Lawmakers go after Amgen and J&J Over Off-Label Sales of Anemia Drugs

Evelyn Pringle April 22, 2007

To increase profits, drugs used to treat anemia in patients covered by Medicare are being given at higher doses and for conditions not approved by the FDA, due to reimbursement policies adopted by the Centers for Medicare and Medicaid Services under the leadership of top officials appointed by the Big Pharma-friendly Bush Administration.

At a December 6, 2006 hearing of the House Ways and Means Committee, then chairman Bill Thomas (R-CA), told Leslie Norwalk, acting commissioner of the CMS, “we have a payment policy that perhaps is killing people; and we are using $2 billion, the highest price paid in a relatively narrow area for the use of the drug through the payment policy, that may in fact be doing that.”

Studies have shown that the massive off-label marketing of these drugs has definitely resulted in many deaths, but the question that remains is how many.

The drugs at issue include Aranesp, the brand name for darbepoetin, and Epogen and Procrit, the brand names for epoetin. Amgen manufactures all three drugs, but Ortho Biotech Products, a Johnson & Johnson subsidiary markets Procrit.

They are top money-makers for both companies. In 2006, ESA’s combined had sales of nearly $10 billion, and Aranesp and Epogen accounted for $6.63 billion, or 48% of Amgen’s total $14.3 billion revenue in 2006.

The drugs belong to a class known as Erythropoiesis Stimulating Agents (ESAs), which are man-made versions of a hormone normally produced in the kidneys to stimulate bone marrow cells to produce hemoglobin which is the main component of red blood cells.

The severity of anemia is determined by a patient’s hematocrit, the proportion of red blood cells in whole blood, which should remain at between 33% and 36%, according to the FDA. The labeling for ESAs specifies that patients should have a hemoglobin level no higher than 12 grams per deciliter of blood.

ESAs are approved only to treat anemia and reduce the need for blood transfusions in patients with chronic kidney failure undergoing dialysis, patients with cancer who are receiving chemotherapy, patients scheduled for major surgery, and HIV patients with anemia due to zidovudine therapy.

However, they are being administered off-label to kidney patients who are not receiving dialysis, cancer patients who are not undergoing chemotherapy and in doses that result in higher levels of hemoglobin than are approved by the FDA as safe and effective.

On March 9, 2007, the FDA announced that all ESAs must carry black box warnings on their labels about the increased risk for serious side effects, including death, and advised doctors that they should use the lowest dose necessary to avoid the need for blood transfusions caused by anemia.

Several recent reports have shown that dialysis centers are administering higher doses of ESAs which has resulted in an increased rate of stroke, heart attack and death in dialysis patients. The dosage received by the typical dialysis patient in the US has nearly tripled since the early 1990s, according to the November 16, 2006, New York Times.

A paper presented at the annual conference of the American Society of Nephrology[,] reported that 37% of patients at Davita clinics, the second largest provider of dialysis in the US, had hemoglobin levels higher than 14 grams at least one time in a 9-month period.

Dialysis patients in the US are dying at a higher rate due to this drugging-for-profit scheme. In Europe, where lower doses of ESAs are given, the Times reports that, about 15% of dialysis patients die each year compared to 22% in the US.

Dialysis centers are also boosting profits by administering the drugs intravenously instead of by injection. According to the Boston Globe on October 24, 2006, clinics would use 30% less ESAs, at a potential savings of $375 million each year, if ESAs were injected because the method require a lower dose and they stay in the system longer.

Critics blame the over-use on the financial incentives in Medicare reimbursement policies. Medicare covers medical care for patients with End Stage Renal Disease, and between 1998 and 2003, spending for ESRD patients increased nearly 50%. About $64,000 a year is spent for each dialysis patient, according to US Renal Data System.

Medicare guarantees dialysis centers a 6% profit for administering ESAs, and in April 2006, the CMS drew fire from Capitol Hill when it adopted a policy allowing payment for the administration of ESAs until hematocrits reached 39%.

The Ways and Means Committee chairman, Rep Thomas, sent a letter chastising Mark McClellan, the CMS Administer at the time, asking why CMS had not developed a policy to deal with the out-of-control dosing of patients at a higher levels. “I cannot understand why CMS would knowingly contradict FDA findings,” he wrote.

The CMS did not respond to the letter, so in November 2006, incoming chairman of the Committee, Rep Pete Stark (D-CA), and Rep Thomas sent a another letter to acting CMS Administrator Leslie Norwalk, describing the CMS policy as “a reimbursement incentive for providers to continue to increase doses” past the approved level.

Ms Norwalk did not respond to that letter either, but on December 6, 2006, Ms Norwalk and specific experts were called to testify at a Committee hearing due to “growing concern about unsafe and questionable treatment for Medicare’s coverage for kidney failure, also known as End Stage Renal Disease,” Rep Thomas said.

Through the current rules which endorse expanding reimbursement to allow hematocrit to be targeted to any level, Thomas said, CMS has implemented a policy harmful to its beneficiaries that will cost hundreds of millions of dollars in additional expenditures.

