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Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR)

Reimbursement Process for H.P. Acthar Gel Conference Call

September 20, 2012 11:00 am ET

Executives

Doug Sherk – Investor Relations, EVC Group

Don M. Bailey – President and Chief Executive Officer

Stephen L. Cartt – Chief Operating Officer

Analysts

David Amsellem – Piper Jaffray

Steve Byrne – BofA Merrill Lynch

Mario Corso – Caris & Company, Inc.

Christopher Holterhoff – Oppenheimer & Co.

Marko Kozul – Leerink Swann Llc

Biren Amin – Jefferies & Co., Inc.

Jim F. Molloy – ThinkEquity LLC

Yale I. Jen – ROTH Capital Partners LLC

Tim Chiang – CRT Capital Group LLC

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Questcor Investor Conference Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Thursday, September 20, 2012.

I would now like to turn the conference over to Mr. Doug Sherk. Please go ahead, sir.

Doug Sherk

Thank you, operator, and good morning, everyone. Thank you for joining us today for the Questcor Pharmaceuticals conference call to discuss the reimbursement process, the company’s implements regarding insurance coverage for Acthar. We apologize for the delay in the start of the call, which was due to technical issues experienced by our service provider.

There will be a taped replay of this call, which will be available approximately one hour after the call’s conclusion and will remain available for seven days. The operator will provide the replay instructions at the end of today’s call.

Before we get started, I’d like to remind you that during the course of this conference call, management will make projections and forward-looking statements regarding future events. We encourage you to review the company’s past and future filings with the SEC, including without limitation the company’s Forms 10-Q and 10-K, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements.

Finally, a couple of housekeeping items; we would like to make sure that during the question-and-answer session, we will allows as many questions possible so please keep the questions to two and then re-queue, if you have the need for any additional questions. We’ll take as many questions as time allows today. In advance, we thank you for your cooperation.

And now I'll like to turn the call over to Don Bailey, President and Chief Executive Officer of Questcor Pharmaceuticals.

Don M. Bailey

Thanks, Doug. Good morning, everyone. With me today are Steve Cartt, Chief Operating Officer; and Mick Mulroy, our Chief Financial Officer. In a few moments, Steve will be making prepared remarks. But before turning the call over to Steve, I’d like to make some brief comments.

Nearly 2 months since our July earnings call, we have continued to make significant progress with our business. Sales and prescription performance continues to improve and vials shipped during the quarter continued to be strong.

We completed the expansion of our nephrology and neurology sales forces and initiated a pilot selling effort in rheumatology, using the same formula that worked so well with MS and nephrotic syndrome. Prescriptions are coming in as a result of our pilot rheumatology effort, focusing on Acthar, polymyositis and dermatomyositis indication. And we are now seeing those prescriptions beginning to get paid and shipped. And we recently announced a positive development regarding our Medicaid rebates.

Most importantly, since that July call, many more patients who had essentially run out of treatment options across multiple FDA approved Acthar indications have been helped with Acthar. We remain committed to helping patients with serious, difficult-to-treat autoimmune and inflammatory conditions. It is this core focus that drives us to further invest in building our scientific and clinical understanding of our unique drug Acthar, and to further educate healthcare providers on its appropriate role in helping patients.

Before turning the call over to Steve Cartt, our Chief Operating Officer, who will provide you march related to the recent information concerning the insurance reimbursement for Acthar. I’d like to summarize the events of yesterday from an investor relations perspective.

We’ve learned that the publications for the first time of a new insurance policy bulletin yesterday morning and immediately went towards to determine whether it would have an impact on our business and to prepare a press release.

Shortly after issuing that release, we became aware of some statements been put out by the insurance carrier that issued the bulletin, which investors construed as potentially being in conflict with our press release. This required additional investigation and made a challenging to engage with investors in one-on-one call, due to the Regulation FD.

As Steve will discuss, that additional investigation has resulted in us reconfirming our statements in the press release, but we do not expect the bulletin to have a material adverse impact on our business. As you know, Questcor has a philosophy of providing investors with significant access to management and we will continue this practice in the future. Unfortunately, the sequence of events yesterday simply made that challenging.

