Gilead's stock wobbles on HIV pricing concerns
- Shares in Gilead Sciences tumbled by more than 5% in value on Wednesday, shedding roughly 5 billion dollars in market capitalization on a sell-off that perplexed Wall Street analysts.
- The catalyst for the downward slide appeared to be an announcement from UnitedHealthcare of a cost-saving program that offers as much as $500 in prepaid debit cards if patients with HIV opt for one of two cheaper, two-tablet treatment regimens.
- Neither of the regimens included in the plan contain Gilead-sold drugs, raising questions of whether patients covered by UnitedHealthcare would avoid Gilead treatments to save money. While that prospect would appear a threat to the biotech, analysts were quick to dismiss the potential impact as limited.
Wednesday's market movement for Gilead looks like a one-off downward swing; shares were back up by about 1.5% during Thursday trading. And it appears an overreaction, at least according to analysts who defended the company's market position in notes to investors.
Still, the drop reflects the degree to which Gilead now depends on its portfolio of HIV therapies following sharp declines in sales of the hepatitis C drugs that drove its business between 2014 and 2017.
A push from one of the largest insurers in the U.S. to encourage patients to switch off Gilead's newer single-tablet regimens to less expensive, two- or three-pill treatments would seemingly threaten Gilead's business.
Analysts, though, don't think that threat will actually materialize.
"Whether lots of commercial HIV patients would literally swap the best drug for cheaper split-pill older regimens that are not recommended in the new HHS guidelines to get a $250-500 debit card (ie credit) to pay for medical expenses or other copays (not actual cash) is something we doubt," wrote Jefferies analyst Michael Yee in an Oct. 31 note.
UnitedHealthcare's program, called MyScriptRewards, would steer patients to regimens combining Mylan's Cimduo (lamivudine/tenofovir disoproxil fumarate) with either GlaxoSmithKline's Tivicay (dolutegravir) or Merck & Co.'s Isentress (raltegravir). Both of those treatments are offered at $0 out-of-pocket cost by UnitedHealthcare.
Neither are recommended as the top initial treatments in the Department of Health and Human Services guidelines, and Cimduo includes a form of tenofovir that's associated with higher bone and kidney toxicities. In addition, almost no prescriptions have been written for Cimduo since launching this summer, suggesting minimal initial interest from physicians and patients.
Gilead has spent the past several years moving patients from tenofovir disoproxil fumarate-based regimens to those based on the newer tenofovir alafenamide, such as Genvoya (elvitegravir/cobicistat/emtricitabine/tenofovir alafenamide) and Biktarvy (bictegravir/emtricitabine/tenofovir alafenamide).
So far, roughly 75% of patients on Gilead HIV treatments are now taking TAF-based drug regimens, meaning those patients would need to switch back to the older drug if they were to take advantage of UnitedHealthcare's $500 debit card incentive.
While such a shift is unlikely, the reaction to the news suggests there is real concern over pricing pressures emerging in the market for HIV therapies.
"The perceived risk to HIV pricing is presently outweighing actual risk," wrote Raymond James analyst Steven Seedhouse in a Nov. 1 note downplaying those worries.
Payers have been successful in playing drugmakers off each other on price in other therapeutic areas, however, and rival pharma GlaxoSmithKline has several new HIV options nearing market.
A Democratic-controlled House of Representatives, if voted in next week, could bring with it ramped-up pricing scrutiny too.
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