Dorian Hargrove 9:31 p.m., May 23
More trouble for Sequenom's Down Syndrome test
Biotech cooked up price-capping scheme, says shareholder suit
A shareholder has filed a derivative action against biotech Sequenom in federal court, according to Courthouse News Service. The suit claims that doctors were hesitant to prescribe the company's prenatal test for Down Syndrome because insurers were reluctant to pay the $2700 charge. So, according to the suit, Sequenom capped the price at $230 for out-of-pocket patients, but the $2700 insurance billing continued.
The scheme initially boosted sales by 150%, but the company ended it. This affected recent earnings negatively, but the company isn't admitting that, according to the suit. The stock reached $8.03 on Dec. 1 of 2010, but today (Oct. 3) closed at $2.66, down 0.37%.
Courthouse News Service doesn't go into the pock-marked history of Sequenom's Down Syndrome test. There have been several previous lawsuits. In 2009, the company discovered flaws in its studies of the test's effectiveness. The board fired several top officials, including the chief executive. The Securities and Exchange Commission charged that the senior vice president of research and development, Elizabeth Dragon, lied about the product's efficacy. She died in 2011. In 2010, the company paid $14 million to settle a shareholder class action lawsuit about the prenatal test.
In September of 2011, Sequenom entered into a cease-and-desist order with the Securities and Exchange Commission.
More like this:
- Sort of like the results of a fad diet — March 5, 2015
- Sequenom Stock Back on Roller Coaster — Oct. 18, 2011
- Local Biotech Executive Lied about Test, Says SEC — June 2, 2010
- Sequenom Stock Zooming Again — March 2, 2010
- Biotech Sequenom Stock Up 32% on Optimism for Down Syndrome Test — Sept. 24, 2008