Fresenius Medical Care AG & Co. KGaA Profile
Fresenius Medical Care AG provide dialysis and related services for individuals with renal diseases, as well as other health care services. The company also develops, manufactures, and distributes a wide variety of health care products.
The company receives a substantial portion of its Care Delivery revenue from the U.S. Medicare program and other government sources.
Services, Products and Business Processes
As a leading global health care company, the company offers health care services and products in around 150 countries with a focus on the following areas: in-center hemodialysis – treatment in specialized clinics; peritoneal dialysis – treatments largely administered by patients primarily at home; home hemodialysis – treatment administered by patients at home; acute dialysis – dialysis treatments administered in a hospital inpatient setting; dialysis drugs – expanding the company’s product range; and other health care services.
Health Care Services
The company provided dialysis treatment and related laboratory and diagnostic services through the company’s global network of 3,925 outpatient dialysis clinics in 2023. At the company’s clinics, the company provides hemodialysis treatments at individual stations through the use of dialysis machines and disposable products. In hemodialysis treatment, a nurse connects the patient to the dialysis machine via bloodlines and monitors the dialysis equipment and the patient’s vital signs. The capacity of a clinic is a function of the number of stations and additional factors, such as type of treatment, patient requirements, length of time per treatment, and local operating practices and ordinances regulating hours of operation.
As part of the dialysis therapy, the company provides a variety of services to ESRD patients at the company’s dialysis clinics in the U.S. These services include administering erythropoietin stimulating agents (ESAs), which are synthetic engineered hormones that stimulate the production of red blood cells. ESAs are used to treat anemia, a medical complication that ESRD patients frequently experience. The company administers ESAs to most of the company’s patients in the U.S.
The company’s clinics also offer services for home dialysis patients, the majority of whom receive peritoneal dialysis (PD) treatment. For the company’s home dialysis patients, the company provides materials, training and patient support services, including clinical monitoring, follow-up assistance and arranging for the delivery of supplies to the patient’s residence.
The company also provides dialysis services under contract to hospitals in the U.S. on an ‘as needed’ basis for hospitalized ESRD patients and for patients suffering from acute kidney failure. Acute kidney failure can result from infections, sepsis, hypotension, toxins, systemic diseases, trauma, or other causes, and requires dialysis until the patient’s kidneys recover their normal function. The company provides services to these patients either at their bedside, using portable dialysis equipment, or at the hospital’s dialysis site. Contracts with hospitals provide for payment at negotiated rates that are generally higher than the Medicare reimbursement rates for chronic in-clinic outpatient treatments.
Other Health Care Services
Pharmacy Services
The company offers pharmacy services, mainly in the U.S. These services include providing renal medications and supplies to the homes of patients or to their dialysis clinics directly from renal pharmacists who are specially trained in treating and counseling patients living with kidney disease.
Vascular, Cardiovascular and Endovascular Specialty Services and Vascular Care Ambulatory Surgery Center Services
The company operates physician office-based vascular access centers, mainly in the U.S. The company also develops, owns and manages specialty outpatient surgery centers for vascular care. A patient receiving hemodialysis must have a vascular access site to enable blood to flow to a dialysis machine for cleansing and to return the newly cleaned blood to the body. The company’s centers create and coordinate the maintenance of these vascular access sites, helping to ensure maturation before use and good flow of blood. Additionally, the company’s vascular care services provide both cardiovascular and endovascular specialty services. Cardiovascular procedures are similar to the setting of care and scope of services for vascular access procedures discussed above with a focus on treatment for heart disease, while endovascular surgical procedures are minimally invasive and designed to access many regions of the body via major and peripheral blood vessels and assist in both the maintenance of hemodialysis accesses and treatment of peripheral artery disease.
Value and Risk-Based Care Programs
The company conducts a broad range of value and risk-based care programs spanning CKD and ESRD patient populations with both private and public payors. The company has participated recently in the following value-based programs:
CMS commenced its ESRD Treatment Choices model on January 1, 2021. The ESRD Treatment Choices model is a mandatory model that applies to ESRD facilities and managing clinicians in certain randomly selected geographic regions (specifically, Hospital Referral Regions) that comprise approximately 30% of adult ESRD beneficiaries in all 50 states and the District of Columbia. This model applies both upside and downside payment adjustments to certain claims submitted by participating physicians and dialysis facilities for Medicare dialysis patients over a span of six and on-half years.
