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					                   Technomics Research, LLC.
                 Economic and Statistical Analysis of Healthcare Technology

                  1815 Medina Road Medina, MN 55356
                PHONE: 763.473.6374  FAX: 763.473.8082
                      www.TechnomicsResearch.com




               Technical Report:
Cost-Effectiveness Analysis of O2Misly Therapy
     for Diabetic Neuropathic Wound Care




                   PREPARED FOR

              IYIA Technologies, Inc.
                  San Marcos, CA




                      JUNE 2007
        CEA of O2 Misly, HBO and Standard Would Care                                            Technomics Research, LLC
                                                                                                                            June 2007


                                                     Table of Contents


EXECUTIVE SUMMARY ......................................................................................................... 3
INTRODUCTION ..................................................................................................................... 4
METHODS AND DATA ........................................................................................................... 4
   Model Structure.................................................................................................................... 4
   Model Data .......................................................................................................................... 6
   Base-Case Analysis ............................................................................................................. 7
   Sensitivity Analyses and Break-Even Analyses .................................................................... 7
RESULTS ................................................................................................................................ 9
   Base-Case Analysis ............................................................................................................. 9
   Sensitivity Analyses and Break-Even Analysis ................................................................... 10
CONCLUSIONS .................................................................................................................... 12
APPENDIX 1: EVIDENCE TABLE ....................................................................................... 14
APPENDIX 2: REFERENCES .............................................................................................. 16
CEA of O2 Misly, HBO and Standard Would Care                Technomics Research, LLC
                                                                               June 2007




 Technical Report: Cost-Effectiveness Analysis of O2Misly Therapy
              for Diabetic Neuropathic Wound Care
                                 Melissa Martinson, MS, PhD



Executive Summary
Nearly 2.5 million diabetic foot ulcers are diagnosed each year in the United States. These
wounds are notoriously slow to heal, with many resulting in amputation and possibly death
because of failure to heal. Hyperbaric oxygen therapy (HBO) is used as an adjunct to
standard wound care (SWC) to treat recalcitrant wounds. IYIA Technologies has developed
the O2Misly Wound Treatment System (O2M) as an adjunct to SWC. It has shown promising
results in early clinical studies of wounds that have failed SWC. A cost-effectiveness analysis
comparing SWC, O2M, and HBO was performed to demonstrate the value of O2M to payers.

The Markov model simulated the healing of uninfected, adequately perfused, diabetic
neuropathic wounds over 20 weeks. Competing events were amputations and death. A
clinical study of O2M provided the efficacy data for that therapy. The medical literature
provided data on the efficacy of HBO and SWC. Costs were estimated from Medicare
national-average reimbursements.

The base-case analysis showed that HBO and O2M were almost equivalent in cost (HBO was
slightly higher), but that O2M was much more effective (85% versus 34% wound closure).
Compared to SWC, O2M was about $7400 more expensive per patient but much more
effective (85% versus 33%); the cost per additional wound closed was $14,100.

Sensitivity analyses showed that the results were not sensitive to the healing rate of SWC, but
were slightly sensitive to the healing rates of HBO and O2M. Only under the circumstance
where HBO was at its most effective based on its 95% confidence interval (5.05% healing per
week) and O2M was at its least effective (4.97% healing per week) was O2M both more
expensive and less effective than HBO.

The break-even analysis showed that if O2M were reimbursed at $33.70 per session, its total
therapy cost would equal that of SWC. However, this includes only the 20 weeks of therapy.
At that point, 59% of the SWC patients still had unresolved wounds (not healed, amputated or
dead) compared to 11% of the O2M patients. Many of these patients will continue to receive
some therapy or an amputation. Thus, if the data had been available so that the model could
have covered a longer time period, it likely would have shown O2M to be a cost-saving
strategy.




                                         Page 3 of 17
CEA of O2 Misly, HBO and Standard Would Care                  Technomics Research, LLC
                                                                                  June 2007


 Technical Report: Cost-Effectiveness Analysis of O2Misly Therapy
              for Diabetic Neuropathic Wound Care



Introduction
Nearly 2.5 million diabetic foot ulcers are diagnosed each year in the United States. These
wounds are notoriously slow to heal, with many taking more than six months to resolve and
many others resulting in amputation because of failure to heal. Amputation results in
significant costs to the healthcare system and in significant disability to patients. In addition,
there is evidence that diabetic patients with open wounds incur a mortality rate several times
higher than those without open wounds (Boyko, 1996).

Hyperbaric oxygen therapy (HBO) is used as an adjunct to standard wound care (SWC) to
treat recalcitrant wounds. Patients are placed in a whole-body pure-oxygen environment at
several atmospheres of pressure. Treatments are delivered 5 to 7 times per week for a month
or more. CMS reimburses this therapy (where it is covered) at $200 per session. (Following
the month of HBO, SWC is continued until the wound heals or further attempts to heal it are
abandoned.) The intent is to encourage wound healing by providing higher oxygen levels
both externally and through the patient’s circulation.

