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Andrew Hanson, CFA
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I am a CFA with 30 years experience as an analyst, director of research, and portfolio manager. I have a GARP (Growth at a Reasonable Price) philosophy and an interest in political economy.
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  • Questcor Rebate Rates: Value Paid For By Insurers

    The investment community needs to understand the implications of the rebate rates by disease indication that Questcor pays as these rates indicate the value that insurer's are willing to pay for in an arm's length and possibly contentious transaction. As an observer of Questcor Pharmaceutical (NASDAQ:QCOR) I find the following points of interest:

    1. Prescriptions per quarter for Multiple Sclerosis and Nephrotic Syndrome continue to grow at a rapid rate:

    (click to enlarge)

    2. The penetration rates for Acthar Gel in Multiple Sclerosis and Nephrotic Syndrome are quite low:

    There is potentially a lot of room for growth in the Nephrotic Syndrome and Multiple Sclerosis indications.

    3. Insurers are paying a greater percentage of Acthar Gel prescriptions for Nephrotic Syndrome and Multiple Sclerosis indications than they are for Infantile Spasm indications:

    The rebate rate for Nephrotic Syndrome and Multiple Sclerosis indications is nearly an order of magnitude lower than it is for Infantile Syndrome. The rebate rate is the percentage of scripts that are rebated in a quarter divided by the total number of scripts in the quarter. The investment community needs to understand the rebate rate by indication that Questcor pays since it indicates the value that insurers are willing to pay for in an arm's length and possibly contentious transaction.

    It is quite possible that Questcor has an outstanding future prospects. It is rapidly growing prescriptions in markets in which it had low penetration. In these markets rebate rates are lower than they are in its mature Infantile Spasm market.

    Disclosure: I am long QCOR.

    Tags: QCOR
    Dec 02 8:23 PM | Link | Comment!
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