Questcor Shares Plunge on Government Probe

Shares of Questcor Pharmaceuticals Inc. (QCOR) are diving lower today as the company disclosed an investigation by the U.S. government into its marketing practices. No details were provided on which agency is conducting the probe.

Questcor did not provide comment other than saying in regulatory filings that it would cooperate with the investigators.

Last week, the Anaheim, California-based biotech suffered its worst weekly fall in two decades (-39.80%) after Aetna (AET) said that it is limiting coverage of Acthar, Questcor’s best-selling drug used for treatment of multiple sclerosis and infant seizures. The leading insurer said it would no longer reimburse patients for use of the gel in a variety of diseases, sending the stock price spiraling down by more than 55 percent at one point on Wednesday.

Aetna said the Acthar is only medically necessary for infantile spasms and did not provide a therapeutic benefit that topped existing drugs in the other 18 diseases it is approved to treat. Questcor countered by saying that it didn’t feel the decision by the U.S.’s third-largest insurer would materially impact on earnings as the snub only impacts about five percent of prescriptions for the gel.

Further adding pressure today on shares of QCOR was Leerink Swann analyst Marko Kozul slapping Questcor with a downgrade to market perform.

By Andrew Klips