Biologics and the Next Era of Wound Care: Navigating Coding Changes, Coverage Pressure, and Market Evolution

Recent CMS and FDA regulatory changes are reshaping the wound care landscape by incentivizing the development of 351 biologics, requiring rigorous clinical evidence and reducing reliance on iterative products. These shifts aim to drive true innovation in advanced wound therapies, improve patient outcomes, and align reimbursement with high-impact clinical value.

• CMS reimbursement changes favor 351 biologics, creating clear incentives for manufacturers to pursue more rigorous, innovative therapies over lower-barrier 361 and 510(k) products.
• FDA requires indication-specific evidence for 351 approval, treating wound types (e.g., Wagner 1) as distinct conditions—demanding high-quality, trial-based data pre- and post-market.
• Product volume will decline, but innovation quality will rise, shifting away from iterative developments toward fewer, more transformative wound care therapies.
• Market behavior is already shifting, with providers and manufacturers exploring regenerative alternatives like PRP that sit outside the new CMS framework.

Please note: This content is a direct transcript, capturing the authentic conversation without edits. Some language may reflect the flow of live discussion rather than polished text. 

Nikolai Sopko, MD, PhD:

When you went through and read, you know, the, I don't even know how many pages it was, 50 pages or something, you know, that we probably all spent our Halloweens reading when that came out, I felt like CMS was pretty clear to a certain extent where they sort of see the 351 products as quite separate, and hence they kept that reimbursement, you know, quite separate from the PMAs, the 510(k)s, and the 361 HCT/P products. And they were quite clear as well in saying that they want to do that in order to foster more product development in the 351 pathway, which, you know, they see as being more rigorous and potentially adding more value and more innovation, potentially for patients in the future. And so they underscored that they really want to support that 351 pathway to encourage manufacturers to create more products under that pathway to provide more potentially innovative and effective products for patients than we've seen. 

As Ned and I are physicians, you know, we know oftentimes when you have more than 5 choices, especially when you have, you know, 200 choices, oftentimes there's not a clear winner. You know, if you have a real clearly effective product oftentimes, you're going to have fewer choices. Now, wounds is different because wounds are a very large, you know, bucket that gets encapsulated in a single word. So, it makes sense that you're going to have, you know, quite a bit more products than you would see for maybe another disease. But I think their goal there is trying to provide more clarity for providers and patients. And they feel, I think, that the 351 pathway helps with that just because of all the work you have to do to get approved, to show your safety and efficacy, that helps remove some of the ambiguity that can be in place with these products with the lesser regulatory pathway. 

Ned Swanson, MD:

And I think if you look at these changes that are getting put in place, you know, from our vision and perspective, how is this going to affect the market for years to come? As Nick said, they're trying to foster the incentive and the development of BLA products. And what that could do over time is get away from this iterative development where you might have one new class of a skin sub, let's say it's a collagen scaffold, or it's an amnion. And then little tweaks just get made currently. And the current setup, the current regulations, that fosters a lot of iterative products where it makes a lot of choice, but it makes also the choice very challenging and difficult. And the pricing was all over the place for what looked like pretty much the same product. And by making the split, especially on the reimbursement side in this way, keeping 351 biologics outside of these changes it should incentivize manufacturers, biotechs, R&D to look at hjow can we really make a leap in innovation? How can we take what’s currently on the market, currently available to patients, and really make a transformative switch into a new product, which you see in almost every other field of medicine. So, if you look at oncology, they're developing CAR T therapies, they're developing gene therapies, vaccines, targeted therapies, most of which fall under this biologics pathway. And every new thing that comes to the market really has to be a giant step up in safety and effectiveness for the patient. So, we think this sort of all began in motion with the FDA changes to the 361 pathway, which Nick spoke about earlier. And you're just seeing it continue forward on the other side of the spectrum with these recent CMS changes. So, we think overall it's a great thing for the field. There will certainly be a lot of changes to get through and probably bumpy times ahead for the market, both providers, patients, manufacturers, regulators. But once we're through those choppy waters and the uncertainty, we really see this as becoming pretty transformative for wound care overall and for this area of medicine. And I think we're already starting to see it from our conversations with providers, with other manufacturers. You see people shifting to other areas to treat their patients. So, you know, we've heard, we've seen a lot of interest in PRP because they're also outside of these changes. So you can see the incentives and the regulations starting to realign what people are looking at doing. Not to say certain things should be used over others that are on the market currently, but you can see how these incentives long-term could really inspire innovation in wound care and really shooting much higher than just tweaking products that already exists. 

Dr. Sopko:

And along those lines, given the burden to go through the 351 approval pathway, it'll probably lessen the amount of new products that you see coming to the market that we've seen in the wound care space where every year it seemed like in the last couple years, there was a lot of new products coming out. You can't just quickly launch products like you could under those other regulatory pathways under the 351. Every specific product has to go through that rigorous process and even your indication. So for example, for us, our first indication is going to be very specific in Wagner 1 wounds, because the FDA really sees each wound class as kind of its own disease type, and they’re going to want you to generate that rigorous data for each one of those disease types. Now, your first indication typically is, you know, kind of, you know, the hardest, if you will. And then, you know, hopefully once you get approved, you can generate data in a little bit more of a flexible manner, hopefully, and working with the FDA, collecting your data rigorously, even post-commercial in order to broaden your indications. But we probably will see a drop in the number of new products coming out to the market, especially for those pursuing that 351 pathway. That's something that we experienced firsthand in our development process. Before we even made the transition from the 361 to 351, we already had 5 trials under our belt. We thankfully ran those trials very rigorously, even under the post-market setting, doing things like full-source data verification, things that weren't really typical for a lot of those post-market studies because we sort of knew we kind of felt like we're probably going to go down this pathway and working with the FDA, they reviewed that data, saw the rigor that it was collected, and we were able to incorporate that data in our package and get things like our regenerative medicine advanced therapy designation as well as our breakthrough therapy designation earlier this year because of that data. And then that also was very helpful in understanding how to design and really execute our most recent phase 3 pivotal trial, which we just had last patient last visit a couple weeks ago, and we're very excited for the final data to come out early next year in anticipation of our BLA submission in April. 

Nikolai Sopko, MD, PhD, Chief Medical Officer and Chief Scientific Officer at PolarityTE, is a physician-scientist specializing in regenerative medicine and wound care innovation, leading clinical and regulatory strategy for advanced biologic therapies.

Ned Swanson, MD, Co-Founder and Chief Executive Officer of PolarityTE, is a board-certified physician and biotech executive focused on developing and commercializing biologics, with deep expertise in navigating complex regulatory pathways for breakthrough wound care treatments.