New questions are being raised about whether Renaissance RX, a local biotech startup whose skyrocketing growth was stymied last year by a review into its government billing, was qualified to receive federal funding for its new, cutting-edge genetic testing in the first place.
The company, which grew in two years from five employees in the New Orleans BioInnovation Center to nearly 800 nationwide, uses genetic information gathered by taking swabs inside patients’ cheeks to determine whether they’re being prescribed the right dosage of medicine.
Now, almost all of its employees have been let go in the wake of a federal Medicare review that began in the fall.
Plans to move the company’s corporate headquarters to the Central Business District — announced with fanfare in September — have been shelved. At the time, the firm said it would spend $8 million on the new 30,000-square-foot headquarters and add 425 workers to the 80 it already had here.
Instead, it began rapidly laying off employees. The federal review — seen as a safeguard against fraud — cut off the company’s cash flow for its main effort, a 250,000-patient registry designed to catalog adverse drug effects and shed light on how patients respond to a particular dose regimen based on their genes.
Company officials had expected the Medicare review to wrap up last month, according to internal emails between the company and state economic development officials obtained by The New Orleans Advocate through a public-records request.
In a front-page story Thursday, The New York Times highlighted the firm’s shifting fortunes as part of a broader look into the field of genetic testing. Health care experts interviewed by The Times speculated that the federal contractors responsible for deciding which tests Medicare will pay for did not fully vet Renaissance’s registry.
Experts also cast doubt on whether it was ethical for the company to pay physicians $75 for each patient they steer into the study.
Once seen as a promising new firm, Renaissance has been hobbled since last fall, with local business leaders just hoping it will survive.
Along with the federal inquiry, a Rhode Island physician who signed on to enroll his patients in Renaissance’s registry has alleged “widespread potential legal and regulatory violations” by the firm. In a lawsuit filed earlier this year, Dr. Scott Wilson said he stopped cooperating with Renaissance amid concerns that its business tactics might cross ethical lines.
Medicare had committed to paying Renaissance as much as $600 for every patient who participated.
At Wilson’s clinic, Renaissance embedded a technician to take DNA “swabs” from patients experiencing adverse reactions while taking multiple medications. The swabs would then be sent to Renaissance for testing, and Medicare would pay Renaissance.
Wilson alleged that the company pressured him for clients and wanted patients to be tested regardless of whether they had experienced an adverse reaction to a medication, meaning that Medicare ultimately picked up the costs of tests that did not qualify to go into the registry.
Wilson’s claims may help explain what triggered the federal review. Renaissance’s Medicare billings jumped from $3 million to $120 million in the space of a year, The Advocate has reported.
In response to the lawsuit, Renaissance has dismissed Wilson’s claims as “baseless” and said the company had tried to cut ties with the physician but that Wilson “made clear that this separation would come at a price.”
“His (Wilson’s) fixation on profit and self-interest made it clear that he was not the right fit for Renaissance RX,” the firm said in a court filing.
The Times story also reported that several top Renaissance executives have faced previous federal scrutiny while running a similar laboratory in Washington state.
Renaissance principals Barry Griffith and Patrick Ridgeway and the company’s chief medical officer, Dr. Karthikeshwar Kasirajan, previously worked at Natural Molecular Testing Corp., which fell apart amid its own Medicare review.
A federal contractor began reviewing that company’s billings in 2012 after Medicare paid it tens of millions of dollars for genetic testing, according to the report.
Separately, the company faced allegations in a 2013 lawsuit about questionable payments it made to physicians in order to get them to steer patients to its genetic testing.
Medicare suspended Natural Molecular’s reimbursements in 2013 because of “credible allegations of fraud,” The Times reported, citing records from the company’s 2013 bankruptcy filings. Warning signs included records of patients billed for tests to determine adverse reactions to drugs they weren’t even taking.
By the time the company filed for bankruptcy, the three executives already were working at Renaissance.
Follow Richard Thompson on Twitter, @rthompsonMSY.