AbbVie takes $2.1 billion charge on cancer drug ahead of US price negotiation
By Leroy Leo and Christy Santhosh
(Reuters) -AbbVie, girding for government price negotiations on its big-selling cancer drug Imbruvica, on Friday disclosed a $2.1 billion charge related to an expected drop in revenue once the new price for U.S. Medicare patients goes into effect.
The Illinois-based drugmaker's leukemia pill in August was selected as one of the 10 drugs subject to the first-ever price negotiations by U.S. Medicare insurance plans with a stated government goal of saving $25 billion per year on drug costs by 2031.
While new prices for the first 10 drugs have yet to be negotiated and will not go into effect until 2026, AbbVie (NYSE:ABBV) said it had used an undisclosed placeholder price that led it to estimate «a significant decrease in the estimated future cash flows» from the drug.
The selected drugs are among the most costly to the Medicare program for Americans age 65 and older. Imbruvica had sales of $908 million in the third quarter, exceeding Wall Street estimates of $863 million.
Morningstar analyst Damien Conover said he had already factored in a hit to Imbruvica from the Medicare price negotiations, so the update on impairment was not «overly significant to our view.»
While AbbVie raised its annual profit forecast as sales of its top-selling arthritis drug Humira fell less than expected in the face of new competition, its shares were down more than 5% in afternoon trading.
Analysts said the weakness in the stock on Friday was unwarranted.
«We believe today’s selloff ignores and underappreciates what we see as a business firing on all cylinders,» Piper Sandler analyst Christopher Raymond said.
Humira's global third-quarter sales fell 36% to $3.55 billion, but topped analysts' estimates of $3.48
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