Myriad Genetics Drops After U.S. Cuts Rate for Gene TestDrew Armstrong
Myriad Genetics Inc., a provider of gene tests for breast cancer, fell to its lowest closing price in almost two years after the U.S. proposed cutting reimbursements for the diagnostic service by almost half.
Myriad dropped 14 percent to $20.79 at the close in New York, its lowest price since Jan. 13, 2012. The shares have lost 23 percent in the last 12 months.
The Centers for Medicare and Medicaid Services will hold a public comment period through Jan. 27 on the proposed lower rates, Myriad said in a filing today. The Salt Lake City-based company will have trouble getting high reimbursements for the tests from the U.S. and other payers, said Peter Lawson, an analyst with Mizuho Securities Co.
“Negative pricing overhangs have increased beyond our comfort level,” Lawson said in a note to clients today. He reduced his rating on the stock to hold from buy.
Medicare, the U.S. health-insurance program for the elderly and disabled, will pay $1,438 next year for sequencing of the BRCA1 and BRCA2 genes, which are associated with breast cancer, the company said in a filing today. That figure is down from a government determination in September to pay $2,795 for the test. Medicare makes up about 10 percent of Myriad’s BRCA testing sales, Lawson said.
Myriad held a U.S. monopoly over the BRCA tests until June, when the U.S. Supreme Court invalidated parts of its gene patents. Afterward, Quest Diagnostics Inc., Ambry Genetics Corp. and another closely held company said they were entering the BRCA market.
Mutations in the BRCA1 and BRCA2 genes, the most common cause of hereditary breast and ovarian cancer, are present in about one in 400 women and indicate an elevated risk.