Trump’s Medicare Crackdown Is Shaking Up Wound Care. One Under the Radar Micro Cap Could Benefit
The Trump administration is waging one of its most aggressive campaigns against healthcare fraud in years, and wound care is squarely in the crosshairs. In February 2026, the Centers for Medicare & Medicaid Services (CMS) imposed a nationwide six-month moratorium on new Medicare enrollment for certain medical supply companies, citing over $1.5 billion in suspected fraudulent billing it stopped in 2025 alone. The move is part of a broader initiative that also includes $5.7 billion in suspended Medicare payments and more than 5,500 provider billing revocations. But the supply equipment crackdown is only part of the story. Medicare spending on wound care products known as "skin substitutes" skyrocketed from roughly $250 million in 2019 to over $10 billion by 2024, a nearly 40-fold increase while patient volume only doubled. The Department of Justice responded in 2025 by charging individuals in connection with $1.1 billion in fraudulent skin substitute claims. CMS then finalized sweeping reimbursement reforms for these products beginning in 2026.
Taken together, the message from Washington is clear: the era of loosely regulated, supply-driven wound care billing is ending. For MediWound (Nasdaq: MDWD), a biotech developing a late-stage enzymatic debridement drug called EscharEx, this regulatory shift could represent a meaningful tailwind.
When the Rules Tighten, Clinical Evidence Matters More
The pattern across both crackdowns is the same: CMS is compressing fraud-prone, supply-driven billing models and raising the bar for what counts as legitimate wound care spending. For years, dressings, grafts, and other reimbursable products could be billed repeatedly under Medicare Part B with limited scrutiny. That environment rewarded volume over outcomes. As oversight tightens, providers become more compliance-sensitive and less willing to rely on products or billing patterns that could invite audit scrutiny. Treatments with clearly defined clinical indications, controlled dosing, and evidence from randomized trials become more attractive. Drug products developed through FDA-regulated pathways, such as Biologics License Applications (BLAs), carry a fundamentally different risk profile than loosely regulated supply categories. This is where MediWound's EscharEx differentiates itself.
What EscharEx Brings to the Table
Chronic wounds, such as venous leg ulcers and diabetic foot ulcers, often contain dead tissue that prevents healing. Removing it, a process called debridement, is a critical first step in wound management and is performed in roughly 68% of cases. Today, the dominant product for enzymatic debridement is SANTYL, a collagenase-based ointment that generates roughly $360 million in annual U.S. sales. SANTYL typically requires weeks of daily application to achieve complete debridement. No new FDA-approved drug has entered this category since 1965.
EscharEx is a concentrate of proteolytic enzymes enriched with bromelain, designed for topical daily application. It removes dead tissue through multimodal enzymatic debridement, preparing the wound bed for healing in days rather than weeks. Unlike commodity wound care supplies that can be billed over extended treatment cycles, EscharEx operates on a defined course: up to eight daily applications over two weeks. In Phase 2 clinical trials published in eClinicalMedicine (a Lancet journal), 63% of patients treated with EscharEx achieved complete debridement at two weeks, compared to 13% for standard of care.
Clinical Momentum and Industry Validation
MediWound is now enrolling patients in VALUE, a global Phase 3 pivotal trial targeting 216 patients across approximately 40 sites in the U.S. and Europe. An interim assessment is expected by year-end 2026, and the company plans to expand its clinical program into diabetic foot ulcers and pressure ulcers in the second half of this year. The program has attracted research collaborations with seven leading wound care companies, including Solventum, Mölnlycke, MIMEDX, B. Braun, Coloplast, Convatec, and Essity. Both the FDA and EMA have provided constructive regulatory feedback on the development strategy. MediWound ended 2025 with $53.6 million in cash and reaffirmed revenue guidance through 2028, with the 2028 outlook incorporating a potential initial contribution from EscharEx, subject to regulatory approval.
Conclusion
Investors have already seen what happens when CMS tightens the screws on loosely regulated wound care categories. The skin substitute reimbursement overhaul disrupted business models built on billing arbitrage. Now, with the DMEPOS moratorium and CMS's broader CRUSH initiative signaling continued enforcement, the direction appears clear: regulators want evidence-based, outcome-driven care. EscharEx remains an investigational product, and Phase 3 results will ultimately determine whether it earns FDA approval. But policy direction matters in healthcare. When regulators compress fraud-prone segments and raise reimbursement standards, capital and clinical attention tend to migrate toward higher-evidence solutions. If that migration continues, MediWound may find itself bringing EscharEx to a wound care market that has been structurally reshaped in its favor.
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