IYIA Technologies has developed the O2Misly Wound Treatment System (O2M) as an
adjunctive therapy to SWC. The patient inserts the affected limb into the chamber, which
delivers hyperoxia treatment followed by a humid mist to which the physician can add
antibiotic or antimicrobial therapies. Treatments are delivered twice weekly until the wound
heals or further attempts to heal it are abandoned. Clinics that use O2M bill payers at $550
per session (one hour).

To date, coverage for O2M has not been consistent across providers. To enhance the
opportunities for coverage, IYIA Technologies has contracted with Technomics Research to
develop an economic model and perform a cost-effectiveness analysis comparing SWC, O2M,
and HBO from the payers’ perspective. This report documents the details of the model and
the results of the analysis.


Methods and Data
Model Structure
A graphical representation of the Markov model used in this analysis is provided in Figure 1.
A Markov model simulates a process (such as wound healing) in which subjects move from
health state to health state at each cycle during the process. In a Markov model, the blue
square represents the choice of treatment strategies and the purple circle represents the
health states that a patient may occupy. The red triangles indicate states that the patient
cannot leave once entered, and the green circles indicate states that a patient may enter.

In this model, the treatment strategies are SWC, O2M, and HBO. In each, the health states
are “open wound”, “healed”, “amputated” and “dead”. The red triangles at the end of “healed”,
“amputated” and “dead” mean that the patient cannot leave the state (there is no wound


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CEA of O2 Misly, HBO and Standard Would Care                  Technomics Research, LLC
                                                                                  June 2007

recidivism in the model because the patient cannot move from “healed” to “open wound”).
From “open wound” the patient can move to any of the other states or can continue to have an
open wound. Movement among states occurs once per week (i.e., the Markov cycle is one
week). The model simulation runs for a total of 20 weeks, although patients who enter the
“healed”, “amputated” or “dead” states prior to 20 weeks do not participate further in the
simulation.

The simulation started with a patient who had a diabetic neuropathic foot ulcer. The patient
was treated by one of three wound-healing strategies. In all of these strategies, the patient
received standard wound care consisting of regular visits to the wound-care clinic, with sterile
bandages, debridement as necessary, and off-loading shoes or devices. Each strategy is
described in more detail below.

From an open wound, the patient could progress to a healed wound, or the affected part of the
foot could require amputation (if, for example, the patient contracted osteomyelitis or other
serious infection), or the patient could die. When any of these three events occurred, the
patient’s time in therapy terminated; these events were competing risks. The total time
allowed in the model was 20 weeks; some patients did not heal during this period, and so
ended their therapy in the “open wound” state.

All amputations were included as one type of event even though the journal articles often
provided data on “major” and “minor” amputations separately. The reason for combining them
was that the definitions of “major” and “minor” varied considerably among the articles.

Deaths were included because of the evidence that having an open wound increases the
mortality rate above the mortality rate of people with diabetes generally (Boyko, 1996). The
risk of death was estimated at about 75% of the risk of amputation, so it was considerable
enough to merit inclusion.

Adverse events were not included due the paucity of data on them in the journal articles
included in the analysis. (Journal articles were chosen for inclusion based on the availability
of wound-closure data and the similarity of the patients treated to those in the O2 Misly clinical
study. No attempt was made to find articles that specifically addressed adverse events.)
SWC and O2M were generally regarded as safe; HBO was described as being “intolerable” to
some patients (who then discontinued therapy), but was not described as causing clinically
significant problems.

The following strategies were included in the model:

   1. STANDARD WOUND CARE (SWC) In this strategy, the patient received an average
      of 0.8 wound-care clinic visits per week, based on the experience of the patients in the
      control arms of the 10 studies included in this analysis. Therapy was continued for 20
      weeks or until healing, amputation or death.

   2. HYPERBARIC OXYGEN THERAPY (HBO) In this strategy, the patient received an
      average of 5.8 sessions of HBO plus SWC per week for an average maximum of 5.4
      weeks, based on the experience of the patients in the two studies included in this
      analysis (other studies were considered, but most did not study a patient population
      comparable to the O2 Misly patients; see Model Data below). If there was no healing,
      amputation or death during the weeks of HBO therapy, SWC was continued until a
      total of 20 weeks, or until healing, amputation or death.


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CEA of O2 Misly, HBO and Standard Would Care                Technomics Research, LLC
                                                                              June 2007


   3. O2 MISLY THERAPY (O2M) In this strategy, the patient received an average of 1.9
      sessions of O2M plus SWC per week, based on the experience of the patients in the
      O2 Misly clinical study (discussed under Model Data, below). Therapy was continued
      for 20 weeks or until healing, amputation or death.

