Medicare contractors suspend Sepracor pricing cuts
WASHINGTON (Reuters) - Medicare contractors are suspending a planned pay cut for Sepracor Inc's asthma drug Xopenex, which will also benefit oxygen suppliers Apria Healthcare Group Inc and Lincare Holdings Inc.
Contractors that administer Medicare's payments for equipment including oxygen reversed a reimbursement cut for the branded asthma drug. The cut scheduled for July 1 would have brought the price in line with a similar generic drug called albuterol, according to officials at the Centers for Medicare and Medicaid Services.
Medicare is the federal insurance program for 44 million elderly and disabled people in the U.S.
Sales of Xopenex, one of Sepracor's flagship drugs that is also used for chronic obstructive pulmonary disease, were $160 million in the first quarter of 2008.
Shares of Sepracor were up nearly 1 percent in noon trade on Nasdaq. Lincare shares rose 1.6 percent on Nasdaq, while Apria shares were up 3 percent on the New York Stock Exchange.
Oxygen companies get paid by the unit from the government on the drugs, and make wide margins on the branded drug.
"With current earnings expectations (and guidance) reflecting the impact of the Xopenex rate cut, the ruling's suspension should prompt upward estimate revisions for AHG, LNCR, and ROHI (Rotech Healthcare Inc)," Arthur Henderson, an analyst at Jefferies & Co. said.
Shares of Rotech Healthcare were up 21 percent in over-the-counter trade.
(Reporting by Kim Dixon, editing by Gerald E. McCormick)
((kim.dixon@thomsonreuters.com; +1 202 354 586of