During the questioning of Ms Norwalk, it was revealed that the Monitoring Policy Group, created by the CMS, approved the higher hematocrit guidelines, and two-thirds of the members had financial ties to either Amgen, Johnson & Johnson or the dialysis clinics that profit by selling more of the drugs.

“Now what troubles me is that of the 24 members,” Rep Stark told Ms Norwalk, “18 of them disclosed financial associations with Amgen or Johnson & Johnson.”

It was also noted that the National Kidney Foundation guidelines had raised the hemoglobin limit to 13. However, a clue as to how that came about surfaced a few months later on March 21, 2007, when the New York Times reported that the president of the Foundation, Dr Allan Collins, was also the director of the Minneapolis-based Medical Research Foundation and in 2004, the year he was made president, Amgen underwrote more than $1.9 million worth of research and education programs led by Dr Collins, and paid him at least $25,800 in mostly consulting and speaking fees in 2005.

Dr Laura Pizzi, a professor at Jefferson Medical College, testified as lead author on a study in the November 2006, Dialysis and Transplantation journal, conducted to determine to what extent health care providers were adhering to clinical guidelines for patients receiving dialysis.

She said the study found significant overuse of the drugs, and although the researchers were not surprised to see that providers were not strictly adhering to the guidelines, they were surprised by the extent to which ESA use deviated from the recommendations.

When converting the increased use to dollar amounts based on Medicare reimbursement rates in 2005, Dr Pizzi said the population with a red blood cell count above industry guidelines had higher drug costs of $3,100 per patient each year.

“We estimate that CMS,” she told the panel, “could have reduced expenditures for these drugs by 36 percent if dialysis facilities adhered to the guidelines.”

If CMS spends $2 billion a year, she said, “it is reasonable to say that several hundred million dollars could have been saved if the providers followed the guidelines.”

Dr Noshi Ishak, a kidney specialist who owns a dialysis clinic in Laconia, NH addressed the huge profits of administering ESA’s intravenously instead of by injections.

He said he switched to administering the drugs by injection in 1998 and usage dropped by more than 20%, or equivalent “to $3,120 savings per patient per year for Medicare.”

The FDA’s Oncology Drugs Advisory Panel is scheduled to meet on May 10, 2007, to review the safety and effectiveness of ESAs, and lawmakers have ordered Amgen and J&J to cease all direct-to-consumer advertising and physician incentives until the FDA determines whether measures need to be taken to protect the public from these products.

Amgen and J&J Funnel Tax Dollars Through Kidney and Cancer Patients

Evelyn Pringle April 17, 2007

Medicare has provided coverage for all patients with End Stage Renal Disease since 1972, and according to the House Ways and Means Committee, the government pays for 93% of services provided to dialysis patients, at a cost of about $2 billion a year.

In 2005, the drugs darbepoetin and epoetin, commonly used by patients who must undergo dialysis, accounted for almost 20% of the $13 billion spent on the Medicare Part B drug plan, and total sales for these drugs worldwide topped $9 billion.

Amgen manufactures and markets darbepoetin as Aranesp, and epoetin is sold under the names Procrit and Epogen. But Procrit is distributed by Ortho Biotech Products, a Johnson & Johnson subsidiary. There are no generic versions of these medications.

The drugs are among the top sellers for both companies. Amgen’s Epogen and Aranesp combined sales were $6.6 billion in 2006, nearly half of the company’s total revenues. Johnson and Johnson’s revenues were $3.2 billion in 2006, making it the company’s second-biggest-selling drug, according to on March 21, 2007.

The drugs are man-made versions of erythropoietin, a hormone normally produced in the kidneys, and belong to a class of drugs known as Erythropoiesis Stimulating Agents. ESA’s are used to treat anemia in raising hemoglobin levels by increasing the number of red blood cells in the body. Anemia’s severity is monitored by a patient’s hematocrit, the proportion of red blood cells in whole blood, which should stay between 33% and 36%.

According to the FDA, ESAs are approved to treat anemia in patients with chronic kidney failure, patients with cancer whose anemia is caused by chemotherapy, patients scheduled for major surgery to reduce potential blood transfusions, and for the treatment of anemia due to zidovudine therapy in HIV patients.

But Aranesp, Epogen, and Procrit are being administered “off label” for uses and in doses not approved by the FDA. For instance, an Amgen vice president recently estimated that about 10% to 12% of Aranesp sales are for the unapproved use of treating “anemia of cancer” in patients who are not undergoing chemotherapy.

A recent company study conducted to support FDA approval for using the drug to treat “anemia of cancer” in patients with cancer in remission who were not undergoing chemotherapy, revealed that Aranesp actually increased the risk of death in these patients.

The February 2, 2007, “Cancer Letter ,” a newsletter for cancer professionals, warns, “If the findings of the recently reported study hold up, more than one in 10 Americans getting Aranesp without chemotherapy has no chance of benefiting from the agent and could be harmed or killed by it, experts say.”

The report estimated that up to 12% of the use of ESAs in the US was for this condition.

