Questcor Plunges After Aetna Limits Coverage of Drug

Questcor Pharmaceuticals Inc. fell the most in 20 years after insurer Aetna Inc. said it would limit coverage of the company’s top-selling drug. The drugmaker said it doesn’t expect a “material impact” from the change.

Questcor plunged 48 percent to $26.35 at the close in New York, its biggest one-day drop since November 1992, after word broke of Aetna’s decision on H.P. Acthar, a treatment for multiple sclerosis and infant seizures.

Questcor’s second-quarter sales more than doubled to $112.5 million, primarily reflecting expanded use of Acthar, the Anaheim, California-based company said in a July 24 statement. Aetna, the third-biggest U.S. health plan, said on its website that studies suggest the drug is “medically necessary” only for West syndrome, a condition that causes infantile spasms, and not for indications such as multiple sclerosis that are treated with steroids.

“Our previous position was that this was a last-resort treatment,” Cynthia Michener, a spokeswoman for the Hartford, Connecticut-based insurer, said in an e-mail. “We now state that it is not medically necessary because there is no clinical evidence that the drug is more effective than steroids.”

Aetna generally reimburses drugs only when they’re deemed medically necessary, Michener said. The insurer will still cover Acthar for members who have been using the drug in the past 12 months, she said.

Questcor Response

Questcor is reviewing the decision, the drugmaker said in a statement. Aetna has accounted for about 5 percent of shipped prescriptions for the gel, Questcor said.

“The company does not believe that the bulletin represents a material change in insurance coverage for Acthar,” it said in the statement. Questcor “does not believe that the bulletin will have a material impact on the company’s results or operations.”

The drug accounts for most of Questcor’s sales, with indications beyond infantile spasms representing about 90 percent of its use, said David Amsellem, a Piper Jaffray & Co. analyst in New York.

“Acthar basically is the company,” Amsellem said in a telephone interview, and investors are worried about “what happens if other insurers follow suit.”

‘Tightening’ Coverage

Amsellem said he expected Aetna’s move would have little impact on sales and was only a “tightening” of restrictions already in place.

The coverage decision was revised on Sept. 14 and will be reviewed again Oct. 13 based on any new clinical data, Aetna’s Michener said.

Questcor shares have fallen 37 percent this year. Today’s slide was the biggest for the shares since the company was formed in 1999 from Cypros Pharmaceutical Corp.’s acquisition of RiboGene Inc.

UnitedHealth Group Inc., the biggest U.S. insurer, considers Acthar medically necessary for West syndrome in children under 2 years old, according to a coverage bulletin on the Minnetonka, Minnesota-based insurer’s website effective Aug. 1. The gel is also covered for exacerbations of multiple sclerosis when patients can’t use steroids.

The second-biggest insurer, Indianapolis-based WellPoint, considers the treatment medically necessary for infantile spasms and for conditions including multiple sclerosis when steroids don’t work, according to a statement on its website.

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