Agency’s Dialysis Probe Widens
A Justice Department probe of the kidney dialysis industry widened Wednesday as two more companies, Abbott Laboratories and Fresenius Medical Care, disclosed that they had received subpoenas for documents related to the use of vitamin D.
The news came a day after DaVita Inc. of El Segundo and Renal Care Group Inc. of Nashville said they had received subpoenas from the U.S. attorney’s office in New York.
The investigation, said to be both civil and criminal, is being led by Keir Dougall, an assistant U.S. attorney charged with handling criminal healthcare fraud cases in the Brooklyn office.
Abbott, the leading provider of intravenous vitamin D, was cooperating with investigators and was told by the Justice Department that it was not a target of the probe, company spokeswoman Melissa Brotz said.
Fresenius, a German company, revealed that it had received a subpoena for documents related to its kidney dialysis operations and its laboratory tests. Fresenius said investigators wanted, among other things, documents on vitamin D therapies and tests given to kidney dialysis patients to determine whether they needed such treatments.
Intravenous vitamin D is routinely given to dialysis patients to regulate parathyroid hormone, which can cause bone loss. Patients with kidney failure go to clinics run by Fresenius, DaVita and Renal Care several times a week to have waste removed from their blood.
The government could be investigating flaws in patient care or Medicare billing fraud, experts have said. The federal health program for the elderly and disabled covers all dialysis patients, regardless of age.
Vitamin D is profitable for large dialysis companies. The four largest chains -- a group that includes Fresenius, DaVita, and Renal Care -- received 34% to 37% more in Medicare reimbursement for vitamin D than they paid for it, according to a report this year by the Department of Health and Human Services.
Analysts said dialysis centers have had a financial incentive to overuse vitamin D. The profits on vitamin D, however, are expected to shrink next year as a result of the Medicare Modernization Act, which gives seniors prescription drug benefits.
DaVita Chief Executive Kent Thiry told investors during a conference call Wednesday that the company was “very comfortable with our clinical policies” on vitamin D.
“What the government worries about is whether someone is inappropriately influencing physicians to prescribe one drug over another,” Thiry said. “I am sure that is a legitimate fear, but I am sure that when they come and talk to us they will see a process that is clinically driven.”
He added that he didn’t know whether DaVita was a subject of the investigation.
“There are still a lot of question marks,” Balaji Gandhi, an analyst with Pacific Growth Equities, said after the call. Investigators could be looking at “a wide range of things from pharmaceuticals to the manufacturing companies to the way doctors and dialysis clinics interact.”
Abbott, based in Abbott Park, Ill., makes two of the three vitamin D products used by dialysis clinics. One of them, Zemplar, is the market leader with $300 million in annual sales. Until recently, Zemplar was the only vitamin D product approved by DaVita. Bone Care International of Middleton, Wis., markets the third product.
DaVita shares rose 80 cents Wednesday to $30.20, Renal Care Group gained 89 cents to $30.89 and Abbott climbed $1.45 to $42.43. All trade on the New York Stock Exchange.