After reviewing the results of this study and several others, on March 9, 2007, the FDA announced that black box warnings would be added to the labels for all ESAs and recommended using the lowest possible dose to raise the hemoglobin concentration to the lowest level.

The FDA-approved labeling for the drugs says patients should have a hemoglobin level of 10-12 grams per deciliter of blood, and patients are considered to need treatment if their levels fall below 10 grams.

During a press briefing, Dr Richard Pazdur, director of the FDA’s Office of Oncology Drug Products at the Center for Drug Evaluation and Research, said the black box warning was being added based on the results of several recently reported clinical trials.

Dr Karen Weiss, deputy director of the Office of Oncology Drug Products, said the FDA became concerned after receiving the results from several trials evaluating the aggressive use of ESAs to raise hemoglobin levels higher than listed on their approved labels.

In the March 10, 2007 Wall Street Journal, Dr Weiss was quoted as saying, the “bulk of the data that has raised concerns” came when patients were given higher doses, whether they were experiencing anemia from kidney disease or cancer treatment.

The evidence shows that “this type of strategy is not beneficial and, in fact, has some evidence of harm,” she said.

On March 9, 2007, the FDA also issued a public health advisory based on the results of a number of studies and warned doctors treating patients with kidney disease or cancer not to push hemoglobin levels over 12 grams per deciliter of blood.

The FDA noted a higher chance of death and an increased rate of tumor growth in cancer patients with advanced head and neck cancer receiving radiation therapy and in patients with metastatic breast cancer receiving chemotherapy, when ESAs were given to maintain levels of more than 12.
There was also a higher rate of death reported, but no fewer blood transfusions, when ESAs were given to patients with cancer and anemia who were not receiving chemotherapy.

A higher chance of death and an increased number of blood clots, strokes, heart failure and heart attacks were found in patients with chronic kidney failure when ESAs were given to raise hemoglobin levels of more than 12.
The Advisory warned that a higher risk of blood clots was also reported in patients who were scheduled for major surgery and received ESAs.

The FDA pointed out that ESAs are not approved for treatment of the symptoms of anemia, such as fatigue in patients with cancer, surgical patients and patients with HIV.

The drug makers have been using direct-to-consumer advertising to increase sales with cancer patients by claiming the drugs could restore energy and reduce fatigue in patients undergoing chemotherapy. But the FDA says there has never been any evidence to support claims that ESAs could increase energy or ease fatigue in patients undergoing cancer treatment.

In recent months, Congress has been investigating Medicare reimbursement policies that guarantee dialysis clinics a 6% profit for administering ESAs, since it became apparent that patients are being given higher doses than needed. Critics say any deal that allows for cost plus payments comes with a built-in incentive to provide unnecessary services.

On October 24, 2006, the Boston Globe reported that dialysis clinics are also increasing profits by administering ESAs intravenously instead of by injection, and about 95% of the patients receive the drugs intravenously.

Clinics could use 30% less, the Globe says, because when ESAs are injected they stay in the system longer and require a lower dose. A 2004 analysis found patients injected with the drugs were given 21% less, for a potential total savings of about $375 million.

The two clinic chains that dominate the dialysis industry are DaVita, with over 1,200 clinics, and Fresenius Medical Care, with about 1,500. According to the Globe, the clinics claim the intravenous method is more convenient because patients are already hooked up to IVs for dialysis.

Critics think differently. “The industry is incentivized to use intravenous because they make a profit margin on every unit they administer,” said Dr Peter Crooks, who oversees dialysis for 3,000 patients for Kaiser Permanente where most patients receive injections.

In an April 11, 2007 report, Bernstein Research estimates that dose volume in renal patients could fall as much as 25% if doctors abide by the new black box warning and insurers refuse to pay for the drugs in patients with hemoglobin levels over 12.

On November 17, 2006, the British journal Lancet reported that about half of all dialysis patients have hemoglobin levels above what the FDA considers safe, and about 20% of patients experience dangerously high levels, creating a risk for heart attack and stroke.

Kaiser Kidney Transplant Program Gets Reprieve From Medicare Officials

Evelyn Pringle September 25, 2006

In August 2006, Kaiser Permanente, the nation’s largest Health Maintenance Organization, agreed to pay a $2 million fine and donate $3 million to a charity group after numerous government investigations determined that the HMO caused harm, and in some cases death, to hundreds of kidney transplant patients.

Two months earlier in June 2006, the Centers for Medicare and Medicaid threatened to cut off funding to the HMO after determining that Kaiser’s kidney transplant program had failed to provide adequate care to patients waiting to receive a kidney transplant.

The CMS released a damning report on June 23, that said the program was understaffed, its record keeping and training were nonexistent or inadequate, and that some patients were not matched up with kidneys, even when a perfect matches was available. The CMS also said patients received confusing information and in many cases, patient complaints were lost or ignored.

The program was poorly planned, poorly staffed, poorly run and poorly qualified to care for transplant patients, CMS inspectors wrote in the report. And as the program faltered again and again through late 2004 and 2005, no one at the HMO even seemed aware that patients were at risk, the report said.

“There was no indication that patients were informed of their rights or of other available options as well as potential consequences of the transfer,” the report stated.

