be over a hemoglobin of 11 grams per deciliter to qualify for the additional payments. Officials at CMS refused to comment on whether they had input into establishing this new benchmark. Nor has several phone calls to Amgen lobbyists turned up anyone who will take ownership of the provision.

I emailed Daniel Coyne at Washington University last week and asked him what impact the legislation will have on dialysis patients. "It would be almost impossible to get 92 percent above 11 without getting the mean to 13 or higher," he wrote me back. "Based on older and recent studies, this would increase the risk of death in patients, have no real benefit otherwise, and probably double Epo use and costs. It also directly violates the FDA package insert which recommends target Hemoglobin to 10 to 12, which means about one-half (of patients) should be 11 or higher in well managed units."

Increased risk of death. No benefit. Higher costs for taxpayers. The ongoing Epo saga, whose latest chapter is being written on Capitol Hill, is a perfect example of why our health care outcomes are second-rate, while our health care costs are second to none.

Merrill Goozner
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