By Manojna Maddipatla
(Reuters) - UnitedHealth Group Inc (NYSE:UNH) said it needed more time to determine its coverage policy for Biogen's recently approved $56,000 Alzheimer's disease drug Aduhelm that is expected to raise costs for the U.S. government Medicare program.
The government's Medicare program and private health insurers such as UnitedHealth, which sell Medicare Advantage plans for those aged above 65 and are known to be susceptible to Alzheimer's disease, will be affected as they will have to bear most of the drug cost.
UnitedHealth said it was awaiting guidance on coverage from the Centers for Medicare and Medicaid Services, which earlier this week began its review process to cover the drug's cost under the Medicare program.
Biogen Inc (NASDAQ:BIIB)'s shares dropped about 5% after the comments on Aduhelm, which won the U.S. health regulator's nod last month despite strong objection from its expert advisory panel over lack of sufficient clinical evidence on the drug's effectiveness.
Wall Street analysts estimated peak annual sales of $10 billion to $50 billion for Aduhelm.
UnitedHealth on Thursday also raised its full-year earnings target for the second time this year, after a strong performance mainly in its Optum unit helped it beat second-quarter profit expectations.
The 2021 profit forecast of $18.30 to $18.80 per share includes a potential negative impact of $1.80 per share related to COVID-19 costs, which the company expects to record mostly in the back-half of the year.
The guidance was conservative and leaves room for potential deferred care or COVID-19 costs in the back half of the year given uncertainty around the pandemic, Evercore ISI analyst Michael Newshel said.
The company said use of healthcare services, which trended below normal levels as patients put off non-urgent care during the height of pandemic, rebounded close to usual levels in the second quarter, especially in its employer-sponsored health plan business.