The report says that a UC Davis transplant coordinator warned Kaiser back in May 2004, before Kaiser launched its plan, that Sacramento-area patients “would have to wait 1.5 to 3.6 years longer for transplantation, depending on blood type” because they would be getting their organs from a different source.

But according to the report, Kaiser did not notify patients of the longer waiting times, nor did it sufficiently inform Medicare patients that they could obtain transplants at UCSF or UC Davis if they were willing to pay the higher deductibles of non-Kaiser patients.

CMS officials told Kaiser to either fix the problems or lose Medicare funding, and cited 3 problems areas: (1) the governing body and management; (2) patient rights and responsibilities; and (3) the director of the transplant program.

However, Kaiser got a reprieve in a letter dated September 12, 2006, in which the CMS withdrew the threat to cut off funding based on a survey conducted on August 18, 2006, that showed the deficiencies had been corrected and Kaiser was now in compliance with federal standards.

According to the September 14, 2006 LA Times, had the deficiencies not been corrected to the inspectors’ satisfaction, “Kaiser could have lost federal funding not just for transplant patients but for all Medicare patients with end-stage renal disease treated by the HMO’s San Francisco hospital.”

The LA Times and CBS News TV Channel 5, exposed the story about the failed kidney transplant program in early May 2006.

Prior to starting its own transplant program, Kaiser outsourced transplant procedures to non-Kaiser medical centers, including the University of California, San Francisco and the UC Davis Medical Center in Sacramento.

In mid-2004, Kaiser cancelled contracts with UC San Francisco and UC Davis and sent a form letter to more than 1,500 Kaiser patients awaiting transplants at those medical facilities, stating that Kaiser would no longer pay for transplants at outside hospitals and patients would be transferred to Kaiser’s new kidney transplant program.

Kidneys are allocated based on how much time a patient has spent on a waiting list so when patients transfer to other programs, it is essential that the medical records show the time already spent on a waiting list or the patient will appear as a new addition and drop to the bottom of the list.

The transfer of patients involves registration with the federal contractor, United Network for Organ Sharing, responsible for overseeing kidney distribution. A patient is not eligible to receive a kidney without proper registration.

The Times reported that Kaiser launched its transplant program “without holding basic discussions with regulators about how to safely transfer up to 1,500 of its patients from other programs to its San Francisco center.”

Nearly 2 years after Kaiser’s new program began, in May 2006, the LA Times reported that hundreds of patients were stuck in “transplant limbo” because of improper handling of paperwork, and that because of the delays, many patients missed opportunities for a transplant and that the Kaiser waiting list had grown to more than 2,000 patients.

Most of the patients on the list were waiting for kidneys from strangers, which can normally take over 5 years. But some patients had offers of kidney donations from relatives, which if well-matched, usually means a transplant right away.

Thirty-one-year-old, Jessica Parker told CBS News that she had two people who were willing to donate a kidney to her for over a year, but says appointments were delayed and calls to Kaiser’s transplant program often went unreturned.

Ms Parker spends most weekdays hooked to a dialysis machine and says she is angered by Kaiser’s incompetence and mismanagement. “Kaiser needs to come out and publicly say, ‘these are the changes we are going to make’ and possibly issue an apology to the families and people on the wait list that have been waiting in vain through mismanagement and incompetence,” Ms Parker told CBS.

The Times reported that doctors attempting to build a record of success avoided the riskier organs and patients, which slowed the rate of transplants, and that doctors at UC San Francisco revealed that in 25 cases where kidneys were a perfect match for Kaiser patients, the HMO refused to authorize the hospital to perform the transplants.

On May 3, 2006, the Times quoted current and former Kaiser employees who said that problems at Kaiser went beyond mere growing pains. “Surgeons and kidney specialists battled over who should receive transplants,” the newspaper wrote. “Desperate patients complained of inexplicable delays,” it noted.

And since the transplant program began, the Times discovered that 10 permanent Kaiser employees had either quit or been fired out of a staff of 22. In less than a year, the first administrator of the program left, and a little over a year later, her replacement was terminated.

In January, 2006, kidney specialist, Dr James Chon, sent a 12-page letter to Kaiser’s physician-in-chief describing problems he saw in the transplant program, including “numerous resignations” and other internal issues.

“On the outside, the program seems to have settled into a reasonably functioning unit,” he wrote. “However, a closer look at the program will show that it is suffering from very serious and potentially explosive problems,” he said.

In his letter, Dr Chon detailed battles between staff members over which patients could receive transplants. One 73-year-old woman, he wrote, had been waiting, initially at UC San Francisco, since 1999.

Dr Chon stated that he and his colleagues felt that although the woman was a high-risk patient, she was a viable candidate but that Dr Sharon Inokuchi, the program’s medical director, refused to sign off until she saw additional medical records, which Dr Chon said were irrelevant.

“I truly believe that decision to overrule four other transplant physicians was unjust and unethical,” he wrote in the letter.

Dr Chon was also put on leave in February 2006, after the dispute with Dr Inokuchi.

