Prodigy jockeys for position

CHARLOTTE, N.C. - Prodigy Diabetes Care has tripled its volume since January, when CMS announced the payment amounts associated with the national mail-order program for diabetes supplies, says Jennifer Andrews, vice president of marketing and government sales.

“We believe, based on all the Medicare claims that we have, that we are now at 40% market share,” she said.

Starting July 1, the payment amounts for diabetes supplies dropped to, on average, 72% below the fee schedule. That means, for example, that a 50-count box of test strips is now reimbursed at $10.41.

Prodigy believes that, as a “premium value brand,” it has a lot to gain from a program that's expected to force providers to drop name brands to save money.

“Some suppliers will say, 'We carry the name brands,' and that will help them from a marketing perspective, but to be honest, we don't think anyone has the intention of putting a large number of patients on a branded product,” she said. “They can't afford to.”

There is a rule that, technically, is working in the favor of name brands like LifeScan, Roche, Bayer and Abbott. CMS requires contract suppliers to at least offer products with 50% market share. But market share is something that is very much in flux, Andrews says.

“Everyone is looking at the rule differently,” she said. “One of the issues is, is CMS looking at market share in 2009 when they first announced the program or right at July 1. They're two very different things.”

Former mail-order provider and industry consultant Tom Milam agrees that there's a lot of jockeying going on among manufacturers right now.

“I've seen some of them cutting deals—they're doing whatever they can to keep their positions for awhile,” he said. “My concern is that there'll be a shift to some products that aren't very accurate and there'll be some deterioration in access and treatment.”

That's why provider Mark Gielniak, who isn't a contract supplier but plans to continue offering supplies through retail, has done his homework. If the program continues on in the next few months, he plans to have conversations with patients about switching to lower cost meters.

“We have two or three meters already lined up that we've tested on accuracy,” said Gielniak, vice president of Diabetes Plus in Warren, Mich. “Most patients won't have a problem with it. They tell us, 'Whatever it takes to stay with you. If you're comfortable, we trust you.' That's because we have that relationship with them.”

Prodigy is at the ready to take on any influx in orders, Andrews says, largely because of a new ownership agreement with OK Biotech, a manufacturing partner based in Taiwan. Prodigy has acquired substantial ownership of the publicly owned shares of OK Biotech, and OK Biotech has purchased a minority stake in Prodigy.

“We have the capacity to triple our new volume,” she said.