U.S. regulators question Fresenius IV iron deal, set reimbursement terms

The FTC said that, under the proposed deal, it wouldn’t cost Fresenius anything, in terms of actual costs to the company, to inflate its internal transfer price. In addition, it would not affect demand. “In fact,” the FTC wrote, “artificially raising ASP would increase the demand for Venofer among other dialysis clinics because it would case reimbursement levels to go up.”

The Consent Agreement

Therefore, in order to approve the deal, the FTC drafted a consent agreement that outlined these competition concerns and set how Venofer would be priced by Fresenius.

Under the FTC agreement, Fresenius can’t report an intra-company transfer price to Medicare higher than a level set in the FTC order, which was derived from current market prices. Specific prices, however, were not disclosed.

In addition, the FTC order said that if a generic version of Venofer is approved by the U.S. Food and Drug Administration, then Fresenius would be required to maintain Venofer’s cost at the set FTC level or at the lowest price Fresenius sells Venofer to dialysis clinics—whichever is lowest—until Dec. 31, 2011.

By early 2011, the bundling of all dialysis services into one reimbursement rate will go into affect. “Once the change from a separately billed, ASP-based payment for Venofer to universal bundled payment for dialysis services is in effect, the adverse effects of the proposed transaction on reimbursement rates will disappear,” according to the FTC’s report.

Also, Fresenius and Luitpold will not be able to share confidential business information about Venofer’s manufacture, sale or distribution, since Luitpold will still sell the drug to non-dialysis clinics. The FTC also has the ability to appoint a “monitor trustee” to ensure compliance. The agency, however, said it hasn’t appointed anyone to the position.

The FTC voted 4-0 to approve the consent agreement, and, according to an agency spokesman, Fresenius and Daiichi signed it, thus making the Venofer deal official. The companies did not admit any wrongdoing by signing the agreement.

The FTC order is subject to public comment until Oct. 13, at which point the FTC will decide whether to make it final.