With that, I will now turn the call over to Steve.

Stephen L. Cartt

Thanks, Don, and good morning, everyone. First and foremost insurance reimbursement continues to be very good for Acthar and MS relapses, Nephrotic Syndrome and IS. We are gaining valuable new experience on a daily basis regarding the insurance coverage we are seeing at this early stage of our effort in DMPM. We attribute this continued strong coverage to the severity of the health outcome. If these conditions are not adequately treated, coupled with the fact that Acthar is indicated and FDA approved in these conditions.

Quite importantly, we hear many reports from doctors that Acthar treatment is producing very positive results in patients. This is not always the case of course that clearly many patients across all of our FDA approved and actively promoted indications are benefitting significantly from this drug, and there are few other treatment options available.

For MS exacerbations for example, there are only two FDA approved therapy, steroids and Acthar. All these factors are contributing to the rapid increase in Acthar usage and to our continuing solid insurance coverage.

I would like to now put the recent coverage policy both in some perspective. Acthar is a highly specialized, very low volume, premium priced drug, used for devastating conditions that are well recognized as being particularly tough to treat. We do not claim in any way that Acthar should compete with or superior to primary drugs such as IV steroids for MS relapses.

Rather Acthar should actually be withheld just for those patients who have already been through the primary treatment regimens and the doctor determines that the patient still requires another treatment approach. This is where Acthar can be an important FDA approved treatment option and this is where we as a company recommend that it be utilized.

Once the patient and physician reach for Acthar as a treatment approach, we have typically tried the primary treatments to no avail and are desperate for something different, because the Acthar is premium priced and is utilized in very limited, often orphan sized patient populations.

Descriptions are typically handled on a very intensive, case-by-case basis through the entire reimbursement process. Prior authorizations are the norm rather than the exception. Initial denials by insurance are frequent. After these denials, the coverage decisions are often appealed successfully provided of course that the patient has already attempted one or more primary treatments particularly when there are no FDA approved treatment options available.

The typical reimbursement process for an Acthar prescription is very labor intensive and we have a team of over 30 reimbursement specialists fully dedicated to the effort. This labor intensive process to secure Acthar coverage or individual prescriptions has been ongoing and continuously evolving since late 2007. Requirements for gaining coverage for an Acthar prescription have increased over this time period with most payers. And we have discussed this many times over the last few years during our conference calls with investors.

A number of plans over the last five years have ratchet up coverage criteria and yet through our support programs and appropriate patient targeting, we have continued to successfully ensure coverage for our patients.

As a company, we’ve gotten much better at targeting the right kind of patients for Acthar utilization and have also gotten much better at educating the prescribing offices about what to expect in the reimbursement process when prescribing Acthar. After this, typically need to provide documentation to insurance that the patient is already cycled through standard treatment without seeing the intended result. At that point, Acthar is typically approved for coverage and shipped to the patient.

So the Acthar reimbursement process is already very different than it is from most products. We actually expect some pushback on a large proportion of our prescription. The good news is that we are very experienced in how to manage this situation successfully. Our results to-date in doing so have been very good.

In short, while the recent policy coverage bulletin is of course from a very important payer that accounts for around 5% of our prescription, we view the recent details of their coverage policy has bought the latest incremental change in our five-year process of seeing a slow, but steadier evolution of coverage criteria.

We believe we have responded to this evolution successfully over time and also believe that we will continue to respond to this successfully. We will pursue coverage for Acthar case-by-case based on the specifics of the individual patient’s treatment history and health situation. At present, we are seeing little to no change in case-by-case coverage decisions regarding Acthar. And we’ll continue to monitor this very carefully, daily, on a case-by-case basis, as we do with all of our payers.

The key for us is to ensure that we consistently drive in prescriptions for patients who are truly in need of something else, and that we appropriately support our prescribers and patients throughout the reimbursement process. At this time, we do not see this recent bulletin as having a material impact on our business or on anything that we are presently doing.

