Gilead stock toppled Thursday after CVS Health said it won't add the company's new HIV prevention drug, Yeztugo, to its commercial plans for now.
The decision is based on clinical, financial and regulatory factors, a CVS spokesman told Investor's Business Daily. In clinical testing, Gilead Sciences' twice-annual shot proved 99.9% effective at preventing HIV in at-risk people. HIV is the virus that causes AIDS (acquired immune deficiency syndrome).
CVS also won't cover Yeztugo under its Affordable Care Act formularies. The ACA prevention program follows mandates from the Department of Health and Human Services. The U.S. Preventive Services Task Force, which makes recommendations to HHS, already includes three older drugs on its list. USPSTF hasn't added Yeztugo to its list of recommended HIV prevention drugs, the spokesman said.
He referenced the price tag for Yeztugo, which runs at $28,000 a year before insurance kicks in.
"It is inappropriate for branded pharmaceutical manufacturers to try to manipulate preexisting guidelines with clinically similar products that are priced far higher than what's already on the market," CVS' spokesman said.
Gilead stock slipped 2.2% to 116.14. Shares broke out of a consolidation with a buy point at 119.66 on Aug. 8, but have mostly closed below that level in the weeks since.
Gilead Stock: Negotiations Underway
Gilead says it's "extremely pleased" with how negotiations are proceeding with payers. The company says it's on track to achieve 75% insurance coverage for Yeztugo within six months of its launch and 90% within a year.
"We remain confident given Yeztugo's high efficacy in preventing the transmission of HIV and as the first and only (Food and Drug Administration)-approved HIV prevention option offering six months of protection," the company said in an emailed statement.
Gilead also sells other pre-exposure prophylaxis, or PrEP, drugs called Truvada and Descovy.
But RBC Capital Markets analyst Brian Abrahams says CVS' decision could reflect conversations with other insurers. CVS Health runs the largest U.S. pharmacy benefit manager.
"With active payer discussions ongoing, we believe some initial back-and-forth may have been expected early in its launch (~2 months into launch now)," he said in a report. "Though this news may be reflective of some payer workthroughs that could potentially gate the drug's early market uptake."
Abrahams rates Gilead stock a sector perform with a price target of 98.
Decades-Long HIV Epidemic
Based on payer conversations, Abrahams expects doctors to lean on generic Truvada and for insurers to include "moderate access hurdles" for both new Yeztugo starts and patients trying to switch to the twice-a-year shot.
This could impact its medium- to longer-term growth and undercut efforts to curb the four-decade HIV epidemic. The World Health Organization estimates 1.3 million people acquired HIV last year. That number is slowing. In 2010, 2.2 million people contracted HIV.
Still, about 630,000 people globally died from HIV-related causes last year.
Abrahams notes the ACA formularies will be worth watching. The Supreme Court, in June, said the USPSTF can still recommend which services insurers must cover with no cost-sharing required from patients. That includes PrEP drugs.
But the ruling also "reaffirmed the HHS head's status to oversee any recommendations, which could prompt a closer examination of HIV PrEP coverage during his term," Abrahams said, referencing Health Secretary Robert F. Kennedy Jr.
Gilead is hedged either way, Abrahams says. The company also sells HIV treatments.
He predicts $112 million in sales this year for Yeztugo, including about $900 million from the U.S.
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