15th Jul 2025 09:29
(Alliance News) - ConvaTec Group PLC on Tuesday criticised a proposal from the US Centers for Medicare & Medicaid Services which would reduce Medicare spending on skin substitutes and could reduce the company's revenue by up to 2%.
The CMS noted that spending on skin substitutes has had "unprecedented growth" as it has risen to over USD10 billion in 2024 from USD256 million in 2019.
"This dramatic spending increase is largely attributed to abusive pricing practices in the sector, including the use of products with limited evidence of clinical value," the CMS said.
The CMS currently treats skin substitutes as biologicals for the purposes of Medicare payments. It said it intends to reclassify skin substitutes as incident-to supplies, to reduce spending on the products by almost 90%.
"These proposed savings would not come at the expense of patient access or quality of care. If finalised, this will save billions for Medicare and taxpayers and incentivise the use of products with the most clinical evidence of success," the CMS said.
CMS Administrator Mehmet Oz said: "We are taking meaningful steps to modernize Medicare, cut waste, and improve patient care."
London-based medical products and technologies company ConvaTec said it supports CMS "in seeking to remove excess cost and promote responsible market practices".
However, it said the proposed reimbursement rate "risks limiting patient choice, product quality and availability in the segment".
The company said it plans to engage fully in the public comment process, which runs to September 12. "We do not expect any changes before 2026 at the earliest," it added.
ConvaTec said its InnovaMatrix product is "highly effective" with "significant health benefits to patients and healthcare professionals, strong user feedback and clinical evidence".
"We are committed to this segment and are on track to publish our randomised controlled trials in 2026. We are also continuing to develop sales across a range of indications, both within and outside the United States," the company added.
The InnovaMatrix product represented around 3% of ConvaTec revenue in the four months to April, the company noted. It is guiding for revenue of at least USD75 million in the 2025 financial year.
The firm said if the proposal is implemented in its current form, the potential headwind to revenue in financial 2026 could be between 1% and 2%.
Shares in ConvaTec were down 5.0% at 246.00 pence in London on Tuesday morning.
By Michael Hennessey, Alliance News reporter
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