Model Data
All of the variables used in the model, their values, and sources are listed in Appendix 1:
Evidence Table. The column labeled, “Default Value” were the defaults used in the simulation
except as otherwise indicated (for the sensitivity analyses). The “Base Case” analysis used
only default values. Some variables were calculated from others in the model. Their values
are listed along with the formulae used to calculate the values.

Two main types of data were used in the model: probabilities and costs. The probabilities
are associated with branches, which represent events: they determine the relative frequency
with which an event happens. For example, a patient moved from state “open wound” to
“healed” with a weekly probability of 2.20% in the HBO strategy, 2.09% in the SWC strategy,
and 10.1% in the O2M strategy.

The cost perspective of the analysis was that of the healthcare payer; therefore, costs in the
model were payer reimbursements. The weekly cost of wound care accumulated once for
each week (cycle) that a patient spent in “open wound”. The cost of an amputation was
added once if a patient ended the simulation in that state. Healed wounds and death were
costless to payers.

Because a majority of diabetic foot-ulcer patients are Medicare beneficiaries, Medicare 2007
national-average prospective payments were used for payer costs. The reimbursements for
services and procedures were based on the respective payment codes: DRGs (for hospital
in-patient payments), CPTs (for physician payments), APCs (for hospital out-patients), and
DMEPOS (durable medical equipment such as off-loading devices). Numbers of therapy
visits came from the medical literature in the case of HBO and SWC, and from the O2 Misly
clinical study in the case of O2M (this is discussed below). Costs were not discounted
because the time duration of the model was just a few months.

The probabilities of healing, amputation and death came from the medical literature with the
exception of the healing rates of O2 Misly, which came from the clinical study. The weekly
probability of healing was 2.2% in the HBO strategy (two studies totaling 16 patients), 2.09%
in the SWC strategy (10 studies totaling 622 patients), and 10.1% in the O2M strategy (one
study totaling 25 patients). These percentages were estimated from the 6-week, 12-week,
and 20-week healing rates provided by the studies, assuming a constant rate of healing over
those weeks. The rate was used to project healing out to 20 weeks in the case of HBO,
where only 6-week rates were available in the literature. This estimate was likely to favor
HBO because the therapy itself was administered for an average of 5.8 weeks. After that,
only SWC was provided to patients. Therefore, assuming the 6-week healing rate out to 20
weeks was likely to estimate higher 20-week healing rates than would actually be observed in
clinical practice. Twenty-week rates were available for SWC and O2M; from these, a
constant weekly rate was estimated. (The FDA refers to this as a “linearized” rate.)

The weekly rate of amputation was estimated from two sources (Lavery, 2003 and Moulik,
2003) that provided annual and 5-year rates for diabetic foot-ulcer patients. Similarly, the


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CEA of O2 Misly, HBO and Standard Would Care                 Technomics Research, LLC
                                                                                June 2007

weekly death rate was estimated from (Boyko, 1996 and Moulik, 2003) that provided annual
and 5-year rates for diabetic foot-ulcer patients. The rates of death and amputation were
assumed to be independent of the strategy, and only dependent on the presence of an open
wound. (Therefore strategies that decreased the healing time also decreased the number of
amputations, but not the weekly rate (risk) of an amputation.)

The O2 Misly study has not been published, so it is summarized here. The clinical study of the
O2Misly therapy included 26 patients with a total of 31 ulcers. All wounds had failed to heal
with standard therapy, which consisted of debridement, avoidance of weight bearing, and
moistened gauze. Twenty-one (21) of the patients had 25 diabetic neuropathic ulcers; 19
were males and 2 were females with an average age of 60. Of the 25 neuropathic ulcers, 17
were grade 2, 5 were grade 3, 2 were reported as grade 3.5, and 1 was grade 4 by the
University of Texas Health Science Center classification system. These wounds averaged
1130 mm3 in size and 30 months in duration.

In the clinical data and journal articles, the healing rate of O2M was significantly higher than
SWC (p<0.0001) at 20 weeks in spite of the small sample of O2M ulcers (n=25). The large
number of SWC ulcers (n=622) and the large observed difference (100% vs 31%) were the
sources of the power in the comparison. The healing rate of O2M was compared to HBO at
six weeks because that was the time frame reported for HBO wounds. O2M was not
significantly better than HBO (p=0.21) in spite of the large observed difference (29% vs 13%)
because the sample size of HBO was also small (n=16).

Base-Case Analysis
The values used for each of the variables in the base-case analysis are listed in the “Default
Value” column of the Evidence Table in Appendix 1; the sources are listed in the “Source(s)”
column of the same table. The base-case analysis compared the total costs per strategy, and
the total effects in terms of wounds healed, amputations performed, and death. It also
estimated the incremental cost-effectiveness ratios (ICERs) for O2M versus SWC, O2M
versus HBO, and HBO versus SWC.

