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An Insurance Crackdown Warning Shot

Bloomberg is reporting that insurance company Cigna is making big changes regarding coverage for Myriad Genetics (NASDAQ: MYGN  )  breast-cancer-related diagnostic test. This was at the center of both the political media, thanks to a Supreme Court verdict vacating some of Myriad's patents, and the paparazzi, after actress Angelina Jolie received a double mastectomy after showing an extremely high predisposition of developing breast cancer.

Cigna will require a genetic counselor before paying for a BRCA diagnostic test. These tests are for women who have a history of breast cancer in their families, but there are concerns regarding over-prescription and Cigna believes that a counselor can help wade through the implications of the data. 

This follows last year's decision by Aetna  (NYSE: AET  ) to limit coverage on Questcor's (UNKNOWN: QCOR.DL  ) Achhar for certain lucrative indications. While isolated events, this could be the beginning of a larger trend by managed-care companies reacting against certain expensive tests and treatments in orphan diseases and oncology.

In this video, health-care analyst David Williamson discusses what these events mean for investors in Cigna and Myriad, but also examines the broader issue of insurance stocks cracking down on expensive treatments, and where that could disrupt health-care spending in the future.

Rising health-care costs continue to be a hotly debated topic, and even legendary investor Warren Buffett called this trend, "The tapeworm that's eating at American competitiveness." To learn more about what's happening to the health-care system -- and how to potentially profit from this trend -- click here for free, immediate access.

Follow David on Twitter: @MotleyDavid.

Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 20, 2013, at 9:57 PM, drdonrs wrote:

    As usual another fool comments on something he knows little or nothing about. Firstly he should learn to spell the name of the drug...Acthar. Secondly he should get his facts straight. Aetna tried to limit approving Acthar for many of the treatments for which it has been approved by the FDA. It turns out that with the pre-approval process in place approval for Acthar continues to grow. More importantly no other medical insurance company followed in Aetna's ill advised footsteps. The incident has been a no issue event. Just look at the myriad of indications for Acthar and the list is growing. Much ado about nothing regarding the author's hyper comment on an insurance crackdown

  • Report this Comment On August 20, 2013, at 10:01 PM, QcorLONG123 wrote:

    Article seems like a fear tactic to establish a long position by picking up shares on the cheap. Nice work FOOLS....

  • Report this Comment On August 21, 2013, at 8:46 AM, NotTheDroid wrote:

    Little to ZERO knowledge of either company. Just an article to garner clicks for the advertisers.

    Try some real analysis and research for once in your life. I haven't seen any from you yet.

  • Report this Comment On August 22, 2013, at 3:42 AM, Caffeinsomniac wrote:

    HORRIBLE thrown together fear article based on baseless and OLD information. The author even spelled QCOR's flagship drug Acthar wrong like Dr Donrs pointed out above me! Spellcheck is useful, especially as an author... If insurance is suddenly such a threat to pharma, why is biotech still booming this year? Why are major analysts still upgrading price targets on companies that have already produced 100% returns in less than a year? Does the author even understand orphan status? Finally, even I could reference another news source like this author does referencing Bloomberg (rather than doing some real work and creating an article of my own) and then include information MORE THAN A YEAR OLD to support my thesis. Motley Fool should be ashamed that they are now known for content like this instead of a reliable resource.

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