A new voluntary CMS payment model, the Comprehensive Kidney Care Contracting model, began on January 1, 2022 as a successor program that builds upon the discontinued ESRD Seamless Care Organizations model. Under the CKCC model, renal health care providers participate by forming an entity known as a Kidney Care Entity (KCE). Through the KCE, renal health care providers take responsibility for the total cost and quality of care for Medicare beneficiaries with CKD stages 4 and 5, as well as Medicare beneficiaries with ESRD. In order to participate, KCEs must include nephrologists and transplant providers, and dialysis providers and other third parties are permitted to participate. The voluntary models allow KCEs to take on various amounts of financial risk. Two options, the CKCC global and professional models, allow renal health care providers to assume upside and downside financial risk. A third option, the CKCC graduated model, is limited to assumption of upside risk, but is unavailable to KCEs that include large dialysis organizations.
The company has also entered into value and risk-based care programs with private payors to provide care to commercial and Medicare Advantage ESRD and CKD patients. Under these payment arrangements, the company’s financial performance is based on the company’s ability to manage a defined scope of medical costs within certain parameters for clinical outcomes.
Physician Nephrology Services
The company manages and operates nephrology physician practices in the United States.
Other Health Care Services Outside the United States
Ambulant Treatment Services
While the company is the majority stakeholder in Cura Day Hospitals Group (Cura), a leading operator of day/short-stay hospitals in Australia, on January 8, 2024 the company announced that an agreement has been signed to divest Cura to global alternative asset manager ICG and a consortium of health care professionals, subject to regulatory approval. The company continued to provide ambulant treatment services in other parts the company’s Care Delivery business outside the U.S., which include comprehensive and specialized health check-up centers, vascular access and other chronic treatment services.
Health Care Products
The company is the world’s largest manufacturer and distributor of equipment and related products for hemodialysis and the second largest manufacturer and distributor of peritoneal dialysis products. The company sells its health care products to customers in around 150 countries and the company also uses them in its own health care service operations. Most of the company’s customers are dialysis clinics.
The company produces and distributes a wide range of machines and disposables for HD, PD and critical care, including acute dialysis.
Hemodialysis Machines
The company’s advanced line of hemodialysis machines includes four series: 2008, 4008, 5008 and 6008. The company developed the 4008, 5008 and 6008 series for the company’s markets outside of the U.S. and the 2008 series for the U.S. market. In 2016, the company introduced the 6008 series with the launch of the company’s 6008 CAREsystem.
The company also produces the 4008 series and 5008S outside of the U.S. for patients to perform home hemodialysis treatment. In 2019, the company completed its acquisition of NxStage Medical, Inc. (NxStage), which broadens the company’s offerings of home hemodialysis treatment options.
In January 2019, the company launched the 4008A dialysis machine, which was designed to meet the needs of emerging markets. With the launch of the 4008A, the company intends to improve the accessibility to life-sustaining dialysis treatment for ESRD patients in these countries. The 4008A dialysis machine incorporates the company’s high-quality standards while minimizing costs for health care systems. The 4008A dialysis machine has been deployed primarily in emerging Asian markets and more recently in China.
On February 8, 2024, the company received FDA clearance for its 5008X hemodialysis system, which will enable the start of clinical evaluations and user-studies in the U.S. The 5008X system provides high-volume hemodiafiltration dialysis therapy.
The company’s various models of these machine series utilize the company’s latest R&D efforts to improve the dialysis process. Examples of these improvements include the addition of Clinical Data eXchange (CDX), which allows the clinician to access Medical Information System (MIS) data directly from the dialysis station.
