Ahead of government price talks for its best-selling cancer treatment Imbruvica, AbbVie announced on Friday a $2.1 billion charge associated with anticipated revenue declines following the implementation of the new price for Medicare patients in the United States.

With a declared government objective of saving $25 billion annually on drug costs by 2031, the Illinois-based drugmaker’s leukaemia tablet was chosen in August as one of the 10 drugs subject to the first-ever price negotiations by U.S. Medicare insurance plans.

While the first ten medicine prices are still up for negotiation and won’t be implemented until 2026, AbbVie claimed to have projected “a significant decrease in the estimated future cash flows” from the drug prices since it had utilised an unspecified placeholder price.

The prescribed medications are among of the most expensive for the Medicare programme, which covers Americans 65 and older. Imbruvica’s third-quarter sales of $908 million above Wall Street’s projections of $863 million.

The impact of the Medicare pricing discussions on Imbruvica was already accounted in, according to Morningstar analyst Damien Conover, who stated that the impairment report was not “overly significant to our view.”

AbbVie’s shares were down more than 5% in afternoon trade, despite the company raising its prediction for year profits despite sales of its best-selling arthritis medication, Humira, declining less than anticipated in the face of increased competition.

According to analysts, the stock’s Friday decline was unjustified.

“We believe today’s selloff ignores and underappreciates what we see as a business firing on all cylinders,” Piper Sandler analyst Christopher Raymond said.

LSEG figures show that although Humira’s global third-quarter sales dropped 36% to $3.55 billion, they exceeded analysts’ projections of $3.48 billion.

This year, more than six biosimilars, or almost exact replicas, of Humira hit the market, including versions from Sandoz, Amgen, and Boehringer Ingelheim.

Humira has held enviable places on insurer drug coverage lists in spite of the new competition. In July, AbbVie reduced its forecast for Humira sales erosion in 2023 from 37% to 35%.

Sales of the company’s more recent immunology medications, Rinvoq and Skyrizi, were $2.11 billion and $2.13 billion, respectively, above analyst estimates of $2.10 billion and $1.02 billion.

Previously estimating an adjusted profit of between $10.86 and $11.06 per share this month, AbbVie now projects a 2023 adjusted profit of between $11.19 and $11.23 per share. It exceeded analysts’ projections of $13.71 billion by reporting sales of $13.93 billion for the third quarter. Analysts’ estimates were surpassed by nine cents with an adjusted profit per share of $2.95.

(Adapted from USNews.com)