Baxter (NYSE:BAX) officials apparently think their company can benefit from a Trump administration and CMS proposal to provide extra reimbursement for new and innovative dialysis equipment and supplies.
Just days ago, CEO Joe Almeida told analysts in an earnings call that the company planned to invest $500 million to significantly increase production capacity and meet new patients’ needs amid the push to adopt home dialysis across the United States.
The proposed CMS rule and the Advancing American Kidney Health Initiative are “putting once-in-a-generation policies in place to improve the lives of those with kidney disease,” Laura Angelini, general manager of Baxter’s Renal Care business, said today in a news release.
“Building on our 65-year legacy in kidney disease, we will continue to advance innovation across dialysis modalities that reduces complications, improves outcomes and makes dialysis care more efficient,” Angelini said.
Baxter is a major medtech company in the dialysis space; it bought Swedish dialysis giant Gambro for $3.9 billion in 2013. Just yesterday, the company announced FDA 510(k) clearance of its PrisMax system and integrated TherMax blood warmer — Baxter’s next-generation platform for continuous renal replacement therapy and therapeutic plasma exchange. PrisMax includes digital health features that enable hospitals to connect the system to electronic medical record platforms.
End-stage renal disease is one of the few conditions in the United States where there is already a single-payer system, thanks to a law signed by President Richard Nixon in 1972. Medicare covers treatment of the disease regardless of age. CMS said there are presently 430,000 beneficiaries typically spending about 12 hours a week attached to a dialysis machine.
The steady payments have turned dialysis treatment into a big business for DaVita Healthcare (NYSE:DVA) and Fresenius Medical Care (NYSE:FMS; ETR:FRE), which run most of the dialysis centers in the U.S. (Fresenius is also a major manufacturer of dialysis technology.) The $35.4 billion spent on treating end-stage renal disease in 2016 represented 7.2% of Medicare spending that year, according to CMS.
Amid growing criticism that the system is ineffective, the Trump administration earlier this month announced an executive order prioritizing increased early detection of kidney disease and an emphasize on transplants and home hemodialysis instead of in-clinic treatment.
CMS Administrator Seema Verma said yesterday that the executive order was about “eliminating regulatory barriers to unleash innovation that will improve health outcomes and quality of life for patients with chronic disease.”
The proposed additional payment would apply to renal dialysis equipment and supplies authorized by FDA on or after Jan. 1, 2020 — defined as innovative because they meet substantial clinical improvement criteria. The proposed extra payment would take place over two years and would be based on 65% of the price established by the Medicare Administrative Contractors (MACs).
Verma said the proposal would “advance innovation across our healthcare system so patients can receive the treatment options that work best for them.”