Ardelyx and two kidney patient advocacy groups are suing the US government over plans to change how certain drugs used by dialysis patients are paid for, shifting them out of Medicare’s Part D program and into the program’s end-stage renal disease system.
In June, the Centers for Medicare & Medicaid Services announced it would move Ardelyx’s drug Xphozah and other oral-only phosphate-lowering therapies in its bundled payment system for dialysis treatments, starting next year. The drugs are used by patients with chronic kidney disease who need to lower levels of phosphate in the blood, which can rise to excessive levels as kidney function declines.
For end-stage kidney patients, Medicare reimbursement for a dialysis session is just under $300 for each patient, no matter the severity of the disease, Jefferies analyst Dennis Ding told Endpoints News.
“Dialysis centers, they want to use the cheapest drugs that are still effective but still cheap, so that they could maintain some sort of profit in order to keep themselves running,” Ding said.
Xphozah costs about $3,000 a month, and would be competing with much cheaper generics, Ding said. “If you’re a dialysis center getting a single bundle payment that’s $300, why would you use a more expensive treatment and operate at a loss, when you can use a cheaper generic and squeeze out some profits?” he added.
In its lawsuit, Ardelyx claims that CMS has violated its statutory and regulatory authority, arguing that Xphozah and other phosphate-lowering therapies shouldn’t be included in the End-Stage Renal Disease Prospective Payment System because they aren’t administered by dialysis providers and can’t be taken during actual dialysis treatment.
CMS declined to comment, citing ongoing litigation.
Medicare regularly looks at ways to squeeze costs out of kidney care, in part because it’s a huge expense for the program. End-stage renal disease care eats up 7% of the Medicare budget, and the agency spends more than $130 billion — nearly a quarter of total spending — on patients with kidney disease, according to the National Kidney Foundation.
Xphozah was approved as an add-on-therapy in October 2023 to reduce serum phosphorus in adults with chronic kidney disease who are also on dialysis. The drug was launched in November, and brought in sales of $15.2 million in the first quarter.
Jefferies analysts also noted on Thursday that if Ardelyx wins the lawsuit, it could potentially keep phosphate-lowering therapies like Xphozah from the CMS’ bundled payment system permanently. But the analysts believe the litigation will take years and wouldn’t stop CMS’ process of moving the drug class into the bundle in January.
Congress, however, could step in sooner.
“The key catalyst this year remains whether or not Congress will be able to pass legislation to keep phosphate binders out of the bundle for 2 years,” Jefferies analysts wrote.