Prodigy Diabetes Care and OK Biotech Align Ownership
CHARLOTTE, N.C., April 16, 2013 /PRNewswire/ -- Prodigy Diabetes Care (Prodigy) announced today that its current manufacturing partner, OK Biotech Co., Ltd., (OK Biotech) has purchased a minority stake in the company, and Prodigy acquired substantial ownership of OK Biotech's publicly traded shares.
After a four-year contractual relationship, both parties agreed that a strategic partnership delivers the most benefit to their customers and patients. Prodigy and OK Biotech developed this new relationship in anticipation of the demand of a consolidated customer base for high-volume, lower cost diabetes testing supplies.
Beginning July 1, 2013, Centers for Medicare and Medicaid Services will implement its new contracts for National Mail Order Competitive Bidding for diabetes testing supplies. This program reduced reimbursement rates for diabetes supplies by 72 percent. The federal government awarded contracts to 23 mail order patient providers, eliminating thousands of suppliers from the market. These cuts strike a blow to manufacturers whose products retail at four or five times the Medicare reimbursement rate.
Prodigy and OK Biotech's new alignment ensures that providers have the capacity to meet the increases in volume and the need for lower priced quality products. Overlapping ownership interests ensure Prodigy and OK Biotech can cooperatively offer the best pricing solutions to accommodate the lower reimbursement rates.
"We knew we needed to take an aggressive approach to the new Medicare program," said Rick Admani , Prodigy COO. "Once the Medicare program announcement was made, we took it as an opportunity to strengthen our affiliation with OK Biotech and meet with many of the bid winners to offer them our best pricing. The responses we've received have been overwhelmingly positive, and we are now under contract with most of the largest bid winners. It is already apparent that our alignment with OK Biotech will help us expand even more rapidly while providing the same quality products and services."
Though the competitive bidding process was originally limited to mail order suppliers, a provision in the fiscal cliff legislation reduced the retail reimbursement for diabetes test strips to the new lower rate that applies to mail order products. Prodigy has offered retailers the same solutions as their mail order counterparts, providing high quality diabetes testing supplies at a cost that will still generate a profit.
"Continuing our partnership with Prodigy builds on our current industry standing as a leader," said James Lai, OK Biotech president. "We invested a substantial amount of money in Prodigy and in our new manufacturing facility to show our commitment to this market. The alignment of Prodigy's quality design products with our proven manufacturing capabilities and capacity will enable us to deliver four billion test strips annually at a favorable price point for our clients."