Questcor stock reels as feds eye Acthar marketing

As if last week's reimbursement blow to Questcor Pharmaceuticals ($QCOR) wasn't enough, the company today disclosed that the U.S. government is investigating its marketing practices. The stock dropped by 27%, on top of a 40% decline last week.

It's been Questcor's misfortune to attract attention from short-seller Citron Research. The firm zeroed in on Questcor in July, Reuters points out, questioning the company's marketing strategy and raising the specter of early generic competition for the company's flagship product, Acthar.

Meanwhile, as Dow Jones reports, the short-selling blog StreetSweeper has also questioned Questcor's marketing practices; the company isn't vigilant enough about preventing off-label promotion by its sales force, critics have said. The company denies those allegations.

News of the marketing probe comes days after Aetna decided to restrict reimbursement for Acthar for treatment of infantile spasms. The insurer said using the drug in its 18 other indications wasn't medically necessary. The company said Aetna's move won't materially affect its results, because the insurer accounts for only about 5% of Acthar scripts. Questcor also said it's submitting information on the drug in advance of another treatment update from Aetna next month.

But analysts worry that Aetna's scrutiny will spread to other insurers, Bloomberg reports. Leerink Swann's Marko Kozul downgraded Questcor stock today, and in an investor note said, "[W]e believe Acthar may increasingly show up on insurers' radars and undergo reimbursement reviews."

Questcor's disclosure today begs this question: Did the feds zero in on Questcor's marketing before Citron and other critics raised their questions? Or is the federal investigation another product of the critical campaign? The shorts certainly have flocked to Questcor stock; as Reuters notes, roughly 35% of the company's shares were shorted by the end of August, or 21.1 million shares.

- see the Reuters news
- read the Dow Jones piece (sub. req.)
- get more from Bloomberg

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