Buffett buys more shares in DaVita dialysis clinics firm

OMAHA, Neb., Mon Oct 1, 2012 – Warren Buffett has bought an additional 282,403 shares of DaVita Inc., the largest operator of dialysis clinics in the United States, according to a filing with the U.S. Securities and Exchange Commission on Monday.

Buffett, through Berkshire Hathaway Inc. is the largest shareholder in DaVita, owning now about 10 percent of the company’s stock.

Berkshire Hathaway bought the shares in multiple transactions at prices ranging from $100.42 to $103.76 between Sept. 26 and 28.

Berkshire Hathaway now owns 10.2 million shares in DaVita.

DaVita eyes new markets with $4.4 billion HealthCare deal

DENVER, Mon May 21, 2012 – DaVita Inc., the biggest U.S. operator of dialysis clinics, has agreed to buy privately-held HealthCare Partners for about $4.42 billion in cash and stock to expand into new markets to help offset potential revenue pressures in its main business.

HealthCare Partners, based in Torrance, California, runs medical groups and physician networks in Southern California, Central Florida, and Southern Nevada. Its revenues in 2011 were about $2.4 billion.

The company provides its services to more than 667,000 patients and has total care dollars under management of about $3.3 billion, DaVita said.

The deal follows changes to the way healthcare companies are reimbursed by U.S. state-run health insurer Medicare which could put pressure on revenues across the industry.

Medicare changed its reimbursement model last year to encourage clinic operators to reduce costs and use drugs more sparingly. It no longer pays for individual services and drugs but instead makes a lump-sum payment per dialysis session, as long as patients are kept in good health.

Analysts have said this favors large players such as DaVita and its biggest rival FMC, the U.S. arm of Germany’s Fresenius Medical Care, because they are better placed to cut costs, but it also creates revenue pressures.

DaVita Chief Executive Kent Thiry said DaVita was currently focused on integrated care for specialized kidney care services. “HealthCare Partners executes on that same mission across a full and deep array of healthcare services in three geographic markets.”

Agreement assures market for anemia drug Epogen

THOUSAND OAKS, Calif. ― Moving to protect a lucrative monopoly against impending competition, Amgen has reached an agreement that will preserve its status as the main supplier of anemia drugs to one of the nation’s two large kidney dialysis chains.The dialysis chain, DaVita, agreed that Amgen’s drug, Epogen, will account for at least 90 percent of its purchases of that type of anemia drug through the end of 2018. DaVita will get discounts and rebates on the drug, Amgen said in a regulatory filing Friday morning.

Amgen has had a monopoly on providing this type of anemia drug to American dialysis clinics since 1989, when Epogen was approved. Sales have been about $2.5 billion annually, though they are now declining because of safety concerns and a change in how Medicare pays for dialysis.

The new contract comes as Amgen might finally face competition. Affymax, a Silicon Valley biotechnology company, has a drug that will come up for a review by an F.D.A. advisory committee on Dec. 7 and might be approved early next year. The Japanese drug maker Takeda would help sell it. And by 2015 or so, companies should be able to introduce near-generic versions of Epogen.

Amgen apparently decided to help lock up sales to DaVita, which treats about one-third of American patients on dialysis. And DaVita apparently decided to leverage the impending competition to get itself a better deal.

Dialysis clinics are under pressure to cut how much they spend on drugs because Medicare this year began paying a set fee for the complete dialysis treatment, including the drugs being used.

Before that, dialysis clinics billed for the drugs like Epogen separately. Critics, including various members of Congress, had said that the system encouraged Epogen to be overused to improve dialysis company profits. That inflated medical bills, they said, and potentially put patients at risk, because some studies have now shown that the drugs can raise the risks of heart attacks and blood clots.

Five years ago, Amgen reached a similar supply agreement with the other large dialysis provider, Fresenius.

At that time, Roche was preparing to enter the market with an anemia drug similar to Epogen. But Amgen eventually prevailed in litigation defending its patents, keeping Roche out of the American market.

At least one analyst had questioned whether the deal between Amgen and Fresenius would raise antitrust scrutiny. It is possible the new deal with DaVita could raise similar concerns.