CVS Health Corp. is beginning human trials of a new home dialysis machine that could shake up the $35 billion market for end-stage kidney care and create a new business for the drugstore chain.
The company plans to offer a device designed by a firm founded by Dean Kamen, the inventor of the two-wheeled Segway personal transporter. The goal is to make the complicated process of dialysis, which cleans toxins from a patient’s blood, easier and safer to do at home. If successful, CVS could threaten the two companies that dominate the market for outpatient dialysis clinics, which most users visit three times a week.
The announcement comes a week after President Donald Trump signed an executive order aimed at modernizing kidney care, with the aim of vastly increasing the number of patients who receive dialysis at home. Currently, about 12 percent of Americans start dialysis treatment at home, U.S. Health and Human Services Secretary Alex Azar said in March.
“The optimal device for home hemodialysis doesn’t exist,” said CVS Executive Vice President Alan Lotvin, in an interview. “This device was designed from the start, from the get-go, to be used by patients and caregivers in their home.”
The sleek, black CVS HemoCare machine includes touch-screen controls, a simplified setup that uses fewer supplies and new automated safety features.
The 70-patient trial assessing safety and efficacy will be held at as many as 10 kidney centers in the U.S. The Rogosin Institute, a kidney-treatment center in New York, will be the initial trial site, CVS said. The hope is to complete the trial and get U.S. regulatory clearance to market the device by the end of 2021, Lotvin said. CVS is working closely on the project with the Food and Drug Administration, he said.
The 9,900-store pharmacy chain is still working on financial models of how it would sell or rent the device to patients, he said.
Kidney care eats up about 20 percent of the annual budget for Medicare, the federal health-care program for senior citizens, with much of the spending going toward dialysis. The business is dominated by two entrenched companies, DaVita Inc. and Fresenius Medical Care. Together, they have more than 70 percent of the dialysis market in the U.S., according to Bloomberg Intelligence. Both companies also offer home dialysis services.
Shares of DaVita fell 4.7 percent in premarket trading in New York on Wednesday, while CVS gained 0.9 percent. Fresenius shares, traded in Germany, declined as much as 2.6 percent.
Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, is the lead independent director at DaVita.
In addition to a lack of patient awareness about their options, one reason home blood dialysis isn’t done more often is the complexity of the equipment and training involved. A second type of home kidney treatment, called peritoneal dialysis, is simpler to learn, but it involves installation of a catheter in a patient’s abdomen.
The dialysis business is so big that it could generate meaningful revenue for CVS even if the drugstore giant captures only a fraction of the market. Of the $114 billion Medicare spent on kidney care in 2016, $35 billion went to patients in the late stages of kidney failure who need dialysis, according to a government-funded data registry.
CVS said it has more than 150 people working on the device and other kidney-disease services. It’s already collaborating with some insurers to help manage patients in the early stages of renal disease, and has developed an artificial-intelligence tool that forecasts the chances a patient will need dialysis in the near future, Lotvin said.
“This is one of our major initiatives,” he said. “We would expect it to be an important contributor in the future.” He declined to discuss financial projections for CVS’s kidney-care business.
CVS’s move into renal care comes as the landscape of the U.S. health-care market is changing. In 2018, CVS bought health insurer Aetna for about $68 billion, part of a move that aims to orient the retailer more toward health-care services. It plans to convert 1,500 of its drugstores in the next three years to new “hub” locations featuring expanded clinics, wellness rooms and spaces for pharmacist consultations.
CVS has been working with Deka Research & Development Corp., the company run by Kamen, since 2017. The CVS-Decca machine solves one problem with home blood dialysis — the need for large amounts of purified water — with a distillation system the size of an under-counter refrigerator. The top portion of the device, which does the dialysis, has a touch screen to simplify the setup process.
