Ardelyx Lost The Lawsuit, But The Kidney PATIENT Act Will Save It

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Ardelyx lost a lawsuit against Medicare, impacting XPHOZAH's revenue potential, with no other major prospects in its pipeline.CMS's decision to move XPHOZAH to the bundled payment system significantly...

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With that loss, XPHOZAH faces the prospect of much reduced and declining revenue. ARDX has no other major prospect in its pipeline, something that has always been a concern. It put all its eggs in that one basket, and now it would have had to pay for that poor gamble. However, the new Kidney PATIENT Act will come to its rescue, at least until 2027, if not longer. It just needs to be quickly passed into law. Background Ardelyx has a single molecule known as tenapanor, branded as IBSRELA and XPHOZAH, which targets IBS-C and hyperphosphatemia in CKD patients. IBSRELA was approved in 2022 for irritable bowel syndrome with constipation (IBS-C) in adults. XPHOZAH was approved for phosphate binder refractory DD-CKD patients with hyperphosphatemia. By the first couple years of launch, these drugs were guided to be making over $200mn (IBSRELA + XPHOZAH) per year, with tremendous intake in market uptake for the drugs. This was facilitated by the lack of effective approved options in IBS-C, and metal overload related safety issues in Hyperphosphatemia. The two markets together were worth several billion dollars, and the company was hopeful that the drugs \"can achieve at least a 10% share of the IBS prescription market and as well on the path to becoming a $1 billion product before patent expiry.\" All those expectations suffered a major setback when the US Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS') added tenapanor and other oral-only phosphate-lowering therapies (PLTs) to the bundled payment system for dialysis patients. This canceled their separate coverage under Medicare Part D and moved them to the End-Stage Renal Disease Prospective Payment System (ESRD PPS). The CMS decision to remove XPHOZAH from Part D to Part B affects XPHOZAH for hyperphosphatemia in DD-CKD patients, and not IBSRELA. However, once the new payment system sets in from January 1, 2025, the impact is going to be quite negative. When a drug is added to a bundled payment system for dialysis patients, it can significantly impact the revenue potential for the drug developer. A bundled payment system comes with a bundled, negotiated price, so the drug may not make as much as when it was separately priced. Moreover, Ardelyx now has to engage in complex negotiations and contracting with health plans and dialysis providers to ensure they are properly reimbursed. XPHOZAH will often not be adequately covered by a single, bundled payment, and that may force healthcare providers to look for cheaper alternatives - there are several approved phosphate binders - like Calcium acetate (several prescription brands including PhosLo and Phoslyra); Lanthanum carbonate (Fosrenol); Sevelamer hydrochloride (Renagel); Sevelamer carbonate (Renvela) - that are available as generics, and cost a fraction of what XPHOZAH costs. Of course, they have safety issues that XPHOZAH may not have, but healthcare providers will find workarounds since the drugs are approved. For various reasons that sound logical but are essentially - and perhaps justifiably - meant to preserve pricing power, Ardelyx sued the CMS for this decision. It was backed by powerful friends - the American Association of Kidney Patients (AAKP) and the National Minority Quality Forum (NMQF). Outcome The matter was dealt with in the District Court of Columbia. As the Court explained, Part B provides insurance for outpatient health services, while Part D provides prescription drug coverage. \"All ESRD patients are eligible for coverage under Part B; most (around 80%) have additional coverage under Part D.\" The incentive for healthcare facilities to opt for Part B for PLTs was that the \"facilities could retain any amount of the payment that exceeded their costs.\" On the other hand, there could be potential misuse of Part D reimbursement because, as the Court noted with the example of Epogen, \"Dialysis facilities had an incentive to rely heavily on such drugs because they were separately reimbursable and thus did not come out of the lump sum payment that they could otherwise retain.\" This was the concern for Congress and created the legislative intent. As the Court stated: The goal was to remove the incentive for dialysis facilities to rely more heavily on drugs reimbursed on a fee-for-service basis, as opposed to ones included in the bundle, and to motivate these facilities to use whatever combination of treatments would be most effective and economical. The government also limited judicial review of the bundled payment system. As pertinent parts of subparagraph (G) noted: There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise of the determination of payment amounts under subparagraph (A), the establishment of an appropriate unit of payment under subparagraph (C), [or] the identification of renal dialysis services included in the bundled payment . . Thus, when Ardelyx filed a motion arguing that CMS's actions go against Part (B) which describes what oral drugs can fall under the bundled system for ESRD dialysis services, CMS said that \"review of that question is precluded by subparagraph (G).\" Bottomline, this is what the Court agreed with. They are basically telling Ardelyx - if you want to change the system, talk to Congress. You cannot directly attack CMS, which is merely implementing what Congress directed it to do. Ardelyx does just that, and supports the Kidney PATIENT Act, which aims to limit oral-only ESRD drugs from moving into the ESRD bundled payment system. As the American Kidney Fund describes it, the act is a \"bipartisan legislation that would delay the move of oral-only ESRD drugs into the ESRD bundle until 2033 or until new intravenous therapies come to the market. The bill would ensure patients have access to the medications they and their doctors have determined work best for them. In addition, the bill would save money for taxpayers because it would delay an increase in the ESRD base rate that determines the bundled payment that would occur when adding oral-only drugs to the bundle.\"  This bill has bipartisan support and is going to be passed as legislation - however, from my limited knowledge of how the system works, it seems it is still running through the process. Meanwhile, it is being amended to be made even more comprehensive. Bottom line, while Ardelyx may have lost the lawsuit on a technicality, this new bill will ensure tenapanor gets adequately covered.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485300798"}