I can’t stress enough however that there are patients suffering from serious medical conditions without no-one else to turn and who are in need of new treatment options. They can be difficult to treat, and if not treated successfully, such patients can become debilitated and in some cases these conditions can even become life threatening.

In each of our primary indications, we believe Acthar has the potential to be an appropriate treatment option for patients who do not respond adequately to or experience problematic side effects from primary treatment approaches. And let me be perfectly clear, we are not competing with these first line agents rather we are pursuing only those patients who needed an additional FDA approved treatment option having tried the primary treatments unsuccessfully.

With in each of these disorders lies a significant patient population where Acthar could be an appropriate FDA approved treatment approach. We anticipate that insurance coverage for Acthar will continue to be available for such patients through their health insurance plan.

Now, I’ll turn the call back to Don.

Don M. Bailey

Thanks, Steve. So to summarize, we remain committed to helping more patients with unmet medical needs and we continue to deliver on our growth strategies. We believe Acthar provides substantial benefits to many patients who would otherwise continue to suffer the effects of serious, difficult-to-treat autoimmune and inflammatory disorders.

Our expanding commercial effort in nephrology and neurology make further sales growth. In addition, we are seeing positive early results from our rheumatology pilot commercial effort. And we even received good news recently related to our Medicaid rebate.

At the same time, we are committed to investing in research and development to learn about Acthar’s unique properties in the possible therapeutic applications to treat other inflammatory and immune diseases.

And finally, insurance coverage for Acthar remains strong. Based on our extensive experience with reimbursement with this drug over the last five years, we believe we will continue to see Acthar covered in the patient types that we are targeting.

Operator, you may now open up the call for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question is from the line of David Amsellem with Piper Jaffray. Please go ahead.

David Amsellem – Piper Jaffray

Okay, thanks. Here are my two questions. First, can you talk about the extent to which you are providing clinical outcomes data in MS, in NS, in any other indications to managed care organizations, is that something that you have been doing and can you talk – if you haven’t, can you talk about those plans going forward, so I’d imagine that that is something that gets on a healthier cause to the extent you have that data?

And then secondly, I just want to clarify your dialog with Aetna, to the extent you had any dialog with them recently. Did they make it explicitly clear to you that they are not covering the product under any circumstances outside of infantile spasms or are they going to continue to look at Acthar coverage essentially on a case-by-case basis? Thank you.

Don M. Bailey

Thanks, David. And I’ll let Steve to give some further clarification on your questions. But basically, we’re in a continuous process with all insurance companies to educate them about the unique aspects of Acthar both from a science and a therapeutic basis. We are in frequent and constant dialog with all insurance carriers, obviously including Aetna.

And our experience is that everything rolls down to the specific patient, with this specific situation, with specific needs that that patient has, doctor treatment protocol and regimens have been that, that patient has experienced, and what the healthcare professional believes this is the best treatment for that patient. Our insurance companies request that information and we provide it on a daily basis for virtually every patient. Steve you want to provide anything here?

Stephen L. Cartt

Sure, yeah David. So we do provide data to play on again on a case by case basis. Everything with Acthar is case by case. There is no blanket approval on every referral that goes through. So on a case by case basis, the Medical Director reviewing a particular case, is asking about what evidence is there for Acthar in this condition, despite having an FDA approval then we will provide that. So it’s literally a case by case, every single time.

David Amsellem – Piper Jaffray

Yeah, regarding my other question, regarding your drive on with Aetna?

Don M. Bailey

Yeah, we’re in communication with all of our payers on a regular basis as we work through these cases. We have had ongoing dialog with Aetna, we expect that to continue. And we don’t’ have information that they have completely stopped covering. We expect that they will be working through cases, on a case by case basis, like to have then up to this point.

David Amsellem – Piper Jaffray

Thank you.

Operator

Thank you. The next question is from the line of Steve Byrne with Bank of America. Please go ahead.

Steve Byrne – BofA Merrill Lynch

Hey, with respect to this policy change by Aetna, have you been working with them recently and were you involved in dialog with them on Acthar ahead of this policy change and why would they make this policy change now?

