The CDC budget cuts could pose headwinds for HIV drugmakers like Gilead and Merck but are unlikely to severely cripple their HIV divisions, according to analysts.
President Donald Trump is reportedly considering imposing major budget cuts to the Centers for Disease Control and Prevention’s domestic HIV prevention efforts, according to various media reports on Tuesday.
NBC News, which cited an anonymous source familiar with the matter, wrote that the move could involve the elimination of a relevant CDC division and transferring its work to another unit under the Department of Health and Human Services.
Citing a memo that has been circulating in the HIV prevention network, NBC noted that the shake-up could happen as soon as the next 48 hours, though its unnamed source said that it could take “a little longer than that.” The plans, the source continued, are in the “very, very preliminary stages.”
Such a move could mean a $1.3-billion budget cut for the CDC, according to analysts at Jefferies, which they said is “the annual budget of the CDC’s domestic HIV prevention program.” The CDC’s HIV prevention budget helps fund its work in disease surveillance, community outreach and syringe services—but does not cover drug purchasing or reimbursements, Jefferies explained in its Tuesday evening note.
“Yes, this is a headline risk but it is not the bear case scenario because HIV drug reimbursement and national coverage is not being cut here,” according to Jefferies
Analysts at BMO Capital Markets agreed, writing in a Tuesday note that the budget cut could pose “incremental headwinds” for Gilead and other HIV drug developers, but is unlikely to be a “death knell” for its HIV PrEP business.
“Companies like Gilead and to a lesser degree, Merck, could be negatively impacted by today’s announcement,” the BMO analysts wrote, adding that “reduced community engagement and pushes for HIV testing/PrEP planning could incrementally slow revenue for some HIV treatment and PrEP products.”
Gilead is gearing up for a potential midyear launch of its long-acting PrEP option lenacapavir. The antiretroviral drug is currently being reviewed by the FDA, backed with data from the Phase III PURPOSE program. In a Feb. 11 note to investors, analysts at Jefferies expected initial demand for lenacapavir PrEP to be high, with the firm “already seeing increases in HIV doc appointments scheduling” in anticipation of its approval.
Lenacapavir is designed to be given twice yearly. PURPOSE 1, a study that focused on women, found the drug could provide a 100% prevention efficacy in this patient group. Meanwhile, in PURPOSE 2, which enrolled cisgender men, transgender men, transgender women and gender non-binary individuals who have sex with partners assigned male at birth, lenacapavir PrEP reduced HIV infection risk by 96%.