Sensitivity Analyses and Break-Even Analyses
A sensitivity analysis is an analysis in which the values of some or all of the variables in the
model are varied from the most reasonable low values to the most reasonable high values.
The purpose is to see how changing the values affects the results. If the results change a lot
when the values change, then the model is “sensitive” to the variable values. If the model is
sensitive to the value of a particular variable, it is important to estimate the true value very
accurately.

Sensitivity analyses wrere performed on the values of the key variables in the model: the
healing rates of HBO, O2M and SWC. One- and two-way analyses were performed. The
two-way analyses tested the effects of simultaneously varying two of the values. The two-way
analyses were SWC and O2M, and HBO and O2M.

A break-even analysis on the cost (reimbursement) for O2M was also performed. Since the
healing rate of HBO is not remarkably better than SWC, this break-even reimbursement is not
of interest to payers. What is of interest is: how much reimbursement would a session of
O2M have to be given to make the total strategy reimbursements for SWC and O2M equal?




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CEA of O2 Misly, HBO and Standard Would Care               Technomics Research, LLC
                                                                               June 2007

Figure 1: Wound Healing Model

                                                       open wound
                                                                      open wound
                                                              #
                                                       healed
                                                                      healed
                                       open wound      p_heal_S O C
                                               1       amputated
                                                                      amputated
                                                         p_am p
                                                       dead
                                                                      dead
                                                         p_dead
                         SOC
                                       healed
                                               0
                                       amputated
                                               0
                                       dead
                                               0
                                                       open wound
                                                                      open wound
                                                              #
                                                       healed
                                                                      healed
                                       open wound      p_heal_HB O
                                               1       amputated
                                                                      amputated
                                                         p_am p
uninfected diabetic                                    dead
neuropathic foot ulcer                                                dead
                                                         p_dead
w adequate perfusion     HBO
                                       healed
                                               0
                                       amputated
                                               0
                                       dead
                                               0
                                                       open wound
                                                                      open wound
                                                              #
                                                       healed
                                                                      healed
                                       open wound      p_heal_O 2M
                                               1       amputated
                                                                      amputated
                                                         p_am p
                                                       dead
                                                                      dead
                                                         p_dead
                         O2 Misly
                                       healed
                                               0
                                       amputated
                                               0
                                       dead
                                               0




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CEA of O2 Misly, HBO and Standard Would Care                Technomics Research, LLC
                                                                              June 2007

Results
Base-Case Analysis
The values used for each of the variables in the base-case analysis are listed in the “Default
Value” column of the Evidence Table in Appendix 1; the sources are listed in the “Source(s)”
column of the same table.

Table 1 shows the results of the base-case analysis (in which only default values were used).
The analysis shows that HBO and O2M strategies cost payers almost equivalent amounts for
an average patient ($10,500 versus $10,100). This result occurred even though HBO was
reimbursed at about $200 per session versus O2M at $550 per session because O2M
patients healed much more quickly, incurring fewer costs. By 20 weeks, about 85% of O2M
wounds were healed, compared to 34% of HBO wounds. Because O2M was both less costly
and more effective than HBO, it dominated the HBO strategy.

Both O2M and HBO were more effective than SWC, and both cost about the same additional
amount (roughly $9,500 more than SWC). When the additional wounds healed were
compared to the additional cost of O2M, the cost per additional wound healed was $14,100.
For HBO, the cost per additional wound healed was $559,000. HBO was much more
expensive in this respect because it was not much more effective than SWC.


              Table 1: Cost-Effectiveness of O2Misly vs. Hyperbaric Oxygen
                    and Standard Wound Care after 20 Weeks of Care

                                                       Strategy
      Statistic
                           Standard              O2 Misly             Hyperbaric Oxygen
                             Care
Wounds healed            32.8%           84.9%                     34.2%
Amputations              4.9%            2.6%                      4.8%
Deaths                   3.8%            2.0%                      3.7%
Average total            $2,700          $10,100                   $10,500
reimbursement
Cost-Effectiveness       Baseline        $14,100                   -$1,000
(ICER vs. treatment to                   (per additional wound     (MORE expensive and
left)                                    healed vs. Standard       LESS effective than
                                         Care)                     O2Misly: DOMINATED)
Cost-Effectiveness       Baseline        Same as above             $559,000
(ICER vs. Standard                                                 (per additional wound
Care)                                                              healed vs. Standard Care)
Number needed to         Baseline        1.9                       71.4
treat to heal one
additional wound
(NNT vs. Standard
Care)
Number needed to         Baseline        43.5                      1,000


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CEA of O2 Misly, HBO and Standard Would Care                         Technomics Research, LLC
                                                                                    June 2007

treat to avoid one
amputation (NNT vs.
Standard Care)
Number needed to                  Baseline        55.6                     1,000
treat to avoid one
death (NNT vs.
Standard Care)




              Figure 1: Event Rates Associated with the O2M, HBO and SWC
                                 Strategies at 20 Weeks

                         90.00%
                         80.00%
                         70.00%
                         60.00%
            Percentage