In February 2006, kidney specialist, Dr Eric Savransky, walked off the job and cleared out his office and never returned, but Kaiser officials told the Times that he was technically on leave.

According to the May 3, 2006 LA Times, in the end, Dr Inokuchi was “relieved” of her administrative duties to focus on patient care and with all the departures, she was the only kidney specialist left to manage patients’ care after their transplants, see them for checkups, handle calls for medical advice, review lab results and evaluate patients.

Transplant surgeons at other hospitals told the Times that programs of Kaiser’s size would have trouble functioning without at least four or five transplant nephrologists.

On July 14, 2006, a former administrator of the transplant unit, David Merlin, filed a wrongful termination lawsuit against Kaiser, seeking $5 million in damages. Mr Merlin’s annual salary as head of the transplant program was $128,000, and he was charged with “responsibility for patient safety and risk management,” the lawsuit states.

The complaint alleges that Mr Melin was terminated after two months on the job for raising concerns about patient care in the transplant program and violations of state and federal guidelines.

According to the lawsuit, Kaiser’s new transplant program served 19 Northern California medical centers and received patient referrals from 48 Kaiser nephrologists or kidney specialists throughout the region.

Within a few weeks of starting the job, the complaint states, Mr Merlin “discovered that the program was so poorly organized and unprofessionally managed that it failed to comply with state and federal requirements and was compromising patient care, leading to unnecessary suffering and possibly deaths.”

After being terminated in early February, Mr Merlin went to the media and contacted state and federal regulatory agencies, including the California Department of Managed Health Care, the US Department of Justice, and the California Medical Licensing Board. As result, a steady bombardment of media stories and government investigations followed and prompted Kaiser to shut down the transplant program in May 2006.

The more than 2,000 patients on its waiting list are now being transferred back to UC San Francisco and UC Davis, many to the same hospital that treated them to begin with, in a process that is not expected to be complete until the end of the year.

Kaiser’s dismal record of patient care is beyond dispute. CBS News’ analysis of national transplant data showed that in 2005, when Kaiser performed 56 transplants, more than twice as many, or 116 people died while waiting on the transplant list.

“And the number of transplants completed at Kaiser,” CBS states, “also was low compared to state averages: less than 3 percent of people on Kaiser’s waiting list got transplants compared to an average 12 percent of people on other lists statewide.”

A large part of the problem with any decision made by Kaiser Permanente, critics say, stems from the fact that the for-profit Permanente Medical Group (TPMG), comprised of approximately 6,000 doctors, gets to split the profits at the end of the year that result from cutting corners on patient care.

Thus, as part of an attempt to increase the pot, the TPMG got the bright idea to set up a kidney transplant center so that it could stop outsourcing the expensive procedure and keep the profits in-house.

According to the May 3, 2006, LA Times, the decision to open a transplant unit came about because Kaiser’s San Francisco hospital’s open-heart surgery program was shrinking as less-invasive procedures became more common and the HMO was left with unused beds and operating rooms. So in 2002, the Times notes, heart transplant surgeon, Arturo Martinez, at Sharp Memorial Hospital in San Diego, brought the idea to Kaiser officials.

In August 2003, Kaiser officials told the media that they could do a better job of coordinating the care of their transplant patients by working with its own network of doctors, hospitals, labs and pharmacies, serving Kaiser’s 3.2 million members in Northern California.

“We should be able to achieve higher outcomes,” Dr Inokuchi, told the San Francisco Business Times at the time.

Of course in hindsight, Kaiser officials could not have been more wrong.

Experts told the Times that the delay in providing transplant services to HMO patients on the waiting list also raises ethical questions. “If you don’t have the resources to transplant all the patients you have on the wait list who really should be transplanted, then you have an obligation to send them to another institution,” said David Magnus, who heads Stanford’s Center for Biomedical Ethics.

Former Kaiser employees say the TPMG should be called on the carpet for the transplant program disaster. “The fault lies with the dysfunctional nature of TPMG, which has so far escaped scrutiny,” said Ruth Given, a former Kaiser and California Medical Association executive, in the May 19, 2006 San Jose Business Journal.

“They should have done a better job of monitoring quality, not only of this program but of all medical programs,” Ms Given said. “But my experience is that the M.D.s discourage that (kind of oversight) — and Kaiser typically backs off.”

Considering that Kaiser’s own “Principles of Permanente Medicine” guidelines hold the system’s physicians responsible for directing all clinical decisions and designing and operating care delivery within the organization, Ms Given said in the San Francisco Business Times on July 21, 2006, “it is particularly puzzling to me that there has been no official public statement from TPMG about (its) role in this entire fiasco.”

Rather than just picking on Mary Ann Thode, Kaiser’s Northern California president, she said, “somebody needs to get (Permanente CEO) Robbie Pearl on the hot seat and have him explain and apologize and describe why this will never happen again.”

In his wrongful termination lawsuit, Mr Merlin said he met with several senior executives of the TPMG in January and early February 2006, raising concerns about the operation of the transplant unit.

