The U.S. health insurance program for the elderly, disabled and poor is seeking to pay one lump sum for all costs related to kidney dialysis, including prescription drugs, the Centers for Medicare & Medicaid Services (CMS) said on Tuesday.

The move toward a single, so-called bundled payment is expected to hurt drugmakers such as Amgen Inc., which makes intravenous anemia drugs Aranesp and Epogen that are currently billed separately.

Under the proposed plan, the payment would cover dialysis treatment, clinical laboratory tests and prescription drugs, including oral drugs. The base bundled payment would be $198.64 for a dialysis session, CMS said in a statement.

The inclusion of oral drugs in the bundled rate came as something of a surprise, said Sanford Bernstein analyst Geoffrey Porges.

This change will curtail the use of many of them, resulting in more dialysis services being provided, at a negative effect on quality of life, and with worse outcomes for dialysis providers, he said in a research note.

With one fixed rate, dialysis providers could profit by spending less money per patient, including opting for reduced drug doses or cheaper generics.

While there are currently no generic alternatives to Amgen's erythropoiesis-stimulating agents (ESAs), which boost red blood cells, several oral drugs are used to address iron, calcium and phosphorous issues.

Genzyme Corp's Renvela and Amgen's Sensipar, both calcium-related drugs, could see lower payments, analysts have said. AMAG Pharmaceuticals Inc's iron supplement drug Feraheme could also see a boost if providers use it before more expensive ESA drugs, analysts have said.

The final payment rule is expected in 2010 and would apply to services on, or after January 1, 2011, CMS said. It is accepting public comment on a its proposed rule until November 16.

Medicine