Questcor: The Secret behind Its 'Miracle' Drug

by Melissa Davis , 1/27/2012 11:04:02 AM

* Editor’s Note: The following article is the second installment in a two-part investigative series on Questcor Pharmaceuticals that began earlier this week. The original story can be found just below this one on the homepage.

Thanks to patients like Garry Sefcovic, who suffer from a common form of multiple sclerosis punctuated by debilitating “flares,” Questcor (Nasdaq: QCOR) has seen orders for its only major product – an old drug viewed as worthless by its previous owners -- literally explode in recent years.

Yet Sefcovic, for one, wishes that he had never even tried that high-priced drug. Last winter, when he sought treatment for a painful MS flare, Sefcovic assumed that he would receive the same cheap IV steroids that had effectively relieved his condition in the past. He wound up seeing a different neurologist, however, who automatically prescribed Acthar Gel – sold by Questcor for a whopping $27,000 per dose – to address his MS flare instead.

“I have good insurance and a chronic disease fund that will pay my deductible,” Sefcovic noted when speaking withTheStreetSweeper late last year. “They made a lot of money off of me.

“Then they had to give me steroid pills after the Acthar,” he added. “I should have just been put on the IV steroids right away.”

Several giant health insurance companies – such as Aetna (NYSE: AET), Cigna (NYSE: CI) and Blue Cross/Blue Shield (BCBS) – would clearly share that reasoned point of view. In fact, as a matter of policy, they officially mandate IV steroids as a first-line treatment for MS flares and normally refuse to cover Acthar for patients who can rely on that cheaper therapy instead.

Notably, Sefcovic receives health insurance coverage from a company -- Medical Mutual -- that subjects Acthar to a careful pre-authorization process as well. Rather than automatically covering Acthar for the treatment of MS flares,records show, Medical Mutual specifically asks whether the patient “had a FAILURE or INTOLERANCE to treatment with corticosteroids” in the past and whether the patient is “a candidate to receive treatment with corticosteroids” at the present time. At that point, records indicate, the insurer then authorizes coverage of Acthar only for those patients who cannot use traditional steroid therapy to provide them with relief.

In contrast, Questcor has taken a far more liberal stand on those who should qualify for its pricy drug. Reaching beyond the narrow population of outright steroid failures, records indicate, Questcor also markets Acthar for other MS patients who simply fail to achieve the same “baseline function” that they enjoyed before their flare-ups occurred. Since many MS victims fall short of this success (as illustrated by the progressive nature of their disease), critics feel, Questcor has effectively repositioned Acthar as a first-line treatment for many patients who should receive cheaper steroid therapy instead.

Despite the clear restrictions placed on Acthar for the treatment of MS flares – the primary condition addressed by that medication today -- Questcor has achieved remarkably high reimbursement rates for its obscure drug. Even though Questcor has seen its coverage rate for Acthar slip over the past couple of years (declining from between 90% and 95% to “generally above 85%” in the latest quarter), records indicate, health insurers continue to pay the vast majority of those expensive medication claims.

That said, however, Sefcovic clearly feels that his own insurance company wasted a pile of money on an overpriced – and ultimately ineffective -- drug that he should have never even received.

“I actually would have preferred steroid treatments first, as I’ve always done in the past,” he said in a follow-up email toTheStreetSweeper earlier this week. “I lose a lot of faith in doctors this way.”

Questcor: A Bold Strategy Threatened by the Fine Print?

by Melissa Davis , 1/24/2012 10:56:57 AM

* Editor’s Note: The following article is the first story in a two-part investigative report on Questcor Pharmaceuticals, with the second installment currently scheduled for release by the end of this week. To receive immediate notification when the second article appears, click on this link to sign up for a free email alert.

As a longtime nephrologist, Dr. Gerald Stephanz felt somewhat surprised when a sales representative suggested that H.P. Acthar Gel – a 60-year-old drug marketed by Questcor Pharmaceuticals (Nasdaq: QCOR) – might help some of the patients he treats for kidney-related disorders. 

Stephanz had last used Acthar decades earlier, when caring for a patient suffering from multiple sclerosis during his residency, and had practically forgotten about the ancient medication since that time. He did remember that Acthar had once sold at a relatively cheap price, however, and that it had largely fallen out of favor after powerful IV steroids –embraced as a superior alternative – arrived on the scene. So the new price tag for Acthar (more than $25,000 a dose) and the new focus on nephrology (without solid clinical data) struck him as rather odd, to say the least.

Stephanz, for one, saw no compelling reason to try the expensive drug. He also felt offended by the “aggressive tactics” that led to a follow-up sales pitch at his office.

“The second time, they kind of ambushed me,” recalled Stephanz, who holds a board-level position with the Renal Physicians Association. “That’s when they tried to explain why the drug costs so much. 

“They have this package they give you,” he explained. “But the label doesn’t have any specific indication for any treatable kidney disease that I can see … How are they going to market this?”

By capitalizing on its high price (raised 1,300% literally overnight) and its broad label (approved in 1952 based on its perceived safety alone), Questcor hopes to transform Acthar into a true blockbuster drug. Questcor views Acthar as afull-blown pipeline, in fact, relying on that single medication for virtually all of its current revenue and its forecasted growth as well. 

Although Questcor reportedly paid just $100,000 for worldwide rights to Acthar – a product abandoned by its previous owners as a hopeless money-loser – the company now charges up to $250,000 for a single course of treatment utilizing that once-neglected drug. All told, Wall Street estimates, Questcor sold more than $210 million worth of Acthar in 2011 and – if recent growth trends prove sustainable – will likely see that total soar past $330 million over the course of the current year.

Questcor originally re-priced Acthar as an orphan drug used for an ultra-rare disease, records show, but the company now derives most of its revenue from soaring prescriptions for more widespread medical problems instead. In recent years, Questcor has dramatically expanded the market for Acthar by promoting it as a second-line treatment for patients who suffer from a common type of multiple sclerosis punctuated by debilitating flares. (TheStreetSweeper focuses primarily on that core market in the second part of this investigative report.) Inspired by that growth – driven in large part, former insiders say, by heavy prescribers who can pocket unlimited “speaker fees” for promoting the drug to others in the field -- Questcor has set out to replicate that success by pitching Acthar for another medical condition as well.

Last week, however, Questcor dropped a potential bombshell about this promising frontier. 

Questcor has routinely stated that it can market Acthar as an “on-label” treatment for nephrotic syndrome – including a specific kidney disease related to NS known as idiopathic membranous nephropathy (iMN) – and even announced plans, earlier this month, to double the number of sales reps focused on this profitable arena. That sales team has already generated plenty of new business for the company in the meantime, records show, with Acthar prescriptions for NS rocketing 145% (on a sequential basis) in the fourth quarter of 2011 alone. Less than a year after aggressively breaking into this brand-new market -- where each patient represents a handsome six-figure opportunity -- Questcor now counts NS as its biggest, and its most lucrative, growth driver by far.

While Questcor has long indicated that it can freely market Acthar for this condition (and has funded a minor study,focused on iMN, that serves as a critical sales aid), however, the U.S. Food and Drug Administration has expressed a far more conservative view on this important matter. 

“The approval of this product for this particular use predates the modern FDA ‘efficacy’ requirement,” the agency noted in an email to TheStreetSweeper earlier this month. “For that reason, we feel that it is best to stick to the exact wording used in the label (i.e., induce a diuresis or a remission of proteinuria) and not say that they treat the disease.”