Mr Merlin’s lawsuit claims that executives Nancy Langholff, RN, assistant medical group administrator; Diane DeCorso, Ms Langholff’s boss, and Dr Nora Burgess, TPMG’s chief financial officer at the San Francisco hospital, ignored the severe ongoing problems that he brought to their attention, and refused to let him schedule a meeting with Dr Bruce Blumberg, MD, the medical center’s physician-in-chief at the time.

Instead, Mr Melin alleges, he was told to “shut up” about the problems, and to “let it go.”

By mid-May 2006, three lawsuits related to its failed kidney program were already filed against Kaiser. One lawsuit was filed on behalf of the widow of a man who died, alleging that her husband was refused a kidney transplant as a result of mishandled paperwork.

Another woman alleges that her condition grew progressively worse after Kaiser continually delayed her transplant.

And the third plaintiff, who has been on dialysis for six years, fears the damage the delay may have caused him, and alleges that a Kaiser doctor advised him on several occasions to travel overseas to get a transplant.

On June 5, 2006, a class action complaint was filed against Kaiser in San Francisco Superior Court, alleging “negligence, fraud and misrepresentation due to Kaiser’s inability to properly administrate the San Francisco Kidney Transplant Program,” according to a press release.

Legal experts predict that many more similar lawsuits will be filed in the months ahead.

At first glance, it would appear that damages for Kaiser patients would be limited by the Medical Compensation Reform Act (MIRCA) enacted in California 1975, that limits pain and suffering awards against health care providers to $250,000.

But legal experts predict that the limitations will not apply to patients injured as a result of the failed transplant program, because California Civil Code S 3428, states that a health care service plan or managed care entity, such as Kaiser, has a duty of ordinary care to “arrange for the provision of medically necessary health care service to its subscribers and enrollees…” and that damages recoverable for a violation of this statute are not limited by MICRA.

Practically speaking, experts say, this means that for those who lost family members, or were otherwise seriously injured, as a consequence of Kaiser’s misadministration of the program, pain and suffering damages may reflect their actual losses and will not be limited by the MICRA.

$2 Million Fine Small Potatoes for Kaiser Transplant Disaster

Evelyn Pringle August 13, 2006

Although the $2 million fine levied against Kaiser Permanente was the largest ever imposed by the California Department of Managed Health Care, it seems like small potatoes considering the damage caused by the HMO’s failed kidney transplant program.

The second largest fine ever levied against an HMO was $1 million back in 2002, following the death of a patient. It also was against Kaiser but obviously did nothing to deter similar misconduct.

In addition to the fine, Kaiser says it will make a $3 million donation through the East Bay Community Foundation to “Donate Life California,” a program that encourages California citizens to donate organs and tissues.

While the donation was not a penalty imposed, Kaiser officials said at a press conference, that it was part of a package of responses created by DMHC that Kaiser agreed to implement.

In the DMHC’s press conference, the agency’s Director, Cindy Ehnes, said the fine and donation were intended to recognize serious problems in the operation, management and oversight of Kaiser’s Northern California kidney transplant unit at its San Francisco medical center.

Ms Ehnes said in recent months the DMHC made oversight of Kaiser a main priority, to make sure that no patients lose an opportunity for a kidney transplant or become “a forgotten number.”

She cited problems that included failure to provide adequate administrative oversight and enough personnel to accomplish patient transfers, failure to give patients timely access to kidney specialists and treatment referrals, and failure to properly respond to patient complaints.

She said the agency recommended the $3 million contribution to the donor registry program, because the additional payment by Kaiser “reflected the magnitude of the issue.”

“We have structured the agreement and penalty with Kaiser in this way because not only will it acknowledge Kaiser’s serious failures to adequately administer and operate its transplant center, it will directly benefit the patients who so desperately need help,” she said at the press conference. “This funding will save lives.”

Ms Ehnes also specifically noted Kaiser’s inadequate oversight of its affiliated Permanente Medical Group of doctors, as one of the issues the DMHC was concerned about.

Members of the Kaiser HMO receive health care services from Kaiser hospitals and its affiliated group of doctors. However, prior to 2004, the HMO had contracts with other hospitals to treat patients in need of kidney transplants because Kaiser did not have a transplant program.

Up until 2004, Kaiser contracted with UC San Francisco and UC Davis to provide kidney transplants. When it decided to set up its own program to perform kidney transplants, Kaiser canceled the contracts with UC San Francisco and UC Davis and sent letters to approximately 1,500 transplant patients saying they were being transferred to the new Kaiser program in San Francisco.

Transferring transplant patients involves registration with the United Network for Organ Sharing, the federal contractor responsible for overseeing kidney distribution. Without a proper registration, a patient is ineligible to receive a kidney.

In June 2004, when Kaiser informed patients on waiting lists at UC San Francisco and UC Davis that from then on transplants would take place at Kaiser’s hospital, patients were literally forced to participate in the program. One letter to patients said in part: “You will be financially responsible for any kidney transplant services you receive from the University of California, San Francisco, after Sept. 1, 2004.”

According to the July 21, 2006, East Bay Business Times, critics say the role of Medical Group’s doctors was central to setting up the transplant program. Unlike the rest of Kaiser which is non-profit, the Medical Group is a for-profit entity that splits profits among its physician partners, giving the group a financial incentive to bring services in-house.

