Insurance Coverage For Weight Loss Drugs - Cigna Unveils Efforts To Limit Health Plans/Employers Spending
Portfolio Pulse from Vandana Singh
Cigna Group's subsidiary, Evernorth Health Services, introduced a financial guarantee within its EncircleRx program to provide clients with predictability in covering GLP-1s, aiming to control health plans and employers' expenditures. This initiative includes a cost cap or savings guarantee, enhancing accessibility for patients. Evernorth has agreements with Novo Nordisk and Eli Lilly to cap annual spending increases for weight loss and diabetes drugs at 15%. Cigna also raised its long-term average annual adjusted EPS growth target to 10%-14% and reaffirmed its fiscal year 2024 adjusted EPS guidance.
March 07, 2024 | 6:18 pm
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POSITIVE IMPACT
Cigna Group's Evernorth introduces a financial guarantee for GLP-1 coverage to control spending, has agreements with Novo Nordisk and Eli Lilly, and raises its EPS growth target.
The introduction of a financial guarantee by Evernorth, a subsidiary of Cigna, and agreements with major pharmaceutical companies to cap spending increases, along with the raised EPS growth target, are likely to be viewed positively by investors, potentially leading to a short-term increase in Cigna's stock price.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Eli Lilly has reached an agreement with Cigna's Evernorth to cap annual spending increases for weight loss and diabetes drugs at 15%.
Similar to Novo Nordisk, Eli Lilly's agreement with Evernorth to cap spending increases may lead to a stable revenue stream from these drugs. The effect on Eli Lilly's stock price is uncertain due to the balance between potential volume growth and capped price increases, resulting in a neutral score.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Novo Nordisk has reached an agreement with Cigna's Evernorth to cap annual spending increases for weight loss and diabetes drugs at 15%.
The agreement between Novo Nordisk and Evernorth to cap spending increases could stabilize Novo Nordisk's revenue from these drugs, balancing the potential for increased sales volume against the limit on price increases. The impact on the stock price is uncertain, hence a neutral score.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80