By Andrew McDonald, Ph.D. and Jerry Isaacson, Ph.D.
The price of Questcor Pharmaceuticals (QCOR) absorbed a major blow last month after the insurance company Aetna (NYSE:AET) made statements regarding the Company's lead product Acthar Gel and a subsequent publication of a short report from Citron Research highlighting this decision led to a greater than 55% tumble in the share price. In order to gain a better understanding of the real world effects (versus headline effects) of this coverage decision, LifeSci Advisors recently surveyed 976 nephrologists and 691 neurologists who belong to our proprietary Expert Network. The results of this survey can be downloaded at no cost here. We received responses from 96 physicians, and 41 had prescribed Acthar Gel in the past year. The results of the study suggest that the use of Acthar Gel will not be strongly affected by Aetna's decision and that, in fact, these physicians intend to increase their use of the product in the coming year.
Among the 41 neurologists and nephrologists who responded to our survey, the average number of Acthar Gel prescriptions in the last 12 months was 4.8, and the median was 1 patient. We asked the physicians about their reimbursement experience with Acthar, as this is now the focus of investor interest. Most responded positively; out of 28 physicians who responded to this question, 20 had a positive reimbursement experience. Some of these respondents did describe having difficulty with the reimbursement process, but the treatment was generally ultimately covered. Three respondents gave neutral responses - one was not involved in reimbursement, another wasn't sure what had happened, and the third indicated that one patient received reimbursement with help from QCOR and another was unable to obtain coverage through the VA. Five respondents indicated that they had trouble with reimbursement, though only three of these physicians were actually unable to obtain coverage for their patients. One participant in the survey had applied for coverage from Aetna since the reimbursement announcement, and indicated that a positive response had not yet been obtained from the insurance company.
We also asked the physicians in this survey to predict whether the use of Acthar Gel in the next year would increase, decrease, or stay the same. An overwhelming majority of respondents, 39/41, indicated that they expect Acthar use to either stay the same or increase in the next 12 months. 23/41 respondents said that they thought use of the drug would remain steady while 16/41 expect usage to increase. The primary reason given for optimistic views on the drug was its ability to treat patients who are difficult to manage and have usually exhausted other treatment alternatives. For example, physicians in the survey mentioned Acthar's usefulness in treating fragile patients who can't tolerate Solu-Medrol (intravenous methylprednisolone) or other steroid treatments. One physician praised the drug for reducing proteinuria in a resistant patient, and it can be beneficial in this setting for patients with no other options.
Although a handful of respondents mentioned the difficulty of getting the treatment reimbursed, others indicated that reimbursement was not a problem and the drug is easy to use. A number of the physicians said that they have had good results and are looking for more patients who would benefit from the drug. The survey revealed that the treatment is generally well tolerated, is a necessary, last-resort option for patients who have exhausted other treatments, and that reimbursement is easier for patients with no other options, including MS patients who relapse but can't tolerate IV or high-dose oral steroids, and diabetics with MS that are not controlled with IV steroids. These physician reports are consistent with the Company's position that Acthar Gel is a valuable treatment option for patients that fail or can't tolerate steroids.
Looking forward to the coming year, the average number patients treated by physicians in our survey is expected to increase to five and the median is expected to increase to 2.25 patients. Interestingly, 10 of 23 respondents who anticipate Acthar prescriptions to stay the same in the next year also indicated that they personally expect to treat more patients.
The results of this physician survey support the case made by QCOR management that the Aetna headline will not materially affect sales volume going forward. It can be difficult to obtain reimbursement for the therapy, but the Company is well aware of this fact and has a team dedicated to helping doctors navigate the reimbursement process, which seems to be successful. Doctors must obtain prior authorization from payers before prescribing the treatment, a request that is often denied and then appealed. For patients who can't tolerate steroids and have no other treatment options, these appeals are usually granted. QCOR management indicated that at least 85% of reimbursement requests are ultimately granted. Insurance companies generally want to give patients the drugs their doctors order, as long as a clear need is demonstrated. This is also driven by pharmacoeconomic factors, as when patients are denied treatment coverage they often end up incurring costs well beyond the price of the drug. Our survey results indicate that Acthar Gel fills an important unmet medical need for patients that are refractory to other therapies and that the headlines that have impacted Questcor's stock price do not appear to impact underlying physicians demand.
Disclosure: I am long QCOR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.