A former transplant unit administrator told the Business Times that Kaiser planned to use the San Francisco program as a template for a series of other transplant centers nationwide that would save the HMO huge amounts of money by not having to send patients to outside hospitals for transplants.

Critics told Business Times that the powerful influence of Kaiser’s doctors within the organization is little known to the public or to regulators, and that financial incentives sometimes result in clinical decisions that can put patients in jeopardy.

That certainly turned out to be the case with the transplant program. According to a CBS channel 5 news analysis of the national transplant data for 2005, Kaiser performed only 56 kidney transplants that year, but 116, or more than twice as many transplant patients died while on the waiting list.

Overall, the exact opposite occurred with transplant patients statewide in California. CBS found that more than 1,800 patients received successful transplants, while only 866 died.

And the number of transplants completed at Kaiser was less than 3% of the people on the waiting list compared to an average 12% on other waiting lists statewide.

Looking back, during the two years before Kaiser began its program, UC San Francisco and UC Davis combined, performed at least 168 transplants on Kaiser patients, three times as many as Kaiser performed in its first year of operation.

While it may be difficult to come up with the exact number of patients who died as a direct result of Kaiser’s failed transplant program, critics say, its clear that many patients were needlessly forced to endure grueling sessions of prolonged dialysis which lessens the chances for a successful transplant.

Ruben Porras had already been waiting for a kidney at UC Davis for 3 years when Kaiser cancelled the program. As a result, Mr Porras was put on inactive status in November 2004, meaning he could not receive a kidney.

In the end, his transfer to Kaiser’s program was not completed until September 2005 and because kidneys were more difficult to obtain in the heavily populated San Francisco area than in Sacramento, the waiting period for Mr Porras was expected to be 3 more years.

Several of his relatives were being assessed as potential donors at UC Davis, but when Kaiser ended the contract, the assessments were also cancelled. When the relatives called Kaiser to try and continue the assessments no one returned the calls.

Less than one month after his transfer to Kaiser’s list was completed, Mr Porrass died at 47, as a result of an infection caused by extended dialysis treatment.

As it turns out, Mr Porras wasted what little time he had left on dialysis hoping for a transplant. “There’s no other life out there for you other than being treated,” his wife told the LA Times. “He had no energy to do anything, go anywhere or do things for himself.”

In another similar case, 63-year-old James Klinkner sent in his forms when he was told that he would be transferred to Kaiser’s list but they too apparently got lost because Kaiser sent him another form to fill out. When he called to find out what happened, his call was not returned. In the meantime, Mr Klinkner also died from complications of prolonged dialysis.

In fact, an investigation by the LA Times found hundreds of other patients at UC Davis and UC San Francisco stranded between programs because of Kaiser’s delays and errors in processing paperwork

And if all this wasn’t bad enough, on May 4, 2006, the Times reported that 25 Kaiser patients “were denied the chance for new kidneys that were nearly perfectly matched to them last year during the troubled start-up of the giant HMO’s kidney transplant program in San Francisco.”

The 25 kidneys were offered between January and December 2005, the California Transplant Donor Network told the Times.

“These “zero mismatch” organs from cadavers are prized,” according to the Times, “because they offer patients a greater chance of long-term survival and minimize the risk of rejection.”

They are considered the best possible option aside from a living donor’s kidney. “And they allow patients to get their transplants immediately,” the Times wrote, “no matter where they are on the waiting list.”

Patients missed the opportunity because Kaiser never completed the paperwork to transfer the patients to its program, and at the same time, Kaiser refused to allow UC San Francisco to transplant the kidneys into Kaiser patients.

On August 4, 2006, the LA Times reported more bad news for patients when California regulators said it would take months longer than expected to transfer about 2,000 patients out of Kaiser’s transplant center in San Francisco. Preparing patients and their records for transfer has taken more time than anticipated, officials said, pushing the target to the end of the year.

Not surprisingly, Kaiser is already facing a barrage of litigation over the transplant program debacle.

Ella Haynes filed the first lawsuit in Alameda County Superior Court back in May 2006, alleging the HMO had botched paperwork and caused her husband Ronald to be removed from the transplant waiting list.

In the case of her husband, having to wait so long caused his condition to deteriorate to the point where he could not even be considered for a transplant. Ronald died of a blood infection in March 2005 at 60-years-old.

Ella learned from the LA Times in May 2006, that her husband never had a chance of receiving a transplant because the 2 1/2 years Ronald spent on the waiting list at UC Davis had never been transferred to Kaiser, effectively eliminating him from the program.

On May 3, 2006, the Times reported that many experienced transplant programs accept kidneys from a separate pool of risky donors, such as older patients or people with health problems, in attempt to cut down the waiting time.

The pool supplied kidneys for about 15% of the transplants in the Bay Area last year, the local organ bank told the Times, but said Kaiser only accepted one.

Kaiser’s chief surgeon, Dr Arturo Martinez, claimed it was because only one patient signed up for the kidneys, but officials from UC Davis and UC San Francisco told the Times that their records show many Kaiser patients had been interested.