Dialyzers
Dialyzers are specialized filters that remove uremic toxins and excess water from the blood during hemodialysis. The company estimates that the company is the leading worldwide producer of polysulfone dialyzers. The company manufactures its F-series and advanced FX series of dialyzers, as well as the company’s Hemoflow and Optiflux series, the leading dialyzer brand in the U.S. All membranes manufactured by the company is produced from highly biocompatible synthetic materials. For example, the novel FX CorAL dialyzer contains an innovative Helixone hydro membrane. This polysulfone membrane is hydrophilized with higher concentrations of polyvinyl pyrrolidone (PVP). In vitro measurements have shown that PVP induces a hydrophilic environment on the inner membrane surface, shown to cause smaller secondary membrane formation, which has been linked to lower complement activation, lower platelet loss and also lower loss in performance.
Home Dialysis Products
The company offers a full line of home dialysis therapy, including products, services and solutions for CAPD, APD and home hemodialysis treatments.
Peritoneal Dialysis
CAPD Therapy: The company’s stay?safe system has been specifically designed to help patients with their daily self-care CAPD treatment in a safe and convenient way.
APD therapy: APD using the company’s product line, which includes the company’s Liberty cycler, sleep ? safe cycler, sleep ? safe harmony cycler and SILENCIA cycler, offers many benefits to PD patients.
Home Hemodialysis
The company provides products for home hemodialysis, with the 5008S portfolio mentioned above, as well as purpose-built products for home: the NxStage VersiHD cycler, (its predecessor, the NxStage System One S and the NxStage PureFlow SL water and dialysate preparation system.
Acute Dialysis Products
Acute dialysis is intended to provide a full portfolio of proven blood purification therapies for critically ill patients with Acute Kidney Injury, including Continuous Kidney Replacement Therapy, as well as further treatment options, such as therapeutic plasma exchange, carbon dioxide removal and sepsis therapy. The company’s intention is to provide state-of-the-art therapies supporting impaired kidneys which are easy to operate with a high degree of safety. The company’s portfolio includes acute dialysis machines, dialysis fluids, hemofilters, plasma filters, adsorbers and a variety of treatment kits and catheters.
Other Dialysis Products
The company manufactures and/or distributes arterial, venous, single needle and pediatric bloodlines. The company produces liquid, dry and semi-dry acid concentrates for individual supply and central supply, including in-house preparation for which the company also provides appropriate connection central distribution systems, as well as suitable mixing devices. Liquid acid concentrates are formulated to be mixed with dry bicarbonate concentrate (8.4%), using water for hemodialysis treatment. Dry and semi-dry concentrates must be dissolved with water using a suitable mixing device to obtain liquid acid concentrate. Dry acid concentrate requires less storage space and may be less prone to bacterial growth than liquid acid concentrates. The company also has rinsing solutions (Saline 0.9% in bags) in its portfolio for priming and rinsing the tubing system. Other products include solutions for disinfecting and decalcifying hemodialysis machines, fistula needles and hemodialysis catheters.
Other Health Care Products
Therapeutic Apheresis: Within the company’s portfolio of therapeutic apheresis products, the company offers extracorporeal therapy options for patients who cannot be sufficiently treated through conventional pharmaceutical regimens, including the removal of metabolic products, toxins, autoantibodies and immunocomplexes. This therapy uses semi-selective adsorbers and filters for the cleaning of blood or plasma components.
Heart and Lung Therapies (Acute Cardiopulmonary Products): In December 2016, the company acquired Xenios AG, a company focusing on products for extracorporeal heart and lung support for patients with severe heart and lung failure, in particular for the indications of severe acute respiratory distress syndrome, acute exacerbations of chronic obstructive pulmonary disease and cardiogenic shock. The products used for an extracorporeal gas exchange offer a wide range of heart and lung support from partial CO2 removal up to full oxygenation. Xenios’s Novalung, a heart and lung support system for the treatment of acute respiratory or cardiopulmonary failure, was approved by the FDA in February 2020 and is the first extracorporeal membrane oxygenation (ECMO) system to be cleared for more than six hours of continuous use as extracorporeal life support. In early May 2021, Xenios AG received approval for a patient kit in China, which followed China’s National Medical Products Administration approval of the Xenios console in December 2020. As a result, a complete heart and lung support system is now permitted for ECMO therapy in China.
