Reuters
Friday, December 15, 2006; 9:36 AM

NEW YORK (Reuters) - Genzyme Corp. (GENZ.O) said on Friday its osteoarthritis pain treatment Synvisc will retain a separate, higher reimbursement rate, after the U.S. government reversed its earlier decision to cut the rate, sending Genzyme shares higher.

The Centers for Medicare and Medicaid Services had earlier decided to group all products known as viscosupplements -- injectable substances that lubricate the joints -- under the same reimbursement code. The decision would have removed a competitive advantage for Synvisc, which has been reimbursed at a higher rate than rivals.

Genzyme said Synvisc, which treats pain due to osteoarthritis of the knee, will maintain a separate reimbursement code and rate for 2007.

The decision "is significant because it continues to encourage innovation in the field with next-generation products that are intended to reduce the burden of treatment and overall cost of therapy," Genzyme Chief Executive Henri Termeer said in a statement.

Synvisc dominates the market with about a 50 percent share, but competition has been increasing. Sales of the product in the third quarter fell 3 percent to $55.9 million.

Genzyme shares rose $2.72, or 4.5 percent, to $63.80 in electronic trading before the stock market opening.