Don M. Bailey

Well, every insurance company operates within their own processes and procedures. Generally speaking, drug manufacturers aren’t involved in those processes, I think we’d try not to be reasonable and often we find that these processes produce policies that has some misinformation in them, misunderstanding, which we will work with our carrier to get it correct. I think you all spotted, a lot of people spotted there are certain issues within this recent policy, both in that – were now squared with the fact of Acthar.

So we will work with them. But we view this as a normal process in the increasing effort to – make sure that the right patient is being covered by Acthar. So when the right patient is provided, is presented to the insurance company, we buying Acthar – the approval ratings are extremely high and we would expect that to continue to occur.

Steve Byrne – BofA Merrill Lynch

And did you know that they were considering a policy change on Acthar, as of last Friday, were you aware that they had made that change?

Stephen L. Cartt

Well, our understanding was that they are reviewing it through the October policy update and so this is an interim one and we were not aware of that. Having said that, we are continuing to work at that cases and we were doing that prior to the policy being updated and we are continuing to do so afterwards. As Don said, this is on a case-by-case basis and we will continue to operate like that.

Don M. Bailey

I think it might be helpful for listeners to contrast Acthar with most individuals experience and trying to obtain prescriptions that they received from the doctor. Typically, you go to a retail pharmacist and they punch in the information in their computer and it comes back, yes or no. This couldn’t be further from that, since it’s not possible for this to be any further from that experience.

So this is not a retail product. This is a very small volume case-by-case product and each case requires special handling and there are specific criteria for each carrier to meet. And we find that interaction to be one that makes a lot of sense to us. We find that the insurance carriers are quite rational. They want to see their patients get the appropriate treatment when they have the appropriate need. And we think that will continue.

It really would make no sense for the insurance company to deny a patient a treatment, which could improve the patient especially when there is no other treatment available to that patient. And the patient is going to have significant visibility as a result of not having a treatment. So this would make – it wouldn’t make that business sense, it wouldn’t make that economic sense for the insurance carrier and it’s not what they’re in business to do. So we find that insurance companies understand that and again when they’re presented with the right patient, we generally are – I mean overwhelmingly receive approval.

Steve Byrne – BofA Merrill Lynch

And just lastly, Don, can you comment on your strategy over the next four weeks ahead of that October 13 review to what exactly are you intending to provide Aetna that might affect their view?

Don M. Bailey

We will of course in the case of all carriers in a sense especially in a situation try to educate the appropriate people about the specifics with respect to Acthar as appropriate. So naturally, we will try to further educate them. We saw in our readings and the public announcements, some misunderstandings with respect to Acthar and we will try to get those clarified.

Steve Byrne – BofA Merrill Lynch

Thank you.

Operator

Thank you. The next question is from the line of Mario Corso, with Caris & Company. Please go ahead.

Mario Corso – Caris & Company, Inc.

Yes, thanks for taking my question and holding this conference call. Don, I’d like to spend a few minutes maybe just drilling down a bit more into what you’re seeing and hearing from Aetna specifically right now. And I know its early days, but are you guys aware of new logistics for receiving approval for claims that goes through Aetna, other new steps you have to take and those steps are being put into place or routinized right now. Because I guess – at a 5% rate of our excess going through Aetna, that’s for example, you'd be – it would be about one-a-day going through Aetna.

So over the last week or so, I'm sure you have a handful that are being in process. So I am wondering if you’re noticing a change, is there a change and that's being worked through now, is that the right way to look at it. And then in terms of the bulletins, I guess when I had look at it, I see, 41 of them they’ve made over the last month or so.

So it's not as though they’re specifically turning for Acthar. And what thinks would seem to me is that most of them have next June, six to nine months out let’s say for their next review date. So you have just one in October, so should this be looked at as an interim – kind of trial move and then there will be another move in October, is that the right way to think about it? Again thanks very much.