Renal Pharmaceuticals
The company continues to acquire and in-license renal pharmaceuticals to improve dialysis treatment for the company’s patients. Below are the primary renal pharmaceuticals the company has acquired or for which the company has obtained licenses for use:
PhosLo
In November 2006, the company acquired PhosLo, a calcium-based phosphate binder. Phosphate binders keep phosphorus levels in ESRD patients in a healthy range by preventing the body from absorbing phosphorus from foods and assisting the passing of excess phosphorous out of the body. The company has received approval of PhosLo in selected European countries. In October 2008, a competitive generic phosphate binder was introduced in the U.S. market, which reduced the company’s PhosLo sales in 2009. In October 2009, the company launched an authorized generic version of PhosLo to compete in the generic calcium acetate market. In April 2011, the FDA approved the company’s New Drug Application for Phoslyra, a liquid formulation of PhosLo. In 2023, the company discontinued the sale of Phoslyra in the U.S.
Venofer and Ferinject
In 2008, the company entered into two separate and independent license and distribution agreements, one for certain countries in Europe and the Middle East with Vifor (International) Ltd., a subsidiary of Swiss-based CSL Vifor (formerly Vifor Pharma Ltd.) and one for the U.S. (with American Regent, Inc. (formerly Luitpold Pharmaceuticals Inc.)), to market and distribute intravenous iron products; Venofer (iron sucrose) and Ferinject (ferric carboxymaltose) outside of the U.S. Both drugs are used to treat iron deficiency anemia experienced by non-dialysis CKD patients, as well as dialysis patients. Venofer is the originator intravenous iron sucrose product, a leading intravenous iron brand in terms of volume worldwide. Ferinject is a leading intravenous iron therapy with market authorization in 86 countries as of August 2023 and 25 million patient years of experience.
The first agreement concerns all commercialization activities for these intravenous iron products in the field of dialysis and became effective on January 1, 2009. In North America, a separate license agreement effective November 1, 2008, provides the company’s subsidiary Fresenius USA Manufacturing Inc. (FUSA) with exclusive rights to manufacture and distribute Venofer to freestanding (non-hospital based) U.S. dialysis facilities and, in addition, grants FUSA similar rights for certain new formulations of the drug. In 2017, Fresenius Medical Care Canada acquired the license to distribute Venofer for ESRD and all indications in Canada. The license agreement has a term of five years with two additional two-year options. The U.S. license agreement has a term of ten years and includes FUSA extension options. In 2023, the North American agreement with American Regent was renegotiated and extended through December 31, 2028. The international agreement which had a term of 20 years was terminated in 2010 as a consequence of the establishment of Vifor Fresenius Medical Care Renal Pharma Ltd. and Vifor Fresenius Medical Care Renal Pharma France S.A.S. (collectively, VFMCRP).
In December 2010, the company announced the expansion of its agreements with CSL Vifor by forming a new renal pharmaceutical company, VFMCRP, with the intention to develop and distribute products focused on addressing distinct complications and areas of chronic kidney disease; renal anemia management, mineral and bone management, kidney function preservation and improvement, conditions associated with kidney impairment and its treatment; and cardio-renal management. FME AG owns 45% of the company, which is headquartered in Switzerland. CSL Vifor contributed licenses (or the commercial benefit in the U.S.) to its Venofer and Ferinject products for use in the dialysis and pre-dialysis market (CKD stages III to V). CSL Vifor and its existing key affiliates or partners retain the responsibility for commercialization of both products outside the renal field. With effect as of November 2, 2021, Vifor Pharma Participations Ltd replaced Vifor Pharma Ltd as a shareholder of VFMCRP.