                         50.00%
                         40.00%
                         30.00%
                         20.00%
                         10.00%
                         0.00%
                                        Healed           Amputated          Died
            SWC             O2M     HBO                   Event




Sensitivity Analyses and Break-Even Analysis
Healing Rate of SWC
The value of the weekly proportion of wounds healed by SWC was varied between 0.017 and
0.0225, approximately the 95% confidence interval for the estimate used in the base-case
analysis (0.0209). At the lowest effectiveness, 28% of wounds healed by 20 weeks; at the
highest, 35% healed. The cost of SWC thereby varied from a high of $2800 to a low of $2700
over 20 weeks. The cost per additional wound healed (the ICER) for O2M ranged from
$12,700 at the lowest healing rate for SWC to $14,800 at the highest. HBO was always
dominated by O2M, which was less expensive and more effective.

Healing Rate of HBO
The value of the weekly proportion of wounds healed by HBO was varied between 0.0058 and
0.0505, approximately the 95% confidence interval for the estimate used in the base-case
analysis (0.0220). At the lowest healing rate, only 10% of wounds healed over 20 weeks; at
the highest rate, 62% healed. The cost of HBO thereby varied from a high of $11,400 to a low


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CEA of O2 Misly, HBO and Standard Would Care                 Technomics Research, LLC
                                                                                June 2007

of $9300 over 20 weeks. At the lowest effectiveness, HBO was dominated; at the highest
effectiveness, it was less expensive (but less effective) than O2M. The ICER for HBO over
SWC was $22,700 per additional wound healed; that for O2M over HBO was $3400 per
additional wound healed.

Healing Rate of O2M
The value of the weekly proportion of wounds healed by O2M was varied between 0.0497 and
0.1436, approximately the 95% confidence interval for the estimate used in the base-case
analysis (0.1012). The cost of O2M thereby varied from a high of $15,600 to a low of $7400
over 20 weeks. At the lowest effectiveness of O2M, it healed 61% of wounds by 20 weeks.
HBO was not dominated. The ICER for HBO over SWC was $562,000 per additional wound
healed; that for O2M over HBO was $18,700. At the highest effectiveness of O2M, it healed
93% of wounds. HBO was dominated, and the cost per additional wound healed compared to
SWC was $7800.

Healing Rates of SWC and O2M
The values of the weekly proportion of wounds healed by SWC and O2M were varied
simultaneously as in the one-way sensitivity analyses above. When SWC was at its most
effective and O2M at its least, the ICER between the two was $49,100; in the reverse
situation, it was $7000.

Healing Rates of HBO and O2M
The values of the weekly proportion of wounds healed by HBO and O2M were varied
simultaneously as in the one-way sensitivity analyses above. HBO was dominated by O2M
whenever O2M was at its maximum effectiveness (healing 93% of wounds). However, when
both therapies were at their minimum effectiveness, HBO was not dominated. O2M was both
more expensive and more effective; the ICER was $8200. When HBO was at its maximum
effectiveness and O2M at its minimum, O2M was dominated by HBO (i.e., O2M was both
more expensive and less effective).

Break-Even Analysis
A break-even analysis was performed to determine what the reimbursement for a session of
O2M would have to be in order for it to be cost-neutral to payers compared to SWC. The cost
per session of O2M was varied between $10 and $550. At $10 per session, O2M saves
payers money, even though they would also incur the cost of SWC at each session. This is
due to the reduction in the total number sessions attributable to the shorter healing times with
O2M. The break-even reimbursement per session was $33.70. Figure 2 shows the results of
this analysis.




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CEA of O2 Misly, HBO and Standard Would Care                                 Technomics Research, LLC
                                                                                             June 2007

                         Figure 2: Break-Even Analysis on the Reimbursement for O2M

                                  $12,000

                                  $10,000
            Total Strategy Cost


                                   $8,000
                                            $33.70                                       SWC
                                   $6,000                                                HBO

                                   $4,000                                                O2 Misly

                                   $2,000

                                      $0
                                            $10      $145     $280    $415   $550
                                                     Reimburesment for O2M




Conclusions
O2 Misly therapy has been demonstrated to have a significantly higher healing rate than SWC
and has the potential to save payers money. In this analysis, wounds were followed only to
20 weeks, and during that time period O2M increased costs over SWC by about $7400 per
patient (or $14,100 per wound healed). At that point, 59% of the SWC patients still had
unresolved wounds (not healed, amputated or dead) compared to 57% of the HBO and 11%
of the O2M patients. Clearly, these patients do not suddenly become costless to the payer.
Many will continue to have SWC. Others will receive amputations, for which the total cost is
much greater than the reimbursement for the surgery itself. These patients often face
significant disability, and the payer often covers the cost of much of this. Thus, if the data had
been available so that the model could have covered a longer time period, it likely would have
shown O2M to be a cost-saving strategy.

