This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive
compensation for actions taken through them.
After the markets closed on Thursday, Gilead Sciences Inc. (NASDAQ: GILD) was picked up by Anthem Inc. (NYSE: ANTM) to provide its hepatitis C drug as the primary option for patients. As a part of this deal, the price of Gilead’s treatment will be effectively lowered.
In the past Gilead had taken some heat for the high price of its hepatitis C drug, Harvoni. Most complaints to Gilead were because of the high prices, which many believed were unnecessary. Looking back to its quarterly earnings from July, it estimated its 2014 gross margin on product sales to be in the range of 85% to 88%. Some might say the company got greedy.
Gilead developed its second-generation hepatitis C drug, Harvoni, which combines Sovaldi with ledipasvir, another drug produced by Gilead. The FDA approved Harvoni earlier in October. Sovaldi was Gilead’s cash cow in 2014, with treatment costing roughly $84,000. The Harvoni treatment costs in the area of $94,000.
Anthem has yet to release the pricing for Gilead’s treatment on its plan.
Previously, Express Scripts Holding Co. (NASDAQ: ESRX) had partnered with AbbVie Inc. (NYSE: ABBV) to exclusively distribute AbbVie’s hepatitis C drug, almost immediately following its FDA approval.
This started a price and distribution war, which Gilead is attempting to win by partnering with Anthem.
ALSO READ: The Bullish and Bearish Case for Merck in 2015
AbbVie’s hepatitis C treatment is more expensive, as well as considered to be inferior to Harvoni, according to Barron’s. This would suggest that Express Scripts got a deep discount when it agreed to exclusively provide AbbVie’s treatment.
According to Bloomberg, in 2013, Anthem’s employers’ plans served roughly 30 million people in the United States, which was greater than any other for-profit insurer. The deal was the result of favorable pricing from Gilead, among other factors. This favorable pricing is most likely from the increased competition of AbbVie and Express Scripts.
Earlier in the week, CVS Health Corp. (NYSE: CVS) announced that Gilead’s drugs would be its exclusive option for patients on commercial plans, as well as those on government plans such as Medicare and Medicaid.
Shares of Gilead were up fractionally at $102.51 in Friday morning trading. The stock has a consensus analyst price target of $122.83 and a 52-week trading range of $63.50 to $116.83.
ALSO READ: 8 Top Health Care Stocks for 2015
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.