When investing in any stock, it's important to understand the areas you need to follow closely. In the following sample of our premium report on Questcor Pharmaceuticals (UNKNOWN:QCOR.DL), we outline one such area for the company.
The company's shares plunged in September 2012 after Aetna issued a clinical bulletin placing severe restrictions on reimbursements for Acthar. Aetna's issue was that no conclusive proof had been established for Acthar's efficacy in treating MS. The insurer did confirm that the drug was medically necessary for treatment of infantile spasms. However, as the chart above displays, this condition represents only a small part of Acthar sales.
Humana followed in October 2012 with a change in its coverage for Acthar. However, the insurer did not rescind coverage for MS. Instead, it changed its policy to require pre-authorization for use of the drug in treating MS. The bad news for Questcor with this decision is that it could mean that Humana will not approve some of the pre-authorizations for Acthar, which could lead to fewer sales. On the other hand, pre-authorization requirements are standard fare for insurers and don't necessarily result in fewer approvals. Questcor has a 30-person staff that focuses solely on helping patients receive approval for pre-authorizations.
UnitedHealth Group also issued a bulletin in October 2012 with changes to its policy regarding Acthar. However, in our opinion, these changes were relatively minor and do not appear to have a material impact on reimbursement for the drug.
Thus far, there appears to be little impact of reimbursement changes on Acthar sales. Questcor's sales efforts and dedicated teams to assist in obtaining payer approval for prescriptions help mitigate the downside from current insurer reimbursement tightening. However, investors should monitor this situation closely.