Payment issue affects Sepracor
By Emily Brown BLOOMBERG NEWS
MARLBORO— The shares of Sepracor Inc. fell 11 percent after information posted on a U.S. government Web site suggested that payments for the asthma drug Xopenex may be reduced.
Medicare’s payments for Xopenex will fall and those for albuterol, a generic alternative, will rise starting July 1, said spokeswoman Ellen B. Griffith in an e-mail yesterday after the close of regular trading.
Xopenex is Sepracor’s best-selling drug, with $555 million in sales in 2006, 47 percent of the company’s revenue. Medicare, the U.S. health program for the elderly and disabled, accounts for almost a third of the medicine’s sales. The government has been reviewing its reimbursement rates for the treatment when it’s delivered through a machine called a nebulizer.
Summer Street Research Partners in Boston yesterday downgraded the shares in the Marlboro-based company to “sell” from “neutral,” saying that information posted on Medicare’s Web site indicated the government may cut reimbursement for nebulized Xopenex “significantly and sooner than expected.”
The price of a share dropped by $5.58, or 11 percent, to $46.70 at 4 p.m. New York time in Nasdaq Stock Market composite trading, after touching $43.95. The last time shares fell more in a single day was Aug. 7, 2002, when they sank 13 percent.
The Summer Street note, by analyst Mario V. Corso, said that information on the Medicare Web site indicated that Xopenex and generic albuterol would have the same reimbursement code as of July 1. The change would cut earnings by 35 cents a share in 2007 and 61 cents in 2008, Corso said.
The company’s shares were also downgraded from “outperform” to “neutral” by analyst Marc Goodman at Credit Suisse.
“It is clear that pricing will be worse than we expected,” Goodman wrote.
Sepracor acknowledged in a regulatory filing in March with the U.S. Securities and Exchange Commission that reimbursement for Xopenex may be reduced to the level of the generic albuterol.
The Centers for Medicare and Medicaid Services started considering last year whether Xopenex is needed to treat chronic obstruction pulmonary disease among the 43 million elderly and disabled Americans who have Medicare. |