In fact, at UC Davis, before the contracts were cancelled in 2004, 20 Kaiser patients had signed up for the organs, and at UC San Francisco there were 23 more Kaiser patients signed up.

Ella Haynes said her husband Ronald had signed up for two riskier kidneys at UC Davis, but when he was transferred to Kaiser, they were told that Ronald “would be better served to wait it out and get one good kidney.”

Ronald was one of approximately 1,500 patients transferred to Kaiser’s new transplant program when it opened in 2004, according to an investigation by CBS 5 in May 2006.

A month after Ronald died in April 2005, Ella received a call from Kaiser asking about her husband’s transplant status and she told the caller that her husband died.

“I told them, ‘well gee, my husband is dead,’ ” she told CBS. “The doc said, ‘I’m so sorry. We didn’t have the paperwork that would have told us this. Otherwise I wouldn’t have called.’ “

Ella’s attorney, Stuart Talley says Kaiser lost track of Ronald’s case altogether. “We have info that leads us to believe he was actually never put on Kaiser’s list,” Mr Talley told CBS.

“So he was actually on nobody’s list,” he noted, “when he passed away and had no chance of getting a kidney.”

Fifty-six-year-old, Bernard Burks, also filed a lawsuit against the HMO in Sacramento County Superior Court, for insurance bad faith and breach of contract, after he was unable to obtain a transplant. The lawsuit alleges Kaiser ignored his phone calls and failed to arrange a transplant even though Mr Burks’ daughter was a compatible donor and was willing to donate a kidney.

As a result of the lawsuit, Kaiser agreed to pay for Mr Burks’ kidney transplant at Stanford University Medical Center, according to National Legal News on June 22, 2006.

Litigants suing Kaiser will certainly have enough witnesses to call and documentary evidence to present to the juries.

The first witness called might well be David Martin, the former administrator of the transplant program, who filed his own lawsuit in San Francisco Superior Court, on July 14, 2006, requesting $5 million in damages, and alleging that he was terminated after only two months on the job for raising concerns about patient care and related issues, including violations of state and federal laws.

Some of the complaint’s specific allegations include: (1) Kaiser never attempted to reconcile its end-stage kidney patient records with those at its former contracting hospitals; (2) hundreds of patient charts were lost; (3) perfect match kidneys were refused; (4) nurses gave out inaccurate and false information about the status of patients and their care; (5) patients were given inappropriate medications; (6) surgical and medical decision-making processes were confused; and (7) abuses occurred in the physician review process.

According to the lawsuit, Kaiser’s program “was so poorly organized and unprofessionally managed that it failed to comply with state and federal requirements and was compromising patient care, leading to unnecessary suffering and possibly deaths.”

After he was terminated, Mr Merlin started the whole ball rolling when he contacted the LA Times and CBS TV-Channel 5 in San Francisco. He also alerted state and federal regulators, the US Department of Justice and the Medical Board of California.

As a result of Mr Merlin’s contacts, the Los Angeles Times and CBS 5, broke the story about the failed transplant program in early May 2006, and within weeks Kaiser shut the program down and agreed to transfer the patients to the other facilities.

Another good witness for plaintiff’s might be Social worker, Bonnie Jacobson, who resigned from the Kaiser program in July, and said she thought the $2 million fine was justified. “I don’t really feel that the really high-up people in the administration at Kaiser got this,” she told the LA Times.

“If any of them had to go for even one dialysis treatment,” she stated, “they would have a whole new understanding of what it means to these patients to get a kidney transplant.”

Federal investigators could also be called to testify. In a highly critical report issued on June 23, 2006, Medicare investigators said the Kaiser program was poorly planned, staffed, and qualified to care for transplant patients. It also said that no one at the HMO even seemed aware that the patients were at risk.

The report says Kaiser staff told Medicare officials that over a period of time there were more than 1,000 incomplete patient records.

In addition, there was “no indication that patients were informed of their rights or of other available options as well as potential consequences of the transfer,” the inspectors wrote.

Investigators found staff members on the job with no training including nurses who had “little or no knowledge of the assessment and care of pre-transplant patients.” The inspectors also said they found no evidence that anyone made sure the nurses were able to do their jobs.

In another instance cited in the report, the personnel file for the data coordinator who was responsible for processing patients’ forms and ensuring that wait time was transferred, “revealed the lack of written evidence of any training” in how to use the computer system for the United Network for Organ Sharing, which oversees the waiting lists and organ allocation.

“There was no evidence,” the report said, “that operations and other components of the program were being reviewed and evaluated to ensure the delivery of quality care to patients.”

At no point did Kaiser assess “its ability to continue to meet the needs of the increasing number of patients and those others already in the program, to prevent or minimize service interruptions and facilitate efficient delivery and continuity of care,” the inspectors wrote.

They noted that future unannounced field investigations would likely be utilized to make Kaiser remained in compliance with federal regulations and guidelines.

According to media reports, Kaiser could face additional penalties as a result of a continuing state investigation of its patient grievance procedures and policies.