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Shares of

Kindred Healthcare


were among the worst-performing health-related stocks Friday, tumbling 24% after U.S. Centers for Medicare & Medicaid Services said it is proposing a freeze to certain payment rates for long-term acute care hospitals.

The proposed rule would be effective from July 1 of this year through June 30, 2007. "The proposed rule is significant and the company is continuing to evaluate the impact of this complex rule on its operations and its hospital development activities," Kindred said in a statement. For the nine months ended Sept. 30, Kindred's hospitals had Medicare sales of about $822 million.

"When management has completed its analysis of the proposed rule, it will provide additional guidance on its potential impact to the company," Kindred said. The company plans to voice its opposition to the proposed rule change during a 60-day public comment period, it said. Shares were trading down $6.57 to $20.23.

AVI BioPharma

( AVII) surged 40% after the drug developer said that three independent labs confirmed that the company's Neugene drug showed efficacy in preclinical experiments against multiple strains of influenza, including the bird flu strain H5N1.

"These confirmations validate our approach to blocking replication of influenza viruses," the company said. "We now believe that a single Neugene drug could be effective against most influenza subtypes, including the H5N1 avian strain." The company now plans to file an investigative new drug application with the Food and Drug Administration for the treatment of influenza A virus. Shares were up $2.35 to $8.24.

Shares of

Inspire Pharmaceuticals

( ISPH) fell modestly after the drugmaker said it discontinued two phase II trials of denufosol tetrasodium intravitreal injection in patients with macular edema. "The data did not demonstrate improvement in either reduction of retinal thickness or improvement in visual acuity," the company said. The company enrolled 12 patients in the first clinical trial and no patients had yet enrolled in the second trial, Inspire said. The company said that it has no further plans to conduct studies of denufosol for the treatment of retinal disease. Shares recently were trading down 3 cents to $5.22.

Other health-care volume movers included


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Bristol-Myers Squibb

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, down 7 cents to $22.49; and


(AMGN) - Get Amgen Inc. Report

, down $2.30 to $76.09.