Velphoro
As part of the agreement to create VFMCRP, CSL Vifor also contributed the asset Velphoro (sucroferric oxyhydroxide), a novel iron-based phosphate binder, to the new company (excluding certain rights within Japan). Fresenius Medical Care North America (FMCNA) markets the product on behalf of VFMCRP in the U.S. and commercial sales of Velphoro commenced in the first quarter of 2014 in the U.S. market. Velphoro has been approved in 51 countries and commercially launched in 38 countries worldwide and the VFMCRP partner Kissei also received approval from the Ministry of Health, Labour and Welfare in Japan during 2015 for the product which is marketed in Japan under the brand name P-TOL. In China, the company received New Drug Approval in February 2023.
OsvaRen and Phosphosorb
In June 2015, VFMCRP, with CSL Vifor, was developed further. In addition to the iron replacement products Ferinject and Venofer for use in nephrology indications and the phosphate binder Velphoro in the company’s shared product portfolio, VFMCRP acquired nephrology medicines commercialized by the company, including the phosphate binders OsvaRen and Phosphosorb. The transfer of the marketing rights was largely completed during the fourth quarter of 2015, allowing the company to further develop its sales and marketing in key European markets.
Shared Product Portfolio
The core of the VFMCRP model is to in-license products predominantly initiated or used by nephrologists as part of the following areas: renal anemia, mineral and bone and cardio-renal management, kidney function improvement and renal associated conditions. The in-licensed products are detailed below:
Mircera (methoxy polyethylene glycol-epoetin beta) is a long-acting ESA licensed from F. Hoffmann-La Roche AG since 2015 to treat symptomatic anemia associated with chronic kidney disease. The product is supplied to around 5,000 dialysis clinics in the U.S. and its territories.
Retacrit (epoetin alfa-epbx) is a short-acting ESA approved in the U.S. in 2018 for all indications of its reference drug, epoetin alfa. Retacrit is licensed from Pfizer Inc. since 2015 for certain channels, primarily comprising the U.S. non-hospital dialysis market and nephrology office practices. It is the first, and only, biosimilar ESA approved for use in the U.S.
Rayaldee (extended release calcifediol) is the first, and only, oral extended release formulation of calcifediol, a pro-hormone of the active form of vitamin D3, for the treatment of secondary hyperparathyroidism in CKD patients with vitamin D insufficiency. VFMCRP has an exclusive license agreement with OPKO Health, Inc., to co-develop and commercialize Rayaldee in Europe (except Russia), Canada, Australia and Japan. In 2022, Rayaldee was launched in Germany and Switzerland.
Tavneos (avacopan) is a first-in-class rare disease treatment for anti-neutrophil cytoplasmic antibody-associated vasculitis (AAV) licensed ex-U.S. from ChemoCentryx, Inc., a wholly owned subsidiary of Amgen Inc. In the licensed territories, Tavneos has been approved for the treatment of two main forms of AAV in combination with a rituximab or cyclophosphamide regimen in Japan, the European Union (including Iceland, Liechtenstein and Norway), Canada, Great Britain, Switzerland, Australia, Kuwait, Israel and South Korea. The therapy has been launched in Germany, Austria, Japan, Canada, Great Britain, Switzerland, Luxembourg, France and Spain.
Korsuva/Kapruvia (difelikefalin) is the first product approved in EU and U.S. for the treatment of moderate-to-severe pruritus associated with CKD for adults undergoing hemodialysis. VFMCRP has a license agreement with Cara Therapeutics, Inc. (Cara), to develop and commercialize Korsuva/Kapruvia worldwide, excluding Japan and South Korea. In the U.S., VFMCRP’s rights are for the entire dialysis market. The company’s renal pharmaceuticals team promotes the product to the company’s clinics/prescribers and receives a marketing fee on the company’s clinical sales, as well as group profit (as a shareholder of VFMCRP) for non-Fresenius Medical Care sales. CSL Vifor’s sales team promotes the product to all non-Fresenius Medical Care clinics/prescribers and receives a marketing fee on these sales. In 2023, CMS ruled that it would add an amount of $0.2493 to each Medicare Fee-for-Service patient treatment beginning in April 2024 through the following three years. After this period, this amount will be taken out of the bundled rate. Fresenius Renal Pharmaceuticals and CSL Vifor agreed that both organizations would stop promotion of Korsuva, in the U.S. market, in 2024. Neither organization will receive a marketing fee beginning in January 2024. Korsuva/Kapruvia is approved in the U.S., the EU (including Iceland, Liechtenstein and Norway), Great Britain, Canada, Switzerland, Kuwait, United Arab Emirates, Singapore and Australia. The product is available in the U.S., Germany, Austria, Sweden, France, Netherlands, and Iceland. The majority of launches for this innovative treatment are expected in 2024.
