Dialysis provider faces anemia drug pressures

National dialysis chain DaVita is doing very well, thank you very much, with 2006 sales of $4.9 billion and earnings of $290 million. That's up dramatically from 1999, when it had revenue of $1.4 billion. Stock prices have also climbed above $60 per share, up from below $2 in early 2000.

The question for DaVita, however, is whether it can maintain this status if Medicare takes proposed measures to cut back on reimbursement for anemia drug Epogen. Like its competitors, DaVita is using large volumes of the Amgen drug; however, it seems to be the most aggressive Epogen user, according to government dialysis registry United States Renal Data System. And USRDA figures suggest that more than half of DaVita patients have raised red blood cell levels that are considered dangerous by the FDA.

DaVita CEO Kent Thiry faces big pressure from Medicare, which wants to pay for dialysis on a bundled basis that won't reward higher Epogen use. Not only that, it's getting hammered by Amgen, which is demanding that it use more Epogen each year to keep favorable pricing. All told, this is a tough moment to be a dialysis provider, particularly a high-profile one, it seems.

To learn more about the Epogen question:
- read this article from The New York Times

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