Although it is relatively straightforward conclusion that O2 Misly offers advantages over
standard wound care, the data on HBO is less compelling. This is not because the available
data does not suggest the superiority of O2M. It does: at 6 weeks the clinical data (not the
simulation from the model) showed that nearly 2 ½ times as many wounds healed with O2M
as with HBO. However, this difference was not statistically significant due to the small
samples in both therapies.

The lack of precise information about the difference between O2M and HBO should not
hamper coverage of O2M. HBO currently has inconsistent coverage, so even a favorable
comparison to HBO is not likely to suffice for coverage. On the other hand, O2M has
relatively low incremental cost and significant clinical superiority to SWC, which has at least
near-universal coverage among US health plans. However, health plans are skeptical about
wound-care products because there have been so many that have not fulfilled their promise.

A possible solution to this problem is a pay-for-performance partnership with a large MCO
such as Kaiser-Permanente (KP). If IYIA Technologies could place an O2 Misly system in a
number of their lower-performing clinics on the agreement that KP would pay $550 per


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CEA of O2 Misly, HBO and Standard Would Care              Technomics Research, LLC
                                                                            June 2007

session for those wounds that healed within 20 weeks (for example), IYIA could collect more
effectiveness data by asking KP to compare the wound healing claims from the clinics that
used O2M to those from the clinics that did not. This would reveal whether the number of
therapy sessions was reduced and how the total costs compared. Assuming the data were
favorable, IYIA would then have both an ally in KP and a compelling argument for coverage
from other payers.




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Appendix 1: Evidence Table
                                                               Default
       Name                   Description            Formula    Value                 Source(s)                       Values and Calculations
n_weeks_HBO         number of weeks of HBO                           5.4 1.   Faglia, 1996              Sessions (weeks, N)                               1.
                    therapy for a wound                                  2.   Doctor, 1992              38 (?,35) 2. 4 (2,15) 3. 34 (?, 18) 4. 30 (?, 5)
                                                                         3.   Baroni, 1987              5. 50 (10,17) 6. 30 (4.33, 9) 7. 20 (2,14)
                                                                         4.   Zamboni, 1997             Total number of session = (38*35 + 4*15 + 34*18 +
                                                                         5.   Kalani, 2002              30*5 + 50*17 + 30*9 +
                                                                         6.   Abidia, 2003              20*14)/(35+15+18+5+17+9+14)=31.43
                                                                         7.   Kessler, 2003             Total number of weeks = 31.43/5.8 = 5.42

n_sessions_HBO_wk   number of HBO sessions per                       5.8 1.   Doctor, 1992              Sessions (weeks, N)                                1. 4
                    week                                                 2.   Kalani, 2002              (2,15) 2. 50 (10,17) 3. 30 (4.33, 9) 4. 20
                                                                         3.   Abidia, 2003              (2,14)
                                                                         4.   Kessler, 2003             Sessions per week =(4/2*15 + 50/10*17 + 30/4.33*9 +
                                                                                                        20/2*14)/(15+17+9+14) = 5.8
n_sessions_O2M_wk   number of sessions of O2                         1.9 Martinson analysis of O2 Misly Mean of total treatments / total weeks in 25 wounds
                    Misly therapy per week                               data
n_sessions_SWC_wk   number of SOC wound-care                        0.81 1. Steed, 1995a           2. 1. 12 sessions in 20 w = .6                          2. 1
                    sessions per week                                    Gentzkow, 1996           3.    3. 1                                                4.
                                                                         Richard, 1995             4. 13 sessions in 20 w = .65                         5. 2
                                                                         Wieman, 1998              5. 6. 11 sessions in 20 w = .55
                                                                         Steed, 1995b             6.    MEAN = (.6*57 + 13 + 8 + .65*127 + 2*25 + .55*6)/(57
                                                                         Steed, 1992                    + 13 + 8 + 127 + 25 + 6)=.81


p_amp               weekly probabiltiy of                        0.0031 1. Moulik, 2003                1. 11% at 5 years = 1-(1-.11)^(1/(5*52))=.00045
                    amputation in person with DM                        2. Lavery, 2003                2. .087 amputations per ulcer per year = 1-(1-
                    and foot ulcer                                                                     .087)^(1/52)=.0017 per week
                                                                                                       MEAN = (.0045+.0017)/2=.0031
p_dead              weekly probability of death of               0.0024 1. Boyko, 1996                 1. 12.1 out of 100 LY = .879 survival @ 52w or .9975
                    person with DM and foot ulcer                       2. Moulik, 2003                survival per week; so weekly mortality = .0025.
                                                                                                       2. 45% @ 5y=1-(1-.45)^(1/(5*52))=.0023 per week
                                                                                                       MEAN=(.0025+.0023)/2=.0024
p_heal_HBO          weekly probability of healing                 0.022 1. Kessler, 2003           2. 1. 2/14                                           2.
                    with HBO                                            Kalliainen, 2003               0/2
                                                                                                       COMBINED RATE: 2/16 were healed at 6w;
                                                                                                       P(healed)=.125; P(open)=.875; weekly P(healed)=1-
                                                                                                       .875^(1/6)=.0220
p_heal_O2M          weekly probability of healing                0.1012 Martinson analysis of O2 Misly Rate of healing at 12 weeks = .7222, so weekly healing
                    with O2M                                            data                           rate = 1 - .2778^(1/12) = .1012

