UNION CITY, Calif., April 29 /PRNewswire-FirstCall/ -- Questcor Pharmaceuticals, Inc. (Nasdaq: QCOR) today reported improved year-over-year financial results for the first quarter ended March 31, 2010. The Company’s financial performance was driven primarily by:

• a 197% increase in the number of new paid Acthar prescriptions for the treatment of multiple sclerosis (MS) exacerbations as compared to the first quarter of 2009.
• a reduced rebate liability to U.S. government insurance plans due to improved Tricare pricing and a provision in the recently passed Patient Protection and Affordable Care Act of 2010.

Net sales totaled $26.2 million for the quarter ended March 31, 2010 compared to $23.3 million for the quarter ended March 31, 2009. Net income for the first quarter of 2010 was $7.9 million, or $0.12 per diluted common share compared to $7.7 million, or $0.11 per diluted common share, for the first quarter of 2009. Because rebates owed to government sponsored insurance plans were lower in the first quarter of 2010, sales reserves decreased to $7.2 million compared to $9.8 million during the first quarter of 2009. The reduction in rebates was due to improved Tricare pricing and a provision in the recently passed Patient Protection and Affordable Care Act of 2010 which limits Medicaid rebates to 100% of a company’s average manufacturer’s price. Expenses were higher in the first quarter of 2010 than in the first quarter of 2009 because of the investments that Questcor is making in its business. These investments include an expanded sales and marketing effort to increase Acthar sales in MS and increased research and development expenses to fund studies of Acthar in several indications and to support the company’s application for approval of Acthar for the treatment of infantile spasms (IS).

“We continue to successfully execute our growth strategies for Acthar,” said Don M. Bailey, President and CEO. “For the past year and a half, we have educated neurologists on the benefits of using Acthar to treat specific types of patients experiencing exacerbations due to MS. Based on company estimates, we believe that net sales of Acthar for the treatment of MS now exceed Acthar net sales for the treatment of IS, which historically has been the primary therapeutic use for Acthar.”

“In addition, during the quarter, we continued to observe the filling of a modest number of spontaneous prescriptions for Acthar for the treatment of nephrotic syndrome (NS). During the period, 11 new paid Acthar prescriptions for NS were filled, which is in the same range as the spontaneous, new NS commercially-paid prescriptions filled in the fourth quarter of 2009. In addition to these new prescriptions, due to the longer treatment period for NS, we observed refills resulting from new NS prescriptions filled in the previous quarter. We are encouraged by the potential for this expanded use of Acthar for NS, an on-label indication. Therefore, we have initiated, starting in early April, a pilot sales program calling on approximately 60 out of an estimated 7,000 nephrologists,” Mr. Bailey added.

“Questcor continues to experience fluctuations in quarterly demand for Acthar to treat IS. During the first quarter of 2010, prescription levels for Acthar for the treatment of IS, while lower than the level in the first quarter of 2009, were within the normal historic range. We are preparing for the May 6th FDA Advisory Committee meeting, where the possible approval of Acthar for the treatment of IS will be discussed,” Mr. Bailey concluded.

MS, IS and NS Sales

During the first quarter of 2010, Questcor shipped 1,446 vials of Acthar compared to 1,429 vials for the first quarter of 2009. Because Acthar prescriptions are filled at specialty pharmacies, the Company does not receive complete information regarding either the number of prescriptions or the number of vials by therapeutic area for all of the patients being treated with Acthar. However, Questcor is able to monitor trends in payer mix for new Acthar prescriptions based on data it receives from its reimbursement support center. Questcor estimates that at least 90% of new Acthar prescriptions are processed by this support center, but that very few refill prescriptions are processed at this center.

In order to help investors better understand the trends in sales of Acthar for each of its three principal therapeutic uses (MS, IS, and NS), Questcor has grouped new prescriptions processed by its reimbursement center into two groups"Paid” and “Fully Rebated.” “Paid” prescriptions include those prescriptions for which Questcor retains at least 70% of the price charged to its distributor. “Fully Rebated” prescriptions are those for which Questcor has recorded a liability approximately equal to or greater than the price charged to its distributor. From time to time during the past two years, the rebate liability for some government insurance programs has shifted. Therefore, the prescriptions that fall into the “Paid” and “Fully Rebated” categories have also shifted over time as follows:

“Paid” prescriptions include all prescriptions in the following payer categories:

• CommercialFor all time periods.
• TricareFor 2008 and 2010.
• Medicaid Managed CareFor all time periods (see Note 1 below).

“Fully Rebated” prescriptions include:

• Those reimbursed by fee-for-service Medicaid insurance and other state programs that are eligible for full rebates as Medicaid Waivers’ Programs for all time periods.
• Tricare--For 2009.

The following tables show, for each of the three principal Acthar therapeutic uses, the number of new prescriptions shipped grouped into “Paid” and “Fully Rebated.” (Note that the columns in this table differ from the table in Questcor’s March 1, 2010 earnings release because of the improved level of Tricare pricing effective January 1, 2010.):