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New Codes Distinguish the IDET◊ Procedure from Other Therapies and will Facilitate Appropriate Physician and Hospital Reimbursement

ANDOVER, Mass., OCTOBER 31, 2006 — Smith & Nephew’s (NYSE:SNN; LSE: SN) Endoscopy division announced today that the American Medical Association (AMA) has created two new Category I Current Procedural Terminology (CPT) codes that will describe the company’s INTRADISCAL ELECTROTHERMAL◊ Therapy (IDET◊) procedure. The new codes will become effective January 1, 2007.

“We are very pleased that the AMA has created unique CPT codes that describe the IDET◊ procedure,” said Mike Frazzette, president, Smith & Nephew Endoscopy. “These codes are important to IDET◊ patients, physicians, and hospitals, because they recognize the wide-spread acceptance of the procedure and the clinical evidence supporting IDET◊. These codes will also help distinguish IDET◊ from procedures with less clinical data supporting effectiveness.”

The distinguishing factor about the new codes is that they only apply to intradiscal annuloplasty procedures that use electrothermal energy. Currently the only procedure available in the market using electrothermal energy is the IDET◊Procedure. All RF procedures, such as nucleoplasty, are not covered by these codes.

The new CPT Codes for Percutaneous INTRADISCAL ELECTROTHERMAL◊ Annuloplasty are:

• 22526 -- Percutaneous intradiscal electrothermal annuloplasty, unilateral or bilateral including  fluoroscopic guidance; single level
• 22527 -- one or more additional levels
  
  CPT Codes are the most widely accepted form of medical nomenclature used to report medical procedures and services.  The purpose of CPT is to provide a uniform language that accurately describes medical, surgical, and diagnostic services.  Physicians, hospitals, and other health care providers use CPT codes to report medical services to private and public health insurance systems for purposes of reimbursement. A standard system of coding also allows for reliable nationwide data collection. CPT is trademarked by the AMA, which first published the codes in 1966.

Among the AMA’s stated criteria for a new Category I CPT code are requirements that: (1) the procedure has received approval from the Food and Drug Administration (FDA) for the specific use of devices or drugs; (2) the procedure is a distinct service performed by many physicians/practitioners across the United States and (3) the clinical efficacy of the procedure is well established and documented in U.S. peer review literature.

Private and public health care insurers charged with making payment decisions will also use these codes to establish accurate reimbursement policies for IDET◊.

The IDET◊ Procedure is a minimally-invasive outpatient procedure for patients suffering from chronic disc-related low back pain who have failed a program of aggressive non-operative therapy. During the procedure, controlled levels of thermal heat are applied directly to the affected disc.

Since 1998, over 60 peer-reviewed articles have been published on the IDET◊procedure supporting the procedure's efficacy and safety. An estimated 7,000 to 10,000 IDET◊procedures are performed annually in the United States by pain management physicians, interventional radiologists and spine surgeons.

Smith & Nephew (NYSE: SNN, LSE: SN) is a global medical technology business, specializing in Endoscopy, Orthopaedic Reconstruction, Orthopaedic Trauma and Clinical Therapies, and Advanced Wound Management products.  Smith & Nephew ranks as the global leader in arthroscopy and one of the world’s leaders in advanced wound management and is one of the fastest growing orthopaedics companies in the world.

Smith & Nephew is dedicated to helping improve people's lives. The company prides itself on the strength of its relationships with its surgeon and professional healthcare customers, with whom its name is synonymous with the highest standards of performance, innovation and trust. The company has more than 8,500 employees and operates in 33 countries around the world and generated sales of over $2.6 billion.

This press release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In particular, statements regarding planned growth in our business and in our operating margins discussed under "Outlook" are forward-looking statements as are discussions of our product pipeline. These statements, as well as the phrases "aim", "plan", "intend", "anticipate", "well- placed", "believe", "estimate", "expect", "target", "consider" and similar expressions, are generally intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors (including, but not limited to, the outcome of litigation and regulatory approvals) that could cause the actual results, performance or achievements of Smith & Nephew, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Please refer to the documents that Smith & Nephew has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Smith & Nephew's most recent annual report on Form 20F, for a discussion of certain of these factors.

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