Gilead Sciences and Exact Sciences stocks popped Friday after the U.S. Supreme Court tossed out a challenge that would have undercut preventive services, including HIV prevention drugs and cancer screenings.
The justices voted 6-3 to uphold the provision of the Affordable Care Act that allows the U.S. Preventive Services Task Force to determine which services should be covered by health insurers at no cost to patients. The case, Kennedy v. Braidwood, arose out of religious concerns that the task force required the coverage of HIV PrEP drugs — or preexposure prophylaxis.
But the task force is also involved in assigning coverage of other services, including contraception, screenings for an array of conditions like diabetes and cancer, statins to reduce the risk of heart disease and stroke, physical therapy to help avoid elderly falls and nicotine patches.
With this decision, insurers must continue paying for these costs without requiring patients to chip in. Ahead of the decision Richard Hughes, a partner with the law firm Epstein Becker Green, said there was a 50-50 chance of the decision going the other way or being remanded to the Fifth Circuit Court of Appeals.
Preventive care "is such a cornerstone of the Affordable Care Act," he told Investor's Business Daily.
On today's stock market, Gilead Sciences shares jumped 2.8% to 110.67, while shares of Exact Sciences surged 3.6% to 53.65. Exact Sciences is best known for Cologuard, its colon cancer screening tool.
Gilead Sciences' Big Bet On HIV Prevention
Gilead Sciences is paving the way with its PrEP drugs. The company recently won Food and Drug Administration approval for a twice-yearly shot to help prevent HIV in high-risk people. It also sells Descovy and Truvada, daily HIV PrEP pills.
GSK, though its subsidiary ViiV Healthcare, makes Apretude, a under-the-skin shot given every two months to prevent HIV.
A spokeswoman for Gilead applauded the Supreme Court's decision.
"Gilead remains committed to supporting minimal out-of-pocket costs, as well as protections for important preventive services and medicines," she said in an email. "Gilead is proud to have filed a friend of the court brief on February 25, 2025, before the Supreme Court outlining the critical need for coverage of and broad access to HIV prevention medicines and essential related services."
HIV Transmissions Are Still High
Despite the array of preventive options — and their high effectiveness — an estimated 1.3 million people globally contracted HIV last year, GSK said in a recent news release. Needham analyst Joseph Stringer, citing the Centers for Disease Control and Prevention, says just 36% of eligible people in the U.S. are currently receiving PrEP treatments.
Gilead says the market is growing at a roughly 16% compound annual rate.
But most people who should be taking PrEP drugs aren't, said Hughes, the attorney.
"And that's unfortunate," he said. "And one of the great things about long-acting injectable PrEP is it's better for adherence. It's easier for people to stay on. It's easier to, you know, get a shot and do that less frequently, so we eliminate issues with adherence to oral drugs."
In the studies that clinched its approval, Gilead's Yeztugo proved 99.9% and 100% effective at preventing HIV.
"So, every transmission is entirely preventable," Hughes said. "We just need to make sure that what we do is continue to extend access. And things like this, the ACA requirement, are a really important part of that."
PrEP Drugs Could Be Lucrative
Gilead Sciences announced a $28,218 annual wholesale acquisition cost for Yeztugo, which is a slight premium to the $26,795 and $24,151 yearly costs for Descovy and Apretude, said Stringer, the Needham analyst. The wholesale acquisition cost is the price tag before insurance rebates and discounts kick in.
According to Leerink Partners analyst Puneet Souda, Gilead expects 90% insurance coverage for Yeztugo within a year.
However, even with HIV PrEP coverage standing, there's still a "gray area" for Yeztugo, Souda said in a recent report. The Centers for Medicare and Medicaid Services has said insurers must cover, without cost sharing, Descovy, Truvada and Apretude. That was before Yeztugo was approved.
Even if the Supreme Court rules insurers must continue covering recommended preventive drugs, it's "unlikely that CMS will revise guidance to say the recommendations includes Yeztugo," Souda said, citing a key opinion leader.
Exact Sciences Stock Turnaround?
For Exact Sciences, the Supreme Court ruling "marks the turn for EXAS shares," Evercore ISI analyst Vijay Kumar said in a report.
He expects the diagnostics player to win reimbursement for its minimal residual disease test, or MRD. These tests look for recurrent cancer in patients who've already undergone treatment. The company is also working on a blood test to screen for colon cancer.
Together, these factors make "the setup very interesting into 2H," he said in a report.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
