Medical Test Maker Halts All Shipments

A leading supplier of a medical test used by dialysis patients said it had voluntarily placed shipments of all its products on hold in the wake of a Food and Drug Administration audit.

Nichols Institute Diagnostics of San Clemente, which also sells tests to detect anemia, thyroid disorders and other conditions, said it was subjecting all products in its inventory to an additional “quality review� before shipping them. The company gave no details on the FDA inspection, which is continuing.

The company, a unit of Quest Diagnostics of Teterboro, N.J., is the leading provider of bone metabolism tests in the kidney dialysis market.

Nichols, in a bulletin to customers June 16, said it did not know when shipments would resume and advised customers to consider alternative suppliers.

Patients with kidney failure go to hospitals or dialysis clinics to have waste removed from their blood. Because such patients are susceptible to bone loss, their bone metabolism is monitored. Nichols’ test measures parathyroid hormone, which regulates calcium absorption. Drugs, such as intravenous vitamin D, are used to prevent the hormone’s levels from rising.

Competing bone metabolism tests don’t run on Nichols equipment, giving clinics and labs that have invested in Nichols machines an incentive not to switch to the rival tests.

Maureen Michael, president of the National Renal Administrators Assn., said clinics were waiting to see how Nichols’ problems unfolded before exploring alternatives. A short delay is manageable because patients are checked monthly, but a longer disruption could be a problem for some patients, she said.

“They could be getting the wrong dose, too much or too little,� said Michael, who runs a small dialysis chain in Florida.

Quest spokeswoman Jennifer Somers said that since the hold on shipments took effect, one lot of bone metabolism tests had been released for sale.

Last fall, the Justice Department subpoenaed documents on Nichols’ bone metabolism test as part of a wider probe that experts said appeared to focus on Medicare billing fraud in the dialysis business. The government also subpoenaed records from the largest dialysis chains and makers of vitamin D.

Quest has disclosed that it faces “whistle-blower� lawsuits regarding its billing and that the suits’ claims are substantial.

Quest does not report Nichols’ revenue. Industry sources said the unit accounted for no more than 1% of Quest’s 2004 revenue of $5.1 billion, or a maximum of $51 million. Annual revenue from the bone metabolism test was said to be around $35 million.