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 (NAS: 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.

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The article Why Questcor Pharmaceuticals' Shares Jumped originally appeared on Fool.com.

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