How Obamacare Cost One Small Company Nearly Half Its Market Value

How Obamacare Cost One Small Company Nearly Half Its Market Value
October 08 01:00 2015

How Obamacare Cost One Small Company Nearly Half Its Market Value

Shares of Exact Sciences, a Wisconsin-based maker of a new colon-cancer screening test, closed the trading day on Monday at $18.53, and within hours of the market opening on Tuesday, the stock price had fallen to $9.80—a 52-week low. What happened in between was an instructive, albeit scary lesson in just how vulnerable small life-sciences companies can be to the vagaries of the Affordable Care Act, or what many now refer to as Obamacare.

Here’s what happened: On Monday night, Exact Sciences announced that its test, called Cologuard, did not get either an A or B rating for colorectal cancer screening in draft guidelines issued by the U.S. Preventive Services Task Force (USPSTF). This matters, because under Obamacare, Medicare and other insurers must cover any treatment or service that’s awarded an A or B by the USPSTF. The law doesn’t specify what payers should do about products that get a different grade, but investors were probably making a wise prediction that without the USPSTF’s blessing, insurers may not roll out the red carpet for Exact Sciences’s first product.

Cologuard, an at-home stool test that detects certain genetic markers associated with colon cancer, was approved by the FDA in the summer of 2014 and is aimed largely at patients who do not comply with the recommendation that anyone over 50 should have a colonoscopy every five years. Cologuard users who test positive would be referred for colonoscopies.

The USPFTS didn’t award any grade to Cologuard, instead listing it as an “alternative” screening test. To further confuse matters, the agency did not provide any guidance as to the circumstances under which the test should be used, essentially leaving it up to physicians to decide, said Exact Sciences’s CEO Kevin Conroy during a conference call with analysts after the announcement. “This decision was different than what I and most people had expected,” he said.,,

Read full story at Forbes
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