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Lower CMS Payment Rate Could Affect Royalties, BG Medicine Says

NEW YORK (GenomeWeb News) – Royalty payments received by BG Medicine from its development and commercialization partners may be reduced following the establishment of a payment rate for the firm's galectin-3 test by the US Centers for Medicare and Medicaid Services, the company said recently in its Form 10-K.

Starting Jan. 1, 2013, CMS began paying $17.80 per test for BG Medicine's galectin-3 test, an amount that is below the agreed-upon CMS payment rate threshold established by the company and its partners who are developing an automated version of the test, it said in its document filed with the US Securities and Exchange Commission.

As a result, "the current royalty amounts payable to us under these agreements are subject to reduction by our partners in amounts to be negotiated by us and our respective partners," BG Medicine said in its SEC document. "There can be no assurance that in any renegotiation of these royalty provisions we will be successful in negotiating new rates that will be favorable to us," it added.

The $17.80 rate was assigned by CMS under a new analyte-specific current procedural terminology, or CPT, code, which took effect on Jan. 1, 2013 for the 2013 fee schedule. BG Medicine said it is applying to CMS to request a higher payment rate for the 2014 fee schedule.

A BG Medicine official declined to disclose the amount of the original CMS payment rate threshold negotiated by BG Medicine and its partners, but said that because there is no US Food and Drug Administration-approved version of an automated version of its test, the $17.80 CMS payment rate at this point has no material significance on those agreements.

The Waltham, Mass.-based company has deals with Abbott, BioMérieux, Alere, and Siemens to develop automated versions of the galectin-3 test. FDA approved a microplate version of the test in 2010.

Fujirebio Diagnostics withdrew its 510(k) submission to the FDA for an automated version of BG Medicine's test that it is developing for Abbott, but said it anticipates refiling its submission in the second half of 2013.

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