by Jamie Hartford – January 25, 2016
A group of investors led by a Denver patent attorney is working to bring new life to AxiaLIF, a spinal fusion technology hampered by coding woes and nearly torpedoed by scandal.
AxiaLIF, short for axial lumbar interbody fusion, was designed to provide presacral access to the L5-S1 vertebrae with minimal risk to nerves, blood vessels, and muscles.
Here’s how it works: The surgeon accesses the lower back through an approximately one-inch incision next to the tailbone, removes the center of the degenerated disc, and inserts bone-growth material in its place to fuse the spine over time. The AxiaLIF implant is inserted to stabilize the vertebrae while fusion is occurring.
TranS1, the originator of AxiaLIF, won 510(k) clearance for the system in 2005 but failed to gain coverage from CMS and many private insurers. Its troubles deepened when the U.S. Department of Justice subpoenaed the company in October 2011. The government said the company allegedly influenced providers to submit claims to federal insurance programs using incorrect diagnosis or procedure codes, leading to kickbacks for some surgeons.
TranS1 merged with and took on the name of Baxano Surgical Inc. in May 2013. One month later, it settled the federal case for $6 million while admitting no wrongdoing. Medicare had begun covering the surgical procedure for implanting AxiaLIF in 2013, but publicly traded Baxano Surgical filed for Chapter 11 bankruptcy protection in November 2014 and went out of business in August 2015.
The combination of Medicare coverage and the “incredible value” that he saw in the patents related to the core AxiaLIF technology propelled attorney Jeffrey Schell and his group to pluck AxiaLIF out of Baxano’s bankruptcy assets for $860,000. They restructured TranS1 under new ownership (Quandary Medical) and set about reviving its sales and manufacturing networks and trying to win coverage for the procedure from private insurers. They began selling AxiaLIF in February 2015.
“We essentially reinitiated the supply chain of the original Trans1 and we’ve successfully reengaged the component manufacturers and packaging resources and logistical network, both in terms of warehousing and sales force, to make sure that AxiaLIF is well supported,” Schell said.