Novitas Draft Decision Challenges Pacific Edges US Growth

Highlights:

• Unfavorable Draft Decision: Novitas, Pacific Edge Limited's (NZX: PEB) Medicare Administrative Contractor, has issued a draft Local Coverage Determination (LCD) stating that its flagship Cxbladder test is "not reasonable and necessary" for bladder cancer management, denying Medicare coverage.
• Impact on US Operations: The decision poses a significant challenge to Pacific Edge's growth in the US market, a critical revenue stream for the company, by limiting the adoption of its non-invasive diagnostic test among Medicare-funded providers.
• Awaiting Final Decision: At the time of writing, Pacific Edge is assessing its options to address the draft LCD, with its future US market prospects hinging on its ability to overturn the determination through evidence-backed consultations.

Pacific Edge Limited (NZX: PEB), a leading developer of non-invasive diagnostic tests, faces a significant hurdle in the United States market after Novitas, its Medicare Administrative Contractor, issued an unfavorable draft Local Coverage Determination (LCD). According to the draft LCD, Pacific Edge’s flagship product, the Cxbladder test, does not meet the criteria for being "reasonable and necessary" for bladder cancer management. As a result, Medicare coverage for the test has been declined.

Impact on Cxbladder Test Coverage

The Cxbladder test, a cornerstone of Pacific Edge’s operations, is a non-invasive diagnostic tool for bladder cancer that has gained recognition for its innovative approach. However, the draft decision poses a challenge to its viability in the US market, which is a key revenue driver for the company. The LCD's conclusion could significantly limit the test’s adoption among healthcare providers relying on Medicare funding.

Implications for Pacific Edge

In June 2023, Pacific Edge acknowledged the potential implications of Novitas' draft LCD. The decision comes at a time when the company is striving to strengthen its footprint in the competitive US healthcare market. With the LCD stating that the test "is not payable," Pacific Edge may face challenges in sustaining its growth trajectory in this crucial segment.

Outlook for the Company

At the time of writing, Pacific Edge has yet to announce its next steps regarding the draft determination. The company has historically demonstrated resilience in navigating regulatory hurdles, and stakeholders are keenly observing how it plans to address this setback.

As the draft LCD undergoes consultation, Pacific Edge's future in the US market hinges on its ability to present compelling evidence to overturn the determination and reaffirm Cxbladder's role in bladder cancer diagnostics.

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