Why Questcor Pharmaceuticals' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biopharmaceutical company Questcor Pharmaceuticals (Nasdaq: QCOR  ) rallied as much as 14% today after the company received favorable news regarding Medicaid reimbursements from the government on its key multiple sclerosis drug, Acthar Gel.

So what: According to a regulatory filing with the Securities and Exchange Commission, Questcor has been informed by the government that it's eligible to reduce its reimbursement responsibility on its key MS drug from 100% to as low as 23.1%. Questcor plans to implement these pricing changes over the next three to six months.

Now what: In addition to treating MS, Acthar Gel has also been approved to treat nephrotic syndrome and dermatomyositis/polymyositis, and today's news almost assuredly means that Questcor will be able to keep more of what it earns. This isn't exactly the best news from a patient treatment perspective, because many years ago Questcor took major heat for raising the price of a vial of its Acthar Gel from $1,600 to $23,000. Although the company will be doling out less in rebates, I have to wonder who else it's going to affect in the process. I'd take a neutral stance on today's ruling and see how it plays out during the next six to 12 months.

Craving more input? Start by adding Questcor Pharmaceuticals to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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