VFMCRP also own the rights to Veltassa (patiromer), a treatment for hyperkalaemia or elevated potassium levels, outside of the U.S. and Japan. In the licensed territories, Veltassa was launched in 12 European markets, as well as Saudi Arabia, United Arab Emirates, Kuwait, Australia and Canada (by partner Otsuka Canada Pharmaceutical, Inc.).
Major Markets
To obtain and manage information on the status and development of global, regional and national markets, the company has developed its MCS. The company uses the MCS within the company as a tool to collect, analyze and communicate current and essential information on the dialysis market, developing trends, the company’s market position and those of its competitors.
The company is also the global market leader for dialysis products. Dialysis products the company produced for use in the company’s own dialysis centers or for sale to third-party customers accounted for a market share of 35% in 2023 (2022: 35%).
Competition
Health Care Services
The company’s largest competitors in the dialysis services industry include DaVita, Inc., Diaverum AB, B. Braun SE, U.S. Renal Care, Inc. and Nephrocare Health Services Private Limited (NephroPlus).
Products
The company’s competitors include Akebia Therapeutics, Inc.; Baxter International, Inc.; Outset Medical, Inc.; Toray Industries, Inc.; Ardelyx Inc.; JMS Co., Ltd; Quanta Dialysis Technologies Inc.; WEGO Healthcare (Shenzhen) Co., Ltd; Asahi Kasei Medical Co., Ltd; Mozarc Medical Holding LLC; Sanofi S.A.; B. Braun SE; Nikkiso Co., Ltd.; S.A.S. Physidia; Bain Medical Equipment (Guangzhou) Co., Ltd; Nipro Corporation; and Takeda Pharmaceutical Company Limited.
Strategy
The company’s products and health care services are at the core of the company’s strategy. To implement the company’s strategy successfully, the company will concentrate on three key areas: the renal care continuum, critical care solutions and complementary assets.
Customers, Marketing, Distribution and Service
The company sells most of its products to dialysis clinics, hospitals and specialized treatment clinics. Close interaction between the company’s sales and marketing, as well as R&D personnel enables the company to integrate concepts and ideas that originate in the field into product development. The company maintains a direct sales force of trained salespersons engaged in the sale of hemodialysis and peritoneal dialysis, as well as acute dialysis products and products for critical care. International sales teams visit physicians, clinical specialists, hospitals, clinics and dialysis clinics and, together with marketing, represent the company at industry trade shows. The company’s clinical nurses provide clinical support, training and assistance to customers and assist the company’s sales force. The company offers customer service, training and education in the applicable local language, and technical support such as field service, repair shops, maintenance and warranty regulation for each country in which the company sells dialysis products.
In the company’s basic distribution system, the company ships products from factories to central warehouses which are frequently located near the factories. From these central warehouses, the company distributes its dialysis and non-dialysis products to regional warehouses. The company also distributes home hemodialysis and peritoneal dialysis products to patients at home, care facilities or their travel destination. The company also delivers hemodialysis and critical care products directly to dialysis clinics, hospitals and other customers. Additionally, local sales forces, independent distributors, dealers and sales agents sell all the company’s products.
Sales of Dialysis Products to Iran
The company actively employs comprehensive policies, procedures and systems to ensure compliance with applicable controls and economic sanctions laws. The company allocated resources to design, implement and maintain a compliance program specific to the company’s U.S. and non-U.S. activities. Additionally, the company’s dedication to providing its life-saving dialysis products to patients and sufferers of ESRD extends worldwide, including conducting humanitarian-related business with distributors in Iran in compliance with applicable law. In particular, the company’s product sales to Iran from Germany are not subject to the EU’s restrictive measures against Iran established by Council Regulation (EU) No. 267/2012 of March 23, 2012, as last amended by Council Implementing Regulation (EU) 2021/1242 of July 29, 2021 implementing Regulation (EU) No 267/2012 concerning restrictive measures against Iran, as the company’s products sold to Iran do not fall within the scope of the EU sanctions and none of the end users or any other person or organization involved is listed on the relevant EU sanctions lists.
