Clearly CMS is loving Epifix if it saves them 75 million a year.
Please see note from Pete Petit below regarding recent letter to CMS:
I have attached a copy of a letter that MiMedx has filed in response to the Centers for Medicare and Medicaid Services proposed price changes for skin substitutes. CMS requested comments to its annual price notifications in June. MiMedx met with CMS personnel in August to understand the issues that CMS is attempting to address through its recent pricing proposal. After that meeting, we filed our comments, which generally support CMS’s focus. A major issue as acknowledged by CMS is that the skin substitute products made by many companies other than MiMedx have huge wastage factors associated with their use, particularly for the smaller wounds such as diabetic foot ulcers. The majority of these high wastage factor products are generated by our two main competitors, Shire Pharmaceuticals (maker of Dermagraft) and Organogenesis (maker of Apligraf). As you can see in our comments document, our “informatics” experts used actual CMS data to calculate the amount of wastage that has been occurring. This wastage has occurred for almost a decade, and it has been an absolute travesty in terms of the amount of money that has been thrown away on the use of these high wastage factor grafts. We knew there would be some repercussions for this abuse, and we believe the steps CMS is now taking will help to address this wastage. It is certainly justified in our opinion. What this means is our size appropriate EpiFix® wound care allografts should have a major advantage. Because our grafts are size appropriate and have very little wastage, our cost effectiveness is substantial compared to these other two products. In addition, our clinical studies have shown that our EpiFix® is more clinically effective by closing wounds faster with a fewer number of applications. To have CMS acknowledge this significant reimbursement problem is a distinct advantage. Our sales organization will be highlighting the wastage issue, as well as how our EpiFix® product combats this problem, to all hospitals, wound care clinics and prescribing physicians. One final note relative to the “Untitled Letter” we received from the FDA. We sent our response to the FDA on Friday, and while the FDA’s “Untitled Letter” was not specific about what exactly is at issue, we tried to cover all the factors we could imagine with our response. Frankly, we do not see how there can be an issue. The micronization process we use for our allografts is the same basic process that is used by dozens of other suppliers of micronized human tissue, such as dermis and bone; we employ the same techniques that have been used by others for a decade. We have requested a meeting with the FDA immediately in order to bring this matter to quick closure. Please recall that this “Untitled Letter” is not a warning letter or anything that rises to that level. It does not affect our sheet allografts, only our micronized product. As we have previously stated, at this point, our micronized product constitutes only about 15% of our revenue forecast for 2014, so if for some reason we are precluded from marketing our micronized product, we believe we can make up any shortfall with our sheet allografts.
If you have any questions, please give us a call.
I was going to create a post regarding the CMS proposed rule. This is a BIG DEAL. It will only accelerate the taking of market share from Dermagraft and Apligraf. Word is that this will hurt the competition because the proposed reimbursement is lower than the Dermgraft and Apligraf prices. This will be MDXG's gain. The value of Epifix ALONE is worth much more than the current market cap of of MDXG.