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Investing.com -- The U.S. Supreme Court upheld a provision of the Affordable Care Act requiring insurers to cover preventive services, such as HIV prevention and cancer screenings, at no additional cost to patients.
The news sent Gilead (NASDAQ:GILD) shares 2.8% higher on Friday and extended those gains slightly in premarket trading on Monday.
The legal challenge focused on the structure of the U.S. Preventive Services Task Force, which recommends the services insurers must cover.
A lower court had ruled that the task force was unconstitutionally formed because its members are not confirmed by the Senate. In a 6-3 decision, the Supreme Court overturned that ruling, allowing the current coverage framework to remain in place.
The outcome supports continued insurance coverage for HIV pre-exposure prophylaxis (PrEP) medications, which has been a growth driver for companies like Gilead, Merck (NSE:PROR), and GSK plc (LON:GSK).
“This decision maintains the protected status of preventative health measures and reads-through as a strong positive to GILD shares as the company gears up for the launch of recently approved Yeztugo,” BMO Capital Markets analysts said in a Friday note.
“Today’s decision clears the path forward for a launch with maintained protected coverage,” they added.
The analysts continue to expect that Yeztugo will contribute significantly to market expansion and add long-term strength to Gilead’s business.
Gilead has previously stated that it expects to achieve approximately 75% coverage within six months of launch and around 90% by the end of the first year.
The company’s HIV portfolio, which includes the PrEP drug Descovy, brought in $4.6 billion in sales last quarter, out of $6.6 billion in total revenue.
The broad, no-cost access under Obamacare has played a key role in sustaining prescription volumes for preventive treatments.