MiMedx, a Marietta company under federal scrutiny amid allegations of channel stuffing, got a helping hand from U.S. Sen Johnny Isakson, according to a report in The Wall Street Journal. ALYSSA POINTER/ALYSSA.POINTER@AJC.COM

Isakson aided company accused of channel stuffing, WSJ reports

Editor’s note: This story has been modified to correct earlier information about the check sent to Sen. Isakson.

U.S. Sen. Johnny Isakson intervened to help MiMedx, a Marietta biopharma accused of over-shipping its products to Veterans Affairs hospitals, when the VA began scrutinizing the company, according to a report by The Wall Street Journal.

A few months prior, MiMedx had sent Isakson, R-Georgia, a check for $15,000, which was passed along to the National Republican Senatorial Committee, his spokeswoman said. 

Later, in an email to top company executives, former chairman and CEO Parker “Pete” Petit — a longtime personal friend of Isakson — said of the company’s troubles with the VA, “We have done everything in terms of talking with the individual in the VA office who sent out this directive to having our Senator make some phone calls to find out what had gone wrong.

“After those initiatives,” Petit said in the email, obtained by The Atlanta Journal-Constitution, “I believe things for MiMedx will stabilize, and we will not be fighting those battles any longer.”

A spokeswoman for U.S. Sen. Johnny Isakson told The Wall Street Journal he didn't intervene on behalf of MiMedx when the Atlanta VA moved to restrict the company's products, but documents indicate otherwise, the Journal reported. ASSOCIATED PRESS

Former U.S. Rep. Tom Price, who briefly served as secretary of Health and Human Services for the Trump administration, also came to the company’s aid, the Journal reported. Price sent a letter to executives for 11 insurance companies urging them to cover MiMedx products in what was dubbed “The Price Campaign” by MiMedx insiders . Price received more than $37,000 in campaign contributions from the company in the 2014 and 2016 election cycles, the article says. Isakson received more than $21,000.

MiMedx is currently under scrutiny by several federal agencies, including the Department of Justice, the Securities and Exchange Commission, Veterans Affairs and the Food and Drug Administration. Former employees have accused the company of boosting reported revenues, and stock prices, by flooding VA facilities with its wound-care and regenerative therapy products — a tactic known as “channel stuffing.”

Petit was ousted from the company earlier this year amid an internal investigation and an external audit by Ernst & Young, which has since resigned as auditor, citing a lack of candor by the company. Last week the company announced layoffs of nearly a quarter of its workforce, about 240 people.

At the time MiMedx called on Isakson for help, the VA had begun a process to reduce the amount of consignment products sitting unused, which threatened the company’s ability to load up shelves and record the sales, The Wall Street Journal reported, quoted unnamed former employees.

In May 2016, after receiving a letter from the company complaining about the process, Isakson asked staffers for the Senate Committee on Veterans Affairs, which he chairs, to follow up, his spokeswoman Amanda Maddox is quoted saying in the Journal story.

Maddox told the Journal that neither Isakson nor his office intervened for the company when the Atlanta VA began restricting the use of MiMedx products, saying in internal VA documents that the products were costly and unproven.

However, a few weeks after MiMedx sent a letter to Isakson about it, Atlanta VA officials discussed responding to a congressional inquiry about the products being blocked, even referencing the relationship between Isakson and Petit, the Journal reported. “A person familiar with the matter said Mr. Isakson or his office was involved in making the inquiry,” the article says.

After receiving the letter, Isakson had “informed Mr. Petit that he would share this information with the VA and seek answers to his questions,” Maddox told the AJC in an email.

“He did not commit to any resolution, but simply agreed to pass along a constituent complaint with a federal agency as he would do for any constituent and has done hundreds of times,” the spokeswoman said.

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