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Trump's executive order on kidney health lifts dialysis company stocks

President Donald Trump signed an executive order Wednesday aimed at expanding treatment options for kidney patients through increased choice, affordable alternative treatments, and more at-home options. The order also encourages the development of artificial kidneys and broader access to kidney transplants.

The order boosts business for dialysis companies like DaVita (DVA) and Fresenius (FMS), and pharmaceutical companies like Amgen (AMGN).

In a speech delivered Wednesday, Trump put a spotlight on dialysis treatment at home.

“Doing this from the home is a dramatic, long overdue reform,” he said. “Something that people have been asking for many, many years.”

Currently, about 12% of kidney patients receive dialysis at home, Trump said.

The push for at-home care fits the business models of dialysis giants DaVita and Fresenius. DaVita released a statement Tuesday, ahead of Trump’s announcement, where new CEO Javier Rodriguez said the company has been investing in kidney care expansion.

US President Donald Trump speaks about advancing American kidney health in Washington, DC, on July 10, 2019. (Photo by Nicholas Kamm / AFP)        (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)
US President Donald Trump speaks about advancing American kidney health in Washington, DC, on July 10, 2019. (NICHOLAS KAMM/AFP/Getty Images)

“We've been investing in capabilities to deliver holistic care that addresses our patients' needs beyond kidney disease, such as mental health, social services and nutrition,” Rodriguez said. “We will continue to work with the Administration and Congress to launch programs that address broader care opportunities.”

Fresenius recently announced it was working on remote health monitoring, predictive analytics and algorithmic clinical insights to help alert clinicians of a potential need for medical attention, as well as help reduce “unnecessary as well as costly hospitalizations.”

The executive order also calls for greater awareness and education provided to patients of their options to help reduce the number of patients relying solely on dialysis.

DaVita shares were up as much as 5.0% on Wednesday. Fresenius was up 2%.

Dialysis is not ideal

The National Institutes of Health has been focused on the development of artificial kidneys, and has cited problems in the dependency of dialysis.

In February 2018, NIH promoted a recent study using an artificial kidney.

“While dialysis saves thousands, if not millions, of lives each year, it is not an ideal solution for kidney disease,” the NIH statement said. “Instead of continuous blood filtration, which keeps blood chemistry within a healthy range, dialysis results in ultra-cleansed and nutrient-depleted blood, which becomes gradually more toxic until the following dialysis treatment.”

But while the development of artificial kidneys is being worked on, the administration wants to encourage more donations by removing financial barriers.

arlificial kidney (dialysis) device with rotating pumps. closeup view.
Dialysis device with rotating pumps

“The regulation should expand the definition of allowable costs that can be reimbursed under the Reimbursement of Travel and Subsistence Expenses Incurred Toward Living Organ Donation program, raise the limit on the income of donors eligible for reimbursement under the program, allow reimbursement for lost-wage expenses, and provide for reimbursement of child-care and elder-care expenses,” according to Trump’s executive order.

The administration’s actions focus on value-based care, which is the industry’s ongoing focus to help reduce costs by providing more proactive care to manage chronic diseases.

This means the way health care providers will be paid by Medicare, and the coverage of at-home dialysis and alternative treatment options, will change.

These changes, Trump said, could save taxpayers up to $4.2 billion per year.

The executive order includes many of the recommendations from an industry advocacy group called Kidney Care Partners, which includes almost three dozen members such as the American Kidney Fund, Amgen, DaVita and Fresenius. A similar outline of ideas can also be found in a bill sponsored by Sens. Benjamin Cardin (D-MD) and Roy Blunt (R-MO) which was introduced in the U.S. Senate in May.

Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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