November 7, 2014

How Mitra Industries Could Save Kidney Disease Patients in the U.S. over $1.7 Billion per Year

Nearly $3 billion per year is spent by U.S. patients on a form of kidney failure dialysis treatment whose cost the Indian firm Mitra Industries has decreased, with the potential to realize savings of nearly $1.9 Billion in dialysate solution alone.

Peritoneal Dialysis

End Stage Renal Disease (ESRD) is a condition requiring either a kidney transplant or an artificial process (mostly dialysis) to clean the blood as a replacement for healthy kidneys. Transplant is the best option, but of the half-million patients with ESRD in the U.S., nearly 4/5 require dialysis treatment, and nearly all of these undergo hemodialysis (HD), an extracorporeal process of removing, cleaning, and replacing the blood using machines. The remaining patients, currently ~40,000, opt for peritoneal dialysis (PD)* therapy, a process whereby a permanent catheter embedded through the abdominal cavity is used to exchange medicated dialysate with waste from the blood via the peritoneal membrane at least 3x per day. This is a process the patient manages herself. The outcomes for PD and HD are comparable, but the main advantages of PD over HD are increased patient empowerment, and cost savings. Several studies in recent years have argued convincingly for the general superiority of PD over HD on a number of relevant dimensions.

With per patient costs of ~$72,000 per year in the U.S., PD does cost less than HD, which runs ~$88,000 per year. The main cost drivers for PD are the dialysate solution, requiring 1 bag per session, as well as the general management of anaemia, the latter being common to any dialysis treatment. A quick look at the prices of PD supplies on Baxter’s product listings confirms their high price as each bag of solution costs ~$45, summing to a yearly cost of nearly $50,000 in solution alone for just thrice daily treatment.

While improvements in home hemodialysis technology could change this, PD is currently the most disruptive form of dialysis. But could costs be even lower for ESRD patients opting for the low cost dialysis route?

Mitra Industries, a manufacturing company in Transfusion Medicine & Renal Services based in New Delhi, India, has developed a novel one-bag solution (NOB) for PD that has decreased the monthly per patient cost to a shockingly low $235. Even assuming that all of this cost is attributable to solution, with thrice per day therapy, that’s a per bag cost of $2.6 compared with $45 from Baxter. Other product benefits are named in their release video below.

In my correspondence with Atul Rishi, the Country Manager for Mitra, he prefaced his introduction of the NOB by listing the environmental constraints that shaped Mitra’s innovation efforts. These are:

  • India Is a Large Country: True both in terms of area & population
  • Education: The majority of the population is not educated
  • Limited Medical Resources: Main cities have excellent facilities but smaller towns are still lacking basics, and the majority of the population in India still resides in smaller towns. For example HD machines are only available in large cities
  • No Medical Reimbursement: Only limited government employees get medical reimbursement and all private patients are self-paid, so they know the costs
  • High Medical Costs: India still imports many medical devices and medications from abroad, and distribution costs are high to reach rural patients, e.g. consider the cost of transporting sufficient quantities of the standard 2 liter bags used in PD therapy
  • High Non-Consumption: 80% to 85% of kidney failure patients go without renal therapy in India as a result of the factors above
  • Emerging Manufacturing Capability: The first indigenous designer and manufacturer of PD products in India began work only in 2000, and started manufacturing supplies nearly identical to those India had been importing from Western countries.

When Mitra began manufacturing PD products in 2006, they did so at the same price points as the competition, but as Atul says, “[We] were constantly thinking on how to reduce cost per bag so that it is not only more economical than existing PD company bags, but also equivalent to or lower than HD monthly cost” (HD, though generally more expensive than PD in developed countries, is sometimes cheaper in developing countries, likely due to much higher resource utilization).

Innovating to the market constraints above, Mitra reduced 2 bags to 1 by reusing the solution bag as the drain bag, and thereby also eliminated the Y connector & tube. This has decreased material cost and waste, and also reduced transportation cost of materials by 15%, leading to a price point not only 95% cheaper than PD bags in the USA, but also 33% cheaper than alternatives in India.

Whether Mitra can make the leap into the U.S. healthcare market to disrupt existing offerings with its NOB depends on many factors outside the scope of this post’s analysis; however, the need for innovations such as this is especially dire at this time. Baxter, which supplies about 90% of supplies for PD patients in the U.S., limited the number of PD referrals across their entire base of customers this year, as well as announced there will be an unexpected and large shortage in supplies of peritoneal dialysis solution for patients with kidney failure in the U.S. Other U.S. manufacturers have stated they cannot make up the shortfall. Given that PD has been rapidly growing as a viable form of low-cost, effective dialysis treatment in the U.S. in recent years, the FDA would do well to consider extending import and marketing approvals to companies such as Mitra, which not only have the capacity to serve patients at scale, but have also structurally innovated their products to decrease the cost of PD therapy. Baxter may well leave the game due to the loss of margins for provision of PD equipment, but they already seem to have lost interest in this market. Should we succeed in allowing entrance to laudable innovators such as Mitra, the real winners will be the patients and payers of America.

*All subsequent use of ‘PD’ in this post refers more specifically to continuous ambulatory PD, as opposed to automated PD

Photo Credit: http://upload.wikimedia.org/wikipedia/commons/4/4e/Peritoneal_dialysis.gif


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