Patient, Physician and Other Relationships
The company’s success in establishing and maintaining health care centers, both in the U.S. and in other countries, depends significantly on the company’s ability to obtain the acceptance of and referrals from local physicians, hospitals and integrated care organizations. The company’s ability to provide high-quality dialysis care and to fulfill the requirements of patients and doctors depends significantly on the company’s ability to enlist nephrologists as medical directors for the company’s dialysis clinics and receive referrals from nephrologists, hospitals, post-acute care facilities and general practitioners.
The company has engaged physicians or physician practices to serve as medical directors for the company’s outpatient dialysis centers, home dialysis programs, and inpatient dialysis service relationships with hospitals.
In addition to the company’s dialysis clinics, a number of the company’s other health care centers employ or contract with physicians to provide professional and administrative services. The company has financial relationships with these physicians in the form of compensation arrangements for the services rendered. The company has processes in place to negotiate these contractual arrangements in compliance with federal and state laws applicable to financial relationships with physicians, such as the Stark Law and the Anti-Kickback Statute.
A number of the dialysis clinics and other health care centers the company operates are owned, or managed, by entities in which the company holds a controlling interest and one or more hospitals, physicians or physician practice groups hold a minority interest. The company has granted holders of these minority interests put options or similar rights under which the company could be required to purchase all or part of the minority owners’ noncontrolling interests. The company also has agreements with physicians to provide management and administrative services at health care centers in which physicians or physician groups hold an ownership interest and agreements with physicians to provide professional services at such health care centers. The company’s relationships with physicians and other referral sources relating to these entities must comply with the federal Anti-Kickback Statute and Stark Law.
Patents and licenses
As the owner of patents or licensee under patents throughout the world, the company holds rights in over 9,500 patents and patent applications in major markets.
Trademarks
As the owner of trademarks or licensee of trademarks throughout the world, the company holds rights in over 3,600 registered trademarks or trademark applications covering inter alia the company’s key product branding in major markets.
The company’s principal trademarks and corporate names are or comprise the designation ‘Fresenius Medical Care’ which the company uses stand-alone or together with a triangular ‘F’ figure in the company’s corporate logo. The use of ‘Fresenius’ in the company’s trademarks is based on a perpetual, royalty-free license from Fresenius SE, the company’s major shareholder.
Regulatory and Legal Matters
The company must comply with all U.S., German and other legal and regulatory requirements under which the company operate, including the U.S. federal Medicare and Medicaid Fraud and Abuse Amendments of 1977, as amended, generally referred to as the ‘Anti-Kickback Statute,’ the federal False Claims Act, the federal Physician Self-Referral Law, commonly known as the ‘Stark Law,’ the U.S. Civil Monetary Penalties Law, including the prohibition on inducements to patients to select a particular health care provider and the federal FCPA, as well as other fraud and abuse laws and similar state statutes, as well as similar laws in other countries.
As a global health care company, the company is subject to laws and regulations, including privacy and data protection. These laws and regulations govern, amongst other elements, the collection, use, disclosure, retention, and transfer of personal data. For example, the EU’s General Data Protection Regulation, which became effective in May 2018, imposes substantial worldwide obligations on the processing and disclosure of personal data. Additional requirements are imposed by the U.S. federal rules protecting the privacy and security of patient medical information, as promulgated under the Health Insurance Portability and Accountability Act of 1996 and, as amended by the Health Information Technology for Economic and Clinical Health Act (enacted as part of the American Recovery and Reinvestment Act of 2009), among other rules promulgated by individual state legislatures. These laws continue to develop globally and differ from jurisdiction to jurisdiction, which increases the complexity and costs of the company’s global data protection and security compliance programs.
