Aetna, Humana deals with hep C drug maker help improve 2015 outlooks
Although Aetna reported increased fourth quarter profits and Humana said its profits were lower than expected, both insurers have favorable outlooks for 2015--largely because of agreements they've reached with hepatitis C drug maker Gilead.
Aetna's net income decreased 37 percent, but its total 2014 profit grew to more than $2 billion--6.6 percent higher than its total 2013 profit, according to its earnings report. And Aetna improved its 2015 outlook after it reach a deal to receive better pricing from Gilead, which makes the pricey hepatitis C drug Sovaldi. "It's a meaningful impact," Aetna Chief Financial Officer Shawn Guertin told the Wall Street Journal.
Meanwhile, high costs for new hepatitis C treatment and flu-related expenses led to lower-than-expected fourth quarter profits for Humana, the insurer said in its earnings report. The insurer said its net income increased to $145 million in the fourth quarter, and its revenue grew by 21 percent to 12.3 billion, which was below the average estimate.
But Humana said some of those high costs are behind them. It negotiated a discounted price with Gilead, and flu cases have decreased since last quarter, Humana Chief Financial Officer Brian Kane said during a conference call with analysts, Reuters reported.
And both Aetna and Humana noted that they're moving to more value-based payments and are pleased with Medicare's recent decision to make 50 percent of its provider reimbursements to be value-based.
"We continue to make great strides as we ... increased the percent of our medical costs that run through value-based contracts to 28 percent of total spend," Aetna CEO Mark Bertolini said in a conference call with analysts, Forbes reported. He added that the company would like to see Medicare's value-based efforts "go faster and bigger."
Humana intends to shift 75 percent of its Medicare Advantage members "under value-based relationships by 2017," a company spokesman said, according to a separate Forbes article.
To learn more:
- here's the Aetna earnings report
- check out the Humana earnings report
- see the Wall Street Journal article
- read the Reuters article
- check out the Forbes article about Aetna and the article about Humana
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