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                                                               Default
        Name                Description             Formula     Value             Source(s)                          Values and Calculations
p_heal_SWC         weekly probability of healing                 0.0209 1. Steed, 1995a           2.   MEAN = (.0143*57 + .0069*13 + .0537*8 + .0213*127
                   with SOC                                             Gentzkow, 1996           3.    + .0083*25 + .0093*6 + .0316*126 + .0221*70 +
                                                                        Richard, 1995             4.   .0123*68 + .0191*122)/644
                                                                        Wieman, 1998              5.   Values taken respectively from the 10 sources.
                                                                        Steed, 1995b             6.
                                                                        Steed, 1992           7.
                                                                        Dermagraft SS&E           8.
                                                                        Bercaplermin SS&E # 1 9.
                                                                        Bercaplermin SS&E # 2 10.
                                                                        Bercaplermin SS&E # 3
r_amputation       reimbursement for amputation r_amp_DRG +     $12,098
                                                  r_amp_phys
r_amp_DRG          reimbursement for amputation                 $11,544 CMS HIPPS 2006 (payments DRG 285 = $11,543.53
                   DRG                                                  for 2007)
r_amp_phys         reimbursement to physician for                  $554 CMS MFS 2006 (payments for Unweighted average of CPTs ($Payment):
                   amputation                                           2007)                      28800 ($551.41); 28805 ($690.11); 28810 ($421.04)
                                                                                                   = $554.19
r_DME_SWC          reimbursement for SOC DME                        $52 CMS DMEPOS 2007 Fee        Mean of floor and ceiling payments for HCPCS codes
                   (e.g. off-loading device)                            Schedule                   A5500 - A5513 = $52.30
r_HBO              per-session reimbursement to                    $202 CMS MFS 2006 (payments for CPT 99183 = $202.37, including facility payment (there
                   physician for HBO therapy                            2007)                      is no APC for this therapy). This payment is made in
                   (includes facility payment)                                                     addition to the SOC payments.
r_O2M              per-session reimbursement to                    $550 Iyia Technologies          This is payment (in addition to SOC payment) desired
                   physician for O2 Misly therapy                                                  by Iyia Technologies to cover the facility costs and time
                   (includes facility payment)                                                     required by the physician.

r_SWC              per-session reimbursement for r_SWC_APC +       $107
                   SOC wound care                r_SWC_phys
r_SWC_APC          per-session reimbursement to                     $59 CMS HOPPS 2006 (payments Unweighted mean of CPTs ($APC Payment):
                   the wound-care facility for                          for 2007)                97597 ($51.83) and 97598 ($67.11) = $59.47
                   SOC
r_SWC_phys         per-session reimbursement to                     $48 CMS MFS 2006 (payments for Unweighted mean of CPTs ($Physician Payment):
                   the physician for SOC                                2007)                      97597 ($41.69) and 97598 ($53.44) = $47.57




                                                               Page 15 of 17
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                                                                              June 2007


Appendix 2: References
1. Abidia, A; Laden, G; Kuhan, G; Johnson, BF; Wilkinson, AR; Renwick, PM;
   Masson, EA; and McCollum, PT. The Role of Hyperbaric Oxygen Therapy in
   Ischemic Diabetic Lower Extremity Ulcers: a Double-blind Randomised-controlled
   Trial. Eur J Vasc Endovasc Surg 2003; 25: 513-518.

2. Baroni G; Porro T; Faglia E; Pizzi G; and Favales F. Hyperbaric oxygen in diabetic
   gangrene treatment. Diabetes Care 1987; 10:81–86.

3. Boyko EJ; Ahroni JH; Smith DG; Davignon D. Increased mortality associated with
   diabetic foot ulcer. Diabet Med 1996; 13: 967-972.

4. DMEPOS (Prosthetics, Orthotics, and Supplies) 2007 Fee Schedule Revised
   January 3, 2007.

5. Doctor, N; Pandya, S; Supe, A. Hyperbaric Oxygen Therapy in Diabetic Foot.
   Postgrad Med 1992; 38(3): 112-114.

6. Faglia, E; Favales, F; Aldeghi, A; Calia, P; Quarantiello, A; Oriani, G; Michael, M;
   Campagnoli, P; and Morabito, A. Adjunctive systemic hyperbaric oxygen therapy in
   threatment of severe prevalently ischemic diabetic foot ulcer. A randomized study.
   Diabetes Care 1996; 19(12): 1338-1343.

