Bacterin International Holdings, Inc. announced on February 11, 2013, that the company has received a subpoena from the Office of the Inspector General of the U.S. Department of Health and Human Services (“OIG”) in connection with an investigation into possible false or otherwise improper claims submitted to Medicare.
Bacterin Subpoenaed Over Possible False Claims
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In an SEC 8K filing, the company statement said the subpoena requests documents related to physician referral programs operated by the company. The company believes the investigation refers to a prior practice of compensating physicians for performing certain educational and promotional services on behalf of the company. Those programs, according to the SEC filing, were discontinued in 2010 and involved payments to only a small number of physicians.
“We believe [the payments] were made in accordance with all applicable laws. We intend to cooperate with the OIG’s investigation, ” said company Founder, President and CEO, Guy Cook.
In addition to this subpoena from the OIG, the company also received two warning letters from the FDA on January 29, 2013, related to company procedures for, among other things, implementing corrective actions and evaluating complaints.
Bacterin was founded in 1998 as a sole proprietorship by Cook as a spinout of the Center for Biofilm Engineering at Montana State University.
Revenues were historically derived from testing services and milestone payments from collaborative product development agreements with various blue chip medical manufacturers. Today, the company generates revenue from a number of sources including: sales from products developed and manufactured by the company, sales of products manufactured by a third party and sold and distributed by the company, and contract revenue from analytical testing and development services provided to medical device manufacturer clients, which tailor Bacterin’s coating process to the client’s specific product/medical application.
Bacterin has developed and currently manufactures and sells several human tissue-based products, primarily allografts, through the company’s biologics division. In addition, the company also manufactures and sells, directly under its own name and indirectly through distributors, various coating and surgical drain products through its medical devices division.
The biologics products include: OsteoSponge, OsteoSpongeSC, OsteoWrap, OsteoLock, BacFast and hMatrix as well as certain other allograft products.
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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