Bloomberg News

Baxter Shares Fall as Insurers Favor Rival’s Blood Products

October 12, 2011

(Updates with closing share price in second paragraph.)

Oct. 12 (Bloomberg) -- Baxter International Inc., the maker of blood products and intravenous drugs, declined after an analyst said the company may be hurt by health insurer Aetna Inc.’s decision to favor a rival Grifols SA treatment for immune system disorders.

Aetna indicated it plans to consider Barcelona-based Grifols’s Gamunex the “preferred” brand of IVIG, a treatment for immune system disorders, said Matthew Prior, an analyst for Bank of America Merrill Lynch in Melbourne. The decision may limit use of other medications, including Baxter’s Gammagard, Prior wrote in an Oct. 12 note to investors. Baxter, based in Deerfield, Illinois, declined 3.1 percent to $54.40 at 4 p.m. New York time.

While details are still unclear, the preferred status for Gamunex is slated to take hold on Jan. 1, Prior said. Hospitals might automatically use Gamunex first and patients may have to pay face higher co-payments if they want an alternative, he said. The decision follows similar moves by Highmark Inc. and Coventry Health Care Inc., smaller health insurers, earlier this year that required patients to use a specific IVIG, he said.

“The ‘preferred’ status could be a softer approach compared to that of Highmark or Coventry that require you to ‘fail first’,” on the specified product before getting access to the others, he wrote.

IVIG, also known as intravenous immunoglobulin, is comprised of antibodies extracted from human blood. It is given to patients with immune system disorders who don’t make enough of their own natural defenses to ward off infections.

Aetna, based in Hartford, Connecticut, is the third-largest U.S. health insurer behind UnitedHealth Group Inc. and WellPoint Inc.

--With assistance from Pat Wechsler in New York. Editors: Bruce Rule, Andrew Pollack

To contact the reporters on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net; Drew Armstrong in Washington at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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