MEDIA ADVISORY, Tuesday, September 25, 2007
CONTACT: Yoni Cohen, Stark (202) 225-3202

Washington, D.C. – Representative Pete Stark (D-CA) today responded to a letter from the Department of Health and Human Services’ Office of Inspector General (OIG) comparing Medicare’s reimbursement rates for drugs related to the treatment of End Stage Renal Disease to those paid by the Department of Veterans (VA). The OIG found that Medicare pays $9.10 per 1000 units of Epogen while the VA pays only $8.03. If Medicare paid the VA rate for Epogen, it would save $187 million a year.

“Medicare beneficiaries and American taxpayers continue to get a bad deal,” said Stark. “As I’ve been saying for years, Medicare pays too much for Epogen. These overpayments endanger patients’ health and enrich a wealthy corporation, Amgen, at taxpayers’ expense. Because Medicare pays significantly more for Epogen than do either the Veterans Administration or large dialysis chains, its payment policies create an incentive for over-prescription. I worked to protect patients and pocketbooks in the Children’s Health and Medicare Protection Act and will continue to call for a new and improved payment system.”

A longtime critic of excessive spending on Epogen, Stark is a proponent of modernizing Medicare’s payment system for ESRD drugs. He co-authored the Children’s Health and Medicare Protection (CHAMP) Act that passed the House in August. CHAMP would institute a “bundled” payment system for Epogen based on the recommendations of the Government Accountability Office and the Medicare Payment Advisory Commission (MedPAC).

The OIG earlier found that while Medicare paid $9.48 per 1,000 units of Epogen in 2006, large dialysis chains were able to purchase the drug for $8.55 per 1,000 units. The average Epogen patient receives 18,700 units of Epogen a week. As a result, large dialysis chains make an average of more than $900 per patient per year from administering Epogen and the higher they dose, the more money they make.

Because of this perverse incentive to over-prescribe, and according to 2005 data from the National Institutes of Health, more than half of patients receive Epogen at or above the upper limit considered medically safe. The Food and Drug Administration (FDA) recently issued a “black box” warning that advised against over-prescription and cautioned against the increased risk of blood clots, strokes, heart failures and heart attacks in kidney patients who receive too much Epogen.

The OIG’s letter is available at http://www.house.gov/stark/news/110th/letters/20070925-oig.pdf.