Don M. Bailey

Okay with respect to anything different, we're not seeing anything different at all and if we get you something different that would be not so similar to what we see without the carriers. So we still expect not to get retire this year, but we still expect that each patients, they have to interact so clearly with the insurance carriers’ decision process and provide the information that that insurance company rightly requests and make sure that this is truly the right treatment for that particular patient.

Their policies are not so similar than policies for other companies. And the review processes are going on as you point out all the times for all of these carriers. So we believe that going forward, we expect the reimbursement process for Acthar to continue on a case-by-case basis. And again, we are only targeting Acthar for those patients who truly need it.

Operator

Thank you. The next question is from the line of Chris Holterhoff with Oppenheimer. Please go ahead.

Christopher Holterhoff – Oppenheimer & Co.

Hi, thanks for talking the question. Is there something you can give us, additional color on how often claims are denied and how often denials are eventually returned specifically as it relates to MS, Nephrotic Syndrome?

Don M. Bailey

I’ll let Steve to address that.

Stephen L. Cartt

Yeah, Chris, so obviously it varies pair-by-pair and we’ve had pairs in the past who have had blanket denial policies. You couldn’t read that into their policy, but that’s in fact what they are doing on a case-by-case basis. So we would have to work through those on appeal and we are quite successful on the returned individual payers who have those types of policies although they weren’t formally in their policies. So we frequently get denial, we are pretty good at appealing. We are successful. We think we’re much stronger now, in 2012, in being able to successfully appeal those than we were back in late 2007 for example. So we’ve gotten – the team has gotten much, much stronger. We have a lot of really good experienced people working on this.

The key as Don mentioned, and we’re kind of reinforcing over and over is that if it’s the right type of patient and the doctor’s office will provide the documentation of that, then we have a highly successful rate of over turning those denials. So that’s the key, driving in the right patients make sure the documentation is there.

Don M. Bailey

Chris, I want to add that we are involved in several appeals daily across the board. So this is a frequent ongoing part of – normal part of the process. Prior acquisitions thus far we acquired on an extremely high percentage. So having – again having the appropriate patients and then patients having the appropriate need is the bottom line for each type of carrier’s decision.

Christopher Holterhoff – Oppenheimer & Co.

Got it. That’s helpful. Thanks, Don. Just to clear, I’m wondering if the other major players also have similar requirements for an appeals process that are kind of ready in place or is it just something that’s exclusive only two to add at the given time?

Don M. Bailey

No, there is – this is not an uncommon occurrence in the industry. We’ve been dealing with this for years. That’s why we made the statement and we didn’t see this was being a material change to our overall reimbursement process. I understand that there is some confusion with respect to that, but when you understand the nuts and bolts of the pals, the reimbursement cost, that’s how it worked.

And understand the basic logic that we’re talking about here is with respective patients. And then again, we are talking about a patient who is significantly disabled, maybe in a life threatening situation and is out of treatment options. So in that case, an approved treatment and the healthcare – their healthcare professional has made this – the independent decision that Acthar to be appropriate treatment of choice for them. That’s a pretty unique situation. And again, the carrier is going to place – they don’t, for some reason they don’t agree with the healthcare professionals. They are going to potentially hurt that patient and they are going to potentially incur getter costs.

So it would be logical for this process to operate the way it is. You would expect with a premium prized product to have this type of case-by-case interactions and we also expect that the outcomes to be yes, one is appropriate, and no, one is not. And by the way, we get almost the same percentage approvals on appeal that we get on cases without appeal. So generally speaking our success rate is consistent with the numbers that we are getting in the past and that number has been consistent all the time. And we got no reason to believe that there won’t be – and that’s been well apart going forward.

Christopher Holterhoff – Oppenheimer & Co.

Got it. That’s really helpful. Thanks a lot. Maybe just ask one follow-up. Can you give us a sense of the allocation of paid scripts amongst the different commercial payers? I know you mentioned Aetna accounts for about 5% of total Acthar scripts, but just kind of wondering if there is an even distribution amongst the larger players or if they are kind of maybe overweighed to one of your payers here?

Don M. Bailey

No, this is pretty well, it goes with covered life. I don’t think – we don’t have those stats with us, but when we look at it, if you look at covered life, it’s normal. We have enough cases now though that would be normal.

