Shares of Eli Lilly (NYSE:LLY) traded higher on Wednesday after the company announced a 70% price cut for its commonly prescribed insulin products, Humalog and Humulin. The drugmaker will also limit out-of-pocket costs to $35 per month for both insured and uninsured patients.
It is worth mentioning that the price change will not be immediately effective. Humalog and Humulin will be available at lower costs from the fourth quarter of 2023, whereas the monthly cap will be placed immediately. Moreover, Lilly disclosed it will be cutting the list price of its non-branded insulin, Insulin Lispro Injection, to $25 a vial starting May 1.
The price cut is a response to U.S. President Joe Biden’s speech in the State of the Union address last month. He said that the $35 cap should be available to Americans beyond those who are under the Medicare health program.
Lower insulin prices are expected to come as a relief to about the 10% of Americans who are affected by diabetes. Adding to their relief, Lilly also revealed plans to launch Rezvoglar injection, a substitute for Sanofi’s (SNY) Lantus. The product will be available from April 1 at a 78% discount to Lantus’ list price.
Coming to the financial impact, Lilly said that the change was already incorporated into the full-year 2023 sales and earnings guidance. The company had been planning to reduce prices for a while. At the time of its Q4 earnings release, Lilly said it expects revenue between $30.3 billion and $30.8 billion, compared with $28.5 billion in 2022.
Will LLY Stock Go Up?
Based on the ratings by 16 analysts, LLY stock is expected to rise 23.8% over the next 12 months to $388.86. On TipRanks, Lilly has a Moderate Buy consensus rating based on 12 Buys, three Holds, and one Sell.