In the U.S., numerous regulatory bodies, including the FDA and comparable state regulatory agencies impose requirements on certain of the company’s subsidiaries as a manufacturer, distributor and/or a seller of drug products under their respective jurisdictions. Some of the products the company’s subsidiaries manufacture and/or distribute are subject to regulation under the Federal Food, Drug, and Cosmetic Act of 1938, as amended (FDCA) and FDA’s implementing regulations. They include the company’s peritoneal dialysis and saline solutions, PhosLo (calcium acetate), Phoslyra (calcium acetate oral solution), Venofer (iron sucrose injection, USP), and Velphoro (sucroferric oxyhydroxide).
The company is required to register as an establishment with the FDA, submit listings for drug products in commercial distribution and comply with regulatory requirements governing product approvals, drug manufacturing, labelling, promotion, distribution, post market safety reporting and recordkeeping. The company is subject to periodic inspections by the FDA and other authorities for compliance with inspections, as well as with federal CMS average sales price reporting, medical drug rebate program and other requirements. The company’s pharmaceutical products must be manufactured in accordance with current Good Manufacturing Practices (cGMP).
With respect to manufacturing, the company is subject to FDA’s Quality System Regulation (21 C.F.R. Part 820) and related FDA guidance, which requires the company to manufacture products in accordance with cGMP, including standards governing product design.
The company’s subsidiaries engaged in the manufacture and sale of medicinal products and medical devices, when engaged in clinical research involving investigational products, are subject to many requirements governing the conduct of clinical research, including Good Clinical Practice (GCP) standards.
Federal, state and local regulations (implemented by CMS, FDA, the Occupational Health and Safety Administration (OSHA), the Drug Enforcement Administration, and state departments or boards of public health, public welfare, medicine, nursing, pharmacy, and medical assistance, among others) require the company to meet various standards relating to, among other things, the management, licensing, safety, security and operation of facilities (including, e.g., laboratories, pharmacies, and clinics), personnel qualifications and licensing, the maintenance of proper records, equipment, and quality assurance programs, and the dispensing, storage, and administration of controlled substances. All of the company’s operations in the U.S. are subject to periodic inspection by federal, state and local agencies to determine if the operations, premises, equipment, personnel and patient care meet applicable standards. To receive Medicare/Medicaid reimbursement, the company’s health care centers, renal diagnostic support business and laboratories must be certified by CMS.
The company’s operations are subject to various U.S. Department of Transportation, Nuclear Regulatory Commission, Environmental Protection Agency, and OSHA requirements and other federal, state and local hazardous and medical waste disposal laws.
The company participates in the federal Medicaid rebate program established by the Omnibus Budget Reconciliation Act of 1990, as well as other government reimbursement programs, including Medicare Part D Gap, TriCare and state pharmacy assistance programs established according to statutes, government regulations and policy. The company makes its pharmaceutical products available to authorized users of the Federal Supply Schedule (FSS) of the General Services Administration under an FSS contract negotiated by the Department of Veterans Affairs. Under the company’s license to market and distribute the intravenous iron medication Venofer to freestanding dialysis clinics, the company is also considered, for statutory price reporting purposes, to be the manufacturer of Venofer (when sold by the company under one of its national drug codes (NDCs)), which is reimbursed under Part B of the Medicare program. The company’s products are also subject to a federal requirement that any company participating in the Medicaid rebate or Medicare program charge prices to Medicare comparable to the rebates paid by State Medicaid agencies on purchases under the Public Health Services (PHS) pharmaceutical pricing program managed by the Department of Health and Human Services (also known as the ‘340B program’ by virtue of the section of the Public Health Service Act that created the program).
The company’s operations are also subject to federal statutes that govern the relationships and assistance that the company may provide to its patients. Such laws include the Anti-Kickback Statute, the False Claims Act, the Stark Law, the Civil Monetary Penalty Law and other federal health care fraud and abuse laws and similar state laws.
Research and Development
The company’s research and development expenses were €231,970 for the year ended December 31, 2023.
History
Fresenius Medical Care AG was founded in 1996. The company was incorporated in 1996 as a stock corporation.