Christopher Holterhoff – Oppenheimer & Co.

Okay. Thanks a lot for taking the questions.

Don M. Bailey

Sure, Chris.

Operator

Thank you. The next question is from the line of Marko Kozul with Leerink Swann. Please go ahead.

Marko Kozul – Leerink Swann Llc

Hi, good morning. We called a few other insurance companies yesterday and Blue Cross told that Acthar is available across indications that physicians requesting it in order to overcome restrictions. I was wondering if you could comment on this and maybe discuss any other emerging trends or reviews that you might be aware of that other large insurance? Thanks.

Don M. Bailey

Yeah, certainly, Marko. I think that the bottom line here is that insurance reviews are a normal process with in every insurance company. We see them all the time. They make changes to their policies. And once we’re dealing with a case-by-case basis that seems to be the most important fact. And the hurdles that or the steps that we need to go through with respective insurance company, the appropriate steps, we need to go through insurance companies are pretty much the same across the board. Do you want to – Steve wants to add as well.

Stephen L. Cartt

Yeah, let me add to that. I’ll just reinforce that. We had situations were policies have changed and the actual case-by-case dealing with the prescriptions has not changed. We’ve also had situations in the past where the policies have not changed, but how those payers were dealing with prescriptions on a case-by-case basis changed dramatically, negatively. And we are able to work through those. So….

Don M. Bailey

It’s kind of changing back.

Stephen L. Cartt

Yeah, changing back. We’ve been able to change back what they’ve doing before. So the policy clearly isn’t irrelevant, but the policy is not the most important thing. What is the situation with the patient, what drug did they already failed, what is their health condition and what are the other treatment options and where we are targeting Acthar, there are really no other treatment options. They’ve failed steroids in most cases, but they can’t tolerate steroids, they need something else. And they look around at other FDA approved options; the only one sitting there is Acthar. And the fact that we don’t have large typical pivotal trials, this area is well not a positive – it is not but a hindrance to getting approvals because we do have small datasets and the drug is FDA approved and that generally carries the day.

Marko Kozul – Leerink Swann Llc

Okay. Thanks for taking the question.

Operator

Thank you. The next question is from the line of Biren Amin with Jefferies & Company. Please go ahead.

Biren Amin – Jefferies & Co., Inc.

Hey guys. Thanks for taking my questions. I’m trying to – I guess, just understand the disconnect between Aetna’s statements yesterday where they publically suggest that they will not be reimbursing for Acthar, as they were previously in patients who were in last line or refractory to steroids. And I guess have you reached out to Aetna to ask them why they removed language that Acthar is medically necessary for all approved FDA indications, in patients that have failed on steroids except for IS?

Don M. Bailey

Well, Biren, we are not going to comment on our specific interactions with Aetna. But it’s clear that Aetna needs to receive some additional information from us. You could tell with the various information they put out, they did not have a complete understanding of Acthar. We noted that the PI that they were referring to is not the new PI, it was the old PI, but there seem to be confusion about steroids and Acthar.

So we are dealing in a lot of cases with indications where steroids are not even a treatment. Clearly, Acthar is different than steroids. If steroids and Acthar were the same and steroids would be used first line in IS, it will be used first line is nephrotic syndrome; and it is not in the case of rheumatology, steroids and Acthar are going to be used in the same time.

So, each indication has a different treatment paradigm and it’s just not a one size fits all. And there is a lot of misunderstanding amongst the medical community that they stack over decades with respect to Acthar and we find that we have to – again, in a case-by-case basis, get these things resolved at the patient level. At the same time, we will naturally try to educate the appropriate people with in each insurance carrier about Acthar and how it really operates and where it should be used.

Biren Amin – Jefferies & Co., Inc.

And maybe if I could just follow up, I know you’ve mentioned appeal process at multiple times regarding, you appeal on a case-by-case basis. Is that driven primarily by the physician and how does that process vary from state-by-state or plan-by-plan?

