covered too early...
UPDATE 2-Cyberonics off as Aetna denies coverage for device
Fri Apr 21, 2006 4:52 PM ET
(Adds Aetna comment, closing stock price)
CHICAGO, April 21 (Reuters) - Shares of Cyberonics Inc. (CYBX.O: Quote, Profile, Research) fell as much as 8 percent on Friday after health insurer Aetna Inc. (AET.N: Quote, Profile, Research) said it would not provide coverage for the company's implantable device to treat severe depression.
FACT BOX
CYBX.O (Cyberonics Inc)
Last: $24.93
Change: -1.80
Up/Down: -6.73%
In a bulletin posted on its Web site, Aetna, one of the largest U.S. insurers, said it will approve payment for the device when used to treat epilepsy, but for no other indication, including refractory depression, autism and obesity.
The insurer said it considers the device, the Vagus Nerve Stimulation Therapy System, which delivers intermittent electrical pulses to the brain, "experimental and investigational." It said the stop-watch-sized device's effectiveness has not been established through well-controlled clinical trials.
Aetna, as well as other insurers, had been reviewing claims for reimbursement on a case-by-case basis. An Aetna spokeswoman said the company will continue to review claims case by case.
Analysts said the decision could set a precedent for other insurers.
"This morning's decision by one of the nation's largest insurers to deny coverage of the device for depression will likely, we believe, stifle what limited demand the device already had and discourage other insurers from offering coverage," said Alexander Arrow, an analyst at Lazard Capital Markets, who recommended investors sell the stock.
The U.S. Food and Drug Administration approved the device last July for adults with depression who had failed to respond to other therapies.
Aetna, however, said that "long-term data regarding tolerability as well as symptomatic and functional outcomes of depressed patients receiving VNS are needed to ascertain the effectiveness of this procedure for treating refractory depression."
Cyberonics Chief Financial Officer Pamela Westbrook said Aetna's decision would not change the company's most recent financial outlook.
"This is business as usual. We have not anticipated broad, national coverage for the next four quarters and it wasn't contemplated in our guidance," Westbrook said.
Earlier this year Sen. Charles Grassley, chairman of the Senate Finance Committee and a critic of the FDA, said he was concerned that the device might not meet the usual FDA criteria for safety and efficacy.
Shares of Cyberonics closed $1.80, or 6.7 percent, lower at $24.93 on Nasdaq after falling as low as $24.60 earlier. |
