stumbled Monday as the company said Medicare reimbursements for its asthma drug Xopenex would be reduced starting July 1.
The Marlborough, Mass., company said it "cannot currently reasonably estimate the potential impact" of the revised Medicare Part B reimbursement rate on Xopenex. The stock fell $1.08, or 2.3%, to $45.46 by late morning, after dropping as low as $44.94.
Wall Street had been expecting unfavorable news since May 18, when analysts noted that the federal agency supervising Medicare had proposed new
reimbursement guidelines for Xopenex. The stock sank more than 10.6%.
Reimbursement for Xopenex will decline because the federal Centers for Medicare and Medicaid Services is placing this brand-name drug in the same category as the generic albuterol.
"Because of the bundling of the two medications, this new, blended reimbursement rate significantly lowers the current reimbursement rate for Xopenex ... and significantly raises the current reimbursement rate for generic albuterol," Sepracor said.
The company added that it "hopes to work with government officials to pursue better alternatives" for reimbursement.
For the quarter ended March 31, two types of Xopenex contributed $173 million in sales, or 52% of Sepracor's total revenue. Most of the Xopenex revenue comes from the nebulizer version, which is affected by the Medicare ruling. This product employs a device to convert a liquid into a fine mist, and the mist is inhaled through a mask.