Don M. Bailey

That’s a good questions. I’ll let Steve to talk about that. But there is, basically there is not a lot of differences, it is driven by the physician. Now, I’ll let Steve.

Stephen L. Cartt

Yeah, it’s important that, number one, it’s the right kind of patient and that’s what our sales forces is out speaking with physicians and encouraging them to use it where it’s appropriate and explaining to them why and that if they do send in the prescriptions, here is what you need to do in all likelihood to support the process. Your staff needs to provide documentation, there is probably going to be a prior authorization. If it gets denied, here’s what the appeal process would look like, obviously, depending on the specific plan that the patient have. That’s where it can vary. And sometimes you need to provide more documentation and sometimes you need to provide less.

So just to reiterate, in terms of case by case review and how different that is and how different that makes Acthar, in a general policy or general guideline that the plan might have which is stated up, up front in writing. And then on the flip side you are dealing with an individual case, all that particulars of that patient, their treatment history, their health condition, et cetera, and how hard the physician is pushing for treatment with Acthar. The general policy and guidelines are one things dealing with that individual patient and that situation is something quite different.

Operator

Thank you. The next question is from the line of Jim Molloy with ThinkEquity. Please go ahead.

Jim F. Molloy – ThinkEquity LLC

Hey, thanks for taking my question. I had some more on Mario’s question from earlier. Given that you are dealing with Aetna on a day-to-day basis here given the 5%, have any approvals that you have is going to come through and then okayed. And then sort of when do you anticipate being able to get in touch with the appropriate person at Aetna, the correct way to corner this information on the [CTP] that came up?

Don M. Bailey

Well, Jim, I’ll let Steve address that.

Stephen L. Cartt

Sure. Yeah we are continuing to see prescriptions come in, since the policy bought an update. And we are seeing prescriptions approved and shift. We will be monitoring them on an individual prescription basis, not even on a daily or weekly, on an individual prescription basis, and providing the information that’s required. And if we see on an individual prescription basis request or a desire for more information or get a denial then we will take the appropriate action that we have all long, and we see the – we are not seeing those now, that changes will continue to deal with and likely do other plans that issue denials on coverage and then we’ll support the process accordingly.

Jim F. Molloy – ThinkEquity LLC

Okay, great. And then a quick follow-up. Can – if you have an appropriate patient, who has tried the appropriate steroids, can the managed care flatly, let’s say, deny reimbursing an FDA approved drug that’s being used on label regardless of any appeal you guys do? Are there any of the examples of managed care, just saying, hey, we’re not going to pay for that drug, we don’t care.

Don M. Bailey

Well, I think that happens for all drugs. It’s not that happen from time to time. Typically, it will happen especially if the healthcare professional was unable or can’t participate actively in that reimbursement process. If the healthcare professional gets involved, the probability of success goes straight up. Quite naturally, we see cases with small plans, but really whatever happens and even some big plans from time to time. Again, it’s usually more information is required by the insurance that they haven’t gotten all the information if they require.

Jim F. Molloy – ThinkEquity LLC

Great. Thanks for taking the questions.

Operator

Thank you. The next question is from the line of Yale Jen with Roth Capital. Please go ahead.

Yale I. Jen – ROTH Capital Partners LLC

Thanks for taking the questions. I guess I’ve two. The first one is that, given this set of arbitration now, would you consider going forward be more proactively conducting like a more concurrent study, so adding more clinical data going forward? And a sub question on that is one of our clients asked whether a study such as Acthar versus ACTH, getting a sense? And the second question, a follow-up question on that is given the Acthar – Aetna’s bulletin points mainly because of the issue of multiple sclerosis. Was there a missing for example, Novartis, [Speedel] and others which presumably have a more, sort of modern day clinical data already available? Thanks.

Don M. Bailey

Sure, Yale. So we have a pretty robust ongoing science program that has dozens of studies underway, including studies in other elements of MS, like secondary progressive MS and MS as a maintenance therapy. So I think, we will continue that program. We will – we’re always examining the possibility of new studies and that will be a continuing ongoing growing program for us. We will look at all possibilities with respect to clinical data.

