xargs would not be my first choice for something like this, but it can certainly be made work. I don't know what the db command is and looking at your syntax, I can't tell where the arg should be inserted, but here is an example using echo:

cat file | xargs -l -i echo "arg is {}"

and even better:

xargs -l -i echo "arg is {}" < file

Hmmm, I gotta admit that using xargs in a case like this is starting to appeal to me...