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Genomic Health Stock Gets a Boost

January 14, 2006|From Reuters

Genomic Health Inc. said Friday that Medicare had agreed to cover the company's test for determining whether a woman with early breast cancer is likely to be helped by chemotherapy, sending the company's shares up as much as 35%.

Genomic rose $2.49, or 25%, to close at $12.44.

Genomic Health said the contractor that administers Medicare programs in California had agreed to cover nearly all of the test's $3,460 list price.

Medicare claims for the test, called Oncotype DX, are currently billed through the state because the test is conducted by Genomic Health in its laboratory in Redwood City, Calif., where the company is based.

The coverage is scheduled to become effective for claims for services performed on or after Feb. 27, the company said.

The test, launched in 2004, was used by 5,000 patients in the first nine months of last year, compared with 500 in its first year on the market, Chief Executive Randy Scott said this week.

Medicare accounted for about 15% of sales during those periods, and that share is expected to grow to about 20%, said Kim Popovits, the company's president and chief operating officer.

She also said the Medicare coverage decision probably would boost the test's profile with private health insurers, most of which do not cover it.

The 125,000 women diagnosed each year with estrogen-sensitive tumors whose cancer has not spread to the lymph nodes are candidates for using the test, which can identify which tumors are likely to recur after surgery and treatment with hormonal drugs.

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