Again the policy bulletin that was put out has some elements in it that were – it was clear we need to get some interactions with the carrier and try to educate them further including the areas that you described, but that will be ongoing. We again consider that to be a normal part of our business process and didn’t view this as something that would materially impact the business.

Yale I. Jen – ROTH Capital Partners LLC

Okay, great. Thanks.

Operator

Thank you. The next question is from the line of Tim Chiang with CRT Capital. Please go ahead.

Tim Chiang – CRT Capital Group LLC

Hi, thanks. Don, is there any sort of statistic that you could provide in terms of what percentage of your prescriptions go through the appeals process currently and what your success rate has been typically?

Don M. Bailey

Well, a significant number of prescriptions go through an appeal process. Like I said, we are dealing with a couple everyday. I don’t have exact numbers for you and they change over time. And the success rate with those is pretty close. And our success rate overall is in the 85% plus range. And our success rate with appeals is within shouting distance so far of those stats. We don’t have exact stats here ready for this call, but there is nothing there, and again it boils down to the patients and the appropriate nook of the patient, and the willingness of the healthcare professionals to get involved in that process.

Tim Chiang – CRT Capital Group LLC

Okay. And Don, I’ve one follow up which is, when you look at the bulleting that Aetna put out, I mean they seem to be pretty clear in terms of what they would need in terms of additional data for approval of reimbursement on some of these other indications. Now, from what you guys are saying, it seems like that’s not the case. I mean I just wanted to make sure that, we could clarify the disconnect on this call. And so basically you’re going to go back to Aetna with in four weeks and – so what is the strategy here? I mean you already have data that you think you can give to them to convince them that they need to change this bulletin?

Don M. Bailey

Well, look, there is data and there is information. Clearly, it’s important that they understand and get the base line information correct. We can’t provide data on something that doesn’t make sense to provide data on. And the way their bulletin is written, it’s been clear to us that further education with respect to Acthar is needed with this particular carrier. And I’m sure with other carrier we see this all the time.

So our strategy will be to interact with this carrier and other carriers on an ongoing basis. We try to improve and facilitate patient reimbursement. And so we can’t go into specific detail about what are in the – really say the week – over the next month because that’s going to be evolving. That’s obviously we're going to working to try to improve the reimbursement situations across the board all the time. Again, I just want to keep repeating this, end up whirling down through a case-by-case decision, that’s our experience.

Tim Chiang – CRT Capital Group LLC

Okay, great, thanks Don.

Operator

Thank you. The next question is from the line of Yale Jen with Roth Capital. Please go ahead.

Yale I. Jen – ROTH Capital Partners LLC

Thanks for picking up follow-up question. In terms of the multiple sclerosis, given that it’s already – it’s be in the market for few years, would you guys be able to get some sample data in terms of the practical real world use of the drug and its impact or effect and maybe that will be something useful material to demonstrate the value of the drug?

Don M. Bailey

I’ll ask Steve to (inaudible).

Stephen L. Cartt

Yeah, Yale, I think that that anytime we can pull together a real world information on how drugs been used with the health outcomes or in patients that would be very, very helpful. That is something that we're working on.

Yale I. Jen – ROTH Capital Partners LLC

Okay, thank you.

Operator

Thank you. That was all the questions we have at this time, I will turn the call back over to management for any closing remarks.

Don M. Bailey

Well, everybody thank you for calling in and I know, you will be wanting to talk to us after this call, and then we will try to respond to each and every investor call as fast as we can. I hope everyone appreciates that we will – that may take some time, but we will be interacting with you as we have been thus far. Our philosophy with communication hasn’t changed. And we appreciate everybody tuning in for this call. Have a good day.

Operator

Ladies and gentlemen, this does conclude the conference call. If you’d like to listen to a reply of today’s conference, please dial 1800-406-7325 or 303-590-3030 and entering the access code of 4566307. Thank you for participation.

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Source: Questcor Pharmaceuticals' CEO Discusses Reimbursement Process for H.P. Acthar Gel Conference (Transcript)
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