In September 2018, the Centers for Medicare & Medicaid Services (CMS) sent an email announcing that it would no longer cover Auryxia®. Auryxia® is an FDA approved medicine that treats iron deficiency anemia (anemia) for patients with chronic kidney disease (CKD) but who are not on dialysis.
People with CKD have damaged kidneys that no longer filter their blood properly. Currently, 30 million people in the U.S. are living with CKD, and for these patients, anemia is common. If left untreated, anemia increases the risks for cardiovascular disease, end-stage renal disease, and premature death. These patients also have increased hospitalization rates and lower overall quality of life. From a cost perspective, untreated anemia increases the annualized cost of CKD by nearly $29,000 per patient.
Even based on a cold cost-benefit analysis, simple arithmetic argues against dropping coverage of Auryxia®. The manufacturer’s label lists the starting dose for iron deficiency anemia in CKD cases at 1 tablet 3 times per day, while the average dosage in clinical trials was 5 tablets per day. Since a supply of two hundred 210 mg tablets costs around $1,200 according to Drugs.com, the annual cost of Auryxia® based on the price offered on drugs.com ranges between $6,570 – $10,950. This does not account for Medicare Part D discounts, which are usually significant, but even without the savings, Medicare would reduce spending by treating anemia with Auryxia® compared to the costs associated with untreated anemia.
Alternative anemia treatments are available for Auryxia®, so the actual trade-off is not between having a medicine to treat anemia and not having one. However, Auryxia® is the only FDA approved oral therapy. All of the other treatments that are approved by the FDA are medicines delivered intravenously and must be administered by a physician in a clinical setting.
Intravenous products are costlier to administer because there are additional infusion administration fees that must be covered. Patients must also take time out of their day to go to the clinic or hospital and sit through the administration of an intravenous (IV) medicine. For most patients, taking a medicine orally at home (or work) is a much more preferred option than being stuck with a needle on a regular basis. Further, IV Infusion also places patients at greater risk of infection and venous injury.
Even though Medicare Part D is denying coverage to Auryxia®, Medicare Part B covers the cost of these more expensive infusion drugs that are used to treat anemia. Denying coverage to Auryxia® under Medicare Part D effectively pushes people toward using the more expensive infusion drugs that will be paid for by Medicare Part B. Therefore, not only is Medicare denying patients access to a medicine that might be more appropriate for them, it costs the system more money to do so.
Perhaps even more troubling for the quality of the health care system, this decision represents another instance where bureaucrats limit the ability of doctors (in this case nephrologists, or doctors who specialize in kidney care) to prescribe the treatment they deem to be the most appropriate for their patients. Ultimately, health care quality will decline should authority continue to be transferred away from doctors and patients to the health care bureaucracy.
CMS’ bureaucratic decision is simply illogical from a reimbursement policy perspective, absurd from a patient perspective, and inconsistent with the evaluation of the FDA as well as the medical evidence as reported in the Journal of the American Society of Nephrology. Given that this decision is not justifiable based on the medical evidence, why would CMS decide to cut off coverage?
CMS has not been forthcoming, but as reported in Stat News, it appears that CMS considers Auryxia® “a mineral, like iodine or vitamin C, which Medicare typically doesn’t cover.” Therefore by denying coverage to Auryxia®, CMS appears to believe that it is simply creating “consistency” across these products. This conclusion makes no sense, however. Not only has the FDA approved Auryxia® as a drug, CMS currently covers it as a drug for the treatment for other complications from kidney disease.
The Auryxia® case demonstrates that government bureaucracies run by their own logic, and often this logic conflicts with the interests of patients. The costs of this policy will be compounded should policies like “Medicare for All” or “Medicare for All Who Want It” be adopted. And, this problem is sure to worsen in the future as innovations in gene therapies and personalized medicine mean that doctors will need more authority to prescribe the best treatment for an individual patient, not less.
Going forward, both near-term and long-term changes are necessary. In the near-term, it is unconscionable that Medicare patients are being denied a more efficacious treatment that will actually reduce overall health care expenditures. In fact, due to its efficacy, virtually every Medicaid and commercial insurer in America currently covers Auryxia for iron deficiency anemia in CKD patients. Consequently, CMS should restore Medicare Part D coverage for Auryxia®.
In the long-term, policymakers need to learn the lessons from this coverage snafu. Health care reforms that expand the government’s control over treatments will lead to more and more cases like Auryxia®. The best way to control health care costs and improve the quality of care is to empower patients and doctors to decide which treatments are best.
Wayne is a Senior Fellow in Business and Economics at the Pacific Research Institute and the Director of PRI’s Center for Medical Economics and Innovation. My research explores the connection between macroeconomic policies and economic outcomes, with a focus on the health care and energy industries. I have over 25 years of experience advising Fortune 500 companies, medium and small businesses, and trade associations. I received my Ph.D. in economics from George Mason University.