Spectrum Publicly Denying Fusilev’s Price Was Cut; Stock Likely To Bounce

Spectrum Pharmaceuticals (NASDAQ:SPPI) is defending its Fusilev cancer treatment franchise after a recent article suggested that pricing for the drug had been cut. An article published Tuesday on The Street.com used sales reported by the company and prescription trend data (estimated by Rx data company Wolters Kluwer) to calculate that Fusilev’s price had been cut by as much as 42%. The theory behind the suspected price cut is that supply of generic leucovorin (similar to, but not the same as Fusilev) is expected to loosen up and the market could see more competition in the coming months. Therefore, this theory says, SPPI must cut its price to compete. SPPI’s defense against looming generics, however, is based on the following – Because Fusilev has its own Medicare J-code (distinct billing code for the high priced cancer treatment), doctors will be reimbursed at the high price point and can make the 6% mark-up allowed by Medicare and other health insurance companies. Bears on the stock believe that doctors (especially those affiliated with hospitals) are more concerned about the overall cost of care, and therefore will switch to cheaper generics when they become available rather than profit on Fusilev. PropThink’s industry sources have said that generics similar to Fusilev will come to market early next year. (more…)