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Pacific Edge shares took a nosedive on the NZX yesterday after news its Cxbladder tests could be dropped by United States-based health insurance company Novitas.
The Dunedin-based cancer diagnostics company requested a trading halt on Friday to consider advice from its US legal team and other advisers.
Shares opened at 78c when trading resumed at the market’s opening yesterday and reached a low of 40c. At market close, they were 48c.
In a statement yesterday, Pacific Edge said it believed the proposed changes were unlikely to survive an ongoing review process in their current form.
"The consensus view we received was that the proposed changes to the LCD (local coverage determination) are contrary to US legal requirements and precedent."
If approved unchanged, Cxbladder would not qualify for coverage from Novitas, the Medicare administrative contractor with jurisdiction for Pacific Edge’s US laboratory. Those tests represented a significant portion of current Cxbladder testing revenue.
Pacific Edge said multiple companies with dozens of diagnostic tests that had existing coverage, or were seeking coverage, would also be affected.
"The proposed changes also fundamentally change the process for determining coverage for specific tests and could deprive US clinicians and Medicare patients access to diagnostic tools with proven, peer-reviewed clinical utility."
Chief executive Dr Peter Meintjes said the company had presented its initial concerns to Novitas and it would work with the US Centres for Medicare and Medicaid Services (CMS) and its contractors to make the necessary changes to the drafts to ensure there was no disruption to the coverage of Cxbladder, "as far as we are able".
"We will also be encouraging the many clinicians and healthcare providers already using our tests to support our position," he said.
Since Cxbladder gained CMS reimbursement coverage in 2020, Pacific Edge had received CMS reimbursement for more than 10,000 tests.
Cxbladder had also been adopted by some of the United States’ largest integrated care networks and incorporated into their clinical treatment guidelines.
Novitas extended the period for public comments on the proposals until September 6.
While it had not provided a specific date for a decision, Pacific Edge understood it must either publish or withdraw the draft LCD within a year of the end of the public comment period.
Regardless of the determination, it also understood CMS was required to give Pacific Edge at least 45 days notice of the effective determination date.
Chairman Chris Gallaher said Pacific Edge remained well capitalised and positioned to execute on its long-term strategic objectives.