On December 10, 2024, the Medicare Administrative Contractors (MACs) held a town hall session to discuss the Local Coverage Decisions (LCDs), “Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers,” which were issued on November 14. The proposed LCDs were announced on April 25 of this year, a comment period followed, and then things went black as the MACs contemplated whether any changes should be made to the LCDs. Two key improvements in the final version included an increase in the number of skin substitute applications from four to eight and an increase in care time from 12 to 16 weeks. In this article, SmartTRAK will discuss the ongoing activities since these LCDs were announced, including the requirement for published peer-reviewed clinical evidence, market activities to shore up position and activities to rescind the LCDs. The article will close with SmartTRAK’s forward analysis of the impact of these LCDs on the market should they be implemented as planned.
When SmartTRAK began covering the Skin Substitute segment almost fifteen years ago, the gold standard for Medicare coverage was a published randomized clinical trial demonstrating evidence of improved wound closure. Since that time, Medicare has drifted away from that requirement allowing the physician to make the determination of the product to be used. The newly issued LCDs return to that gold standard, only covering products with published clinical data. During the comment period, four products were added in which clinical data was missed on the initial review, and one was deleted. The covered products are currently limited to eighteen, but actually only sixteen, as two of the products are no longer available on the market. This is a drastic decline as today, there are over 200 products available to practitioners. Stakeholders expressed concern during the town hall meeting whether the sixteen products could adequately serve the needs of the patients. See Table 1 for the LCD-covered product list.
After the MACs announced the proposed LCDs in April, several companies initiated a bundle of clinical trials designed to meet the requirements of a completed and published clinical trial demonstrating improved wound closure outcomes. SmartTRAK scouted through clinicaltrials.gov to identify the trials evaluating skin substitutes for diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs) initiated by companies since the April announcement (see Table 2) and assumes these companies are the ones that want to stay in the game. To date, companies have initiated twenty-three trials---one was completed and one was terminated. During the town hall meeting, the Alliance of Wound Care Stakeholders and several companies asked for clarification on the process for reconsideration for a product to be listed on the covered list. Today, the MACs have only stated that reconsideration would be “at least annually,” and there is no expedited process.
Table 2 below shows seven trials scheduled to be completed by mid-2025. Assuming a successful trial, the MACs will only consider study results if they are published. SmartTRAK has learned that the Journal of Wound Care has increased resources to help expedite the review process. In developing its forward-looking forecast, SmartTRAK assumes that some of these products will be available to the market in 2026.
Table 2. Clinical Trials Initiated for DFUs and VLUs
Since the LCDs were finalized, several companies have been looking to shore up their market position via licensing deals, educational seminars and internal investments.
In late November, StimLabs* announced it has entered into an exclusive national distribution agreement with Geistlich to commercialize Derma-Gide*, a porcine-derived matrix. Derma-Gide was one of the four products approved for coverage in the final LCDs. Currently, StimLabs has no products on the LCD-covered list. The partnership broadens StimLabs' portfolio to include xenografts for wound care.
In late November, BioStem announced it signed a Letter of Intent (LOI) to acquire commercial-stage products and development technologies from ProgenaCare* to support its portfolio diversification strategy. BioStem expects to finalize the definitive agreements within 60 days after due diligence. Although ProgenaMatrix* is not on the covered list, it has several published studies with positive results.
In early December, Reapplix* sponsored a webinar on Wound Source. The company provides 3C Patch*, a robust blood-derived patch prepared directly at the point of care for the treatment of DFUs. The company sponsored a webinar entitled “How to be Prepared for Upcoming CMS Coverage Changes to Skin Substitutes/Cellular and Tissue-Based Products (CTPs),” discussing the requirements of the new LCDs and presenting the option of switching to the 3C Patch if healing had stalled. The 3C Patch has good reimbursement, which allows for 20 weeks of treatment.
In late November, Organogenesis*, which has three products on the approved list, announced plans to expand manufacturing capacity at a 122K sq ft biomanufacturing facility in Smithfield, RI. The company will continue to operate its headquarters and manufacturing facilities in Canton, MA and other operations in the US and abroad. The Rhode Island lease is contingent upon state and local tax incentives.
Although the LCDs for skin substitutes were finalized November 14, a coalition is working to rescind the LCDs before they go into effect on February 12, 2025. SmartTRAK spoke with Preeya Noronha Pinto, life sciences/healthcare partner at King & Spalding, who is leading the coalition’s effort. Pinto, a former Health and Human Services acting general counsel and Department of Justice litigator, knows the ins and outs of the agency's operations. Formed in August 2023, the Medicare Access to Skin Substitutes (MASS) Coalition is made up of manufacturers and distributors and has continued to build steam as LCDs have been proposed, rescinded, proposed and are ready to be implemented in February 2025.
The goal of the coalition is to raise awareness of the issue among Medicare beneficiaries and Congress, especially since the number of approved products has been drastically reduced. In an interview with SmartTRAK, Pinto said one of several inconsistencies is between the FDA authorizing products through the 361 regulatory pathway, which already recognizes clinical evidence supporting amniotic tissue products, and the LCDs requiring additional product-specific clinical evidence to demonstrate healing. The coalition is citing other arguments and issues that need to be addressed, including:
Pinto mentioned that the LCDs are not addressing the real issue--the payment methodology--which allows products with significantly varying price points to be used and reimbursed. The coalition's ultimate goal is to have the Centers for Medicare & Medicaid Services (CMS) instruct the MACs to rescind the latest LCDs so they cannot be implemented in February as planned. According to Pinto, “The LCDs are arbitrary and capricious and will devastate patient care if they become effective. The MASS Coalition is fighting to prevent increased sepsis, amputations and death in patients with chronic wounds that will surely occur if the LCDs are implemented.”
In addition to the coalition’s efforts, SmartTRAK is aware of significant activity by manufacturers and others to lobby Congress. This lobbying effort was unsuccessful under the previous administration, but things may change with the new administration entering on January 20th. Some have linked the issuance of the LCDs to the current administration's desire to have them in place prior to the new administration taking over. If rescinding the LCDs is successful, it would likely take several months to implement the change.
Given all the moving parts of the Skin Substitute Market, providing a five-year forecast has been challenging. In developing its forecast (see Table 3), SmartTRAK made the following assumptions:
Table 3. US Skin Substitute/CTP Forecast
Although SmartTRAK is seeing significant year-over-year growth in 2024, revenues have begun to level out quarter over quarter. SmartTRAK projects 2024 will be a high year for the Skin Substitute Market, with subsequent revenue falling over the next two years but then rebounding in 2027 and 2028 as additional products are covered. However, the dynamic nature of the market, along with uncertainty and the potential for unknown events, could result in rapid market shifts and changing forecasts in the years ahead.
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