More than 1 in 7 American adults has chronic kidney disease (CKD), with the majority of those affected unaware of it. CKD is associated with heart disease, stroke, kidney failure and early death. Chronic kidney care for patients who have progressed to end-stage renal disease (ESRD) or kidney failure — and thus require dialysis — is a huge expense, responsible for $35 billion in Medicare spending in 2016, about 7% of all claims cost.
With a goal of providing better access to higher quality, coordinated patient care while lowering costs, U.S. President Donald Trump signed an executive order on July 11 aimed at making kidney care more effective and convenient, in hopes of reducing the number of people who develop ESRD. As part of this initiative, the Centers for Medicare and Medicaid Services have outlined new payment models for patients with CKD or ESRD. Their intent: to focus on preventing disease progression; to encourage kidney transplants over dialysis; and if dialysis is needed, to emphasize more convenient, home-based dialysis over the current default treatment of in-center dialysis. The new payment models reward physicians who slow the progression of CKD to ESRD or prevent CKD from taking hold. They also provide incentive payments to physicians who transition dialysis patients to in-home care or to kidney transplants, while lowering some payments for dialysis supportive care. These new payment models will take effect in January 2020.
The new payment models will likely benefit companies who are developing new drugs that aim to reduce the risk of renal failure in patients with CKD and Type 2 diabetes. This includes Johnson & Johnson, whose Invokana (canagliflozin) SGLT2 inhibitor has been shown in clinical trials to reduce the patient progression to ESRD by 30% — as defined by the need for chronic dialysis or renal transplant, doubling of serum creatinine levels, and renal or cardiovascular death. Invokana is already approved as an adjunct to diet and exercise to reduce blood sugar and the risk of major cardiovascular events in adults with Type 2 diabetes. In May, the FDA granted Priority Review to Invokana to reduce the risk of ESRD and renal or cardiovascular death in adults with Type 2 diabetes and CKD.
Astra Zeneca, Gilead Sciences/Goldfinch, and a number of other companies are also developing SGLT2 inhibitors and other drugs to treat CKD, and could benefit from the new payment models. Astra Zeneca was granted Fast Track status in late August for Farxiga (dapagliflozin) in CKD generally, regardless of whether a patient has diabetes.
Also likely to benefit are the growing number of companies that are offering home dialysis services, including CVS, who recently announced their intent to initiate a clinical trial of a new home dialysis device.
Companies whose focus has been on drugs used to treat the side-effects of CKD and ESRD patients on dialysis, including anemia, may be negatively affected by the payment changes. Erythropoietin-stimulating agents are the most common such drugs, with Amgen’s Epogen (epoietin alpha) accounting for $1 billion in sales in 2018.
While encouraging kidney transplants over dialysis is also a goal, more than 100,000 patients are currently waiting for such transplants. The Trump initiative aims to increase the number of living donors by easing the financial challenges for such individuals, who are currently responsible for expenses such as travel, lost wages, and childcare that are incurred as a result of the donation process. The initiative also aims to streamline the organ procurement process that currently allows large numbers of potentially usable organs to go to waste each year.