7. Food and Drug Administration. Bercaplermin Memorandum: Clinical Review of
   BLA-96-1408; December 1997.
   http://www.fda.gov/cder/biologics/review/becaomj121697-r2.pdf February 2007.

8. Food and Drug Administration. Dermagraft Summary of Safety and Effectiveness
   Data.    Approval September 2001.    http://www.fda.gov/cdrh/pdf/P000036b.pdf
   February 2007.

9. Gentzkow GD; Iwasaki SD; Hershon KS; Mengel M; Prendergast JJ; Ricotta JJ;
   Steed DP; Lipkin S. Use of dermagraft, a cultured human dermis, to treat diabetic
   foot ulcers. Diabetes Care 19: 350-354, 1996.

10. HIPPS Federal Register, Vol. 71, No. 160 Friday, August 18, 2006.

11. HOPPS Federal Register, Vol. 71, No. 226, November 24, 2006.

12. Kalani, Majid; Jorneskog, Gun; Naderi, Nazanin; Lind, Folke; Brismar, Kerstin.
    Hyperbaric oxygen (HBO) therapy in treatment of diabetic foot ulcers: Long-term
    follow-up. J Diabetes Complications 2002; 16: 153-158.

13. Kalliainen, Loree K; Gordillo, Gayle M; Shlanger, Richard; Sen, Chandan K.
    Topical oxygen as an adjunct to wound healing: a clinical case series. Pathophys
    2003; 9: 81-87.



                                    Page 16 of 17
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                                                                               June 2007
14. Kessler, Laurence MD PhD; Bilbault, Pascal MD; Ortega, Francoise MD; Grasso,
    Claire MD PhD; Passemard, Raphael MD PhD; Stephan, Dominique MD PhD;
    Pinget, Michel MD PhD; and Schneider, Francis MD PhD. Hyperbaric Oxygenation
    Accelerates the Healing Rate of Nonischemic chronic Diabetic Foot Ulcers: A
    prospective randomized study. Diabetes Care 2003; 26: 2378-2382.

15. Lavery, Lawrence A DPM MPH; Armstrong, David G DPM; Wunderlich, Robert P
    DPM; Tredwell, Jeffrey DPM; and Boulton, Andrew JM MD. Diabetic Foot
    Syndrome: Evaluating the prevalence and incidence of foot pathology in Mexican
    Americans and non-Hispanic whites from a diabetes disease management cohort.
    Diabetes Care 2003; 26: 1435-1438.

16. Martinson, Melissa, MS PhD. Report on the Effectiveness of the IYIA O2MislyTM
    WTS-1000 Compared to Standard Wound Care. Technomics Research, LLC.
    Unpublished report on file at IYIA Technologies.

17. MFS Federal Register, Vol 71, No.231, December 1, 2006 corrected in No. 236
    December 8, 2006.

18. Moulik, Probal K MRCP; Mtonga, Robert MB; and Gill, Geoffrey V MD. Amputation
    and Mortality in New-Onset Diabetic Foot Ulcers Stratified by Etiology. Diabetes
    Care 2003; 26: 491-494.

19. Richard JL; Parer-Richard C; Daures JP; Jacob, C; Comte-Bardonnet M. Effect of
    topical basic fibroflast growth factor on the healing of chronic diabetic neuropathic
    ulcer of the foot: a pilot, randomized, double-blind placebo-controlled study.
    Diabetes Care 18: 64-69, 1995.

20. Steed DL and the Diabetic Ulcer Study Group. Clinical evaluation of recombinant
    human platelet-derived growth factor for the treatment of lower extremity diabetic
    ulcers. J Vasc Surg 21: 71-79, 1995.

21. Steed DL; Goslen JB; Holloway GA; Malone JM; Bunt TJ; Webster MW.
    Randomized prospective double-blind trial in healing chronic diabetic foot ulcers:
    CT-102 activated platelet supernatant, topical versus placebo. Diabetes Care
    15:1598-1604, 1992.

22. Steed DL; Ricotta JJ; Predergast JJ; Kaplan RJ; Webster MW; McGill JB;
    Schwartz SL and the RGD Study Group. Promotion and acceleration of diabetic
    ulcer healing by arginine-glycine-aspartic acid (RGD) peptide matrix. Diabetes Care
    18:39-46, 1995.

23. Wieman JT; Smiell JM; Su Y. Efficacy and safety of a tropical gel formulation of
    recombinant human platelet-derived growth factor-BB (becaplemin) in patients with
    chronic neuropathic diabetic ulcers: a phase III randomized placebo-controlled
    double-blind study. Diabetes Care 21:822-827, 1998.

24. Zamboni WA; Wong HP; Stephenson LL,; and Pfeifer MA: Evaluation of hyperbaric
    oxygen for diabetic wounds: a prospective study. Undersea Hyper Med 1997;
    24:175–179.


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