A flawed Medicare payment plan encourages aggressive use of a risky and costly anti-anemia drug on many kidney dialysis patients, say researchers who warn the system should be changed.

A new study finds that for-profit dialysis chains give higher doses of the drug than nonprofit dialysis centers. That practice may be putting patients at risk of deadly side effects, some experts said.

The drug is Epogen, and Medicare pays more for it than any other single drug: $2 billion in 2005. For-profit dialysis chains report that the drug accounts for 20 percent to 25 percent of their annual net operating revenue.

Epogen is approved by the Food and Drug Administration to prevent blood transfusions in patients suffering from anemia, which can accompany kidney failure.

However, its overuse has been linked to increases in deaths, strokes and heart attacks. Last month, federal regulators asked makers to place a black box warning on Epogen and other similar drugs' labels, the strongest warning a prescription drug can have.

The new study found that patients in chain-operated, for-profit dialysis centers consistently are given the highest doses of Epogen, regardless of their anemia status. The for-profit centers increased the drug dose even when patients already had recommended levels of red blood cells. The nonprofit centers did not.

"Patients are at risk here. They need to be reassured that the right thing is being done for them," said study co-author Dennis Cotter of the Medical Technology and Practice Patterns Institute, a nonprofit research group in Bethesda, Md.

Cotter said Medicare not only reimburses dialysis centers a fixed amount for each treatment, they also reimburse them separately for Epogen.

Some for-profit chains, which handle the majority of dialysis patients, negotiate volume discounts from Epogen's drug maker,Amgen Inc. of Thousand Oaks, Calif. So the chains generally buy the drug for less than Medicare reimburses, making the drug a profit center.

DaVita Inc., one of the chains, stated in its 2006 annual report that one-fourth of its net operating revenue comes from administering the drug. Fresenius Medical Care AG reported the drug accounts for 21 percent of its net operating revenue in North America.

"If ever there was a time to fix this reimbursement system, it's now," said Dr. Ajay Singh of Harvard's Brigham and Women's Hospital, who was not involved in the new study, but led a previous study that linked aggressive use of the drug to health risks. Its overuse "may put patients at higher risk," he said.

The differences in use between for-profit and nonprofit centers was not because certain patients were sicker, the researchers found. The study, appearing in Wednesday's Journal of the American Medical Association, is based on data on nearly 160,000 dialysis patients who got care in 2004.

In an accompanying editorial in JAMA, Dr. Daniel Coyne of Washington University School of Medicine in St. Louis said kidney doctors who work with dialysis centers may not know they are "making dubious dosing decisions" because they sign multipage standing orders and turn over anemia management to chain employees.

Amgen spokesman Dan Whelan said the company believes most Epogen use has been appropriate.

"Doctors make Epogen prescribing decisions based on the clinical needs of their patients," Whelan said. He said one year of Epogen treatment for a dialysis patient costs about $8,920 at wholesale.

Dr. Paul Scheel, director of nephrology at Johns Hopkins University Medical Center, said he doesn't believe that doctors are turning over prescribing decisions to dialysis centers or are unaware of dosing. As someone who's worked with two dialysis chains, he said he has never been encouraged to use Epogen inappropriately.

Dr. Charles McAllister, chief medical officer for DaVita, said the company's dosing guidelines "are based on clinical science and really are done in an open collaborative atmosphere with physicians. The decision to use a guideline is purely that of the physician alone."

Medicare spokeswoman Ellen Griffith said the agency expects to report to Congress this summer about its dialysis payment system and plans a demonstration project of a new payment system that would include Epogen in a "bundled" reimbursement rate.

Amgen supports the demonstration project, Whelan said. But Singh and Cotter said a demonstration project would only delay changes needed immediately.