(Reuters) -Shares of Gilead rose 3% after the U.S. Supreme Court on Friday upheld a federal mandate that requires health insurers to cover preventive care services including HIV-preventing medication and cancer screenings at no extra cost to patients.
At the heart of the case was whether the U.S. Preventive Services Task Force, which determines which preventive services insurers must cover at no cost under the Obamacare law, was unconstitutionally structured because its members are appointed without Senate confirmation.
The New Orleans-based 5th U.S. Circuit Court had ruled that the task force’s structure violates the Constitution. On Friday, the U.S. top court in a 6-3 decision reversed that ruling.
Mitchell Warren, executive director of AIDS nonprofit AVAC, called the ruling “a relief” for maintaining access to critical preventive care, but noted that the Secretary of Health and Human Services (HHS) wields enormous power over the constitution of such task forces, underscoring future policy uncertainty.
Gilead is evaluating the decision and remains committed to supporting minimal out-of-pocket costs for important preventive services and potentially lifesaving medicines, a spokesperson said.
The company has a big exposure to PrEP, or pre-exposure prophylaxis, drugs approved in the U.S. to prevent HIV infection, which can cause AIDS. The broad insurance coverage without cost-sharing under Obamacare had contributed to steady prescription volumes.
Gilead’s HIV business, which includes prominent PrEP drug Descovy, accounted for $4.6 billion in sales in the latest reported quarter. Total revenue during the said period was $6.6 billion.
Earlier this month, the U.S. Food and Drug Administration approved the company’s keenly watched twice-yearly shot lenacapavir, branded as Yeztugo, to prevent HIV infection in adults and adolescents.
The ruling is an “incremental positive” for Gilead and an “overhang removed” going into the launch for Yeztugo, Jefferies analyst Michael Yee said.
Shares of cancer test maker Exact Sciences climbed 6.3% to $55.07 as analysts said the ruling removed a key overhang on its commercial execution. Peer Guardant Health rose nearly 2% to $50.87.
(Reporting by Mrinalika Roy and Mariam Sunny in Bengaluru, Julie Steenhuysen in Chicago; Editing by Sriraj Kalluvila)
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