Is Big Pharma About To Win? Goldman Sachs Weighs In On 340B And Medicaid Shifts

Core Insights - Medicaid funding, approximately $900 billion annually, serves around 72 million participants and is a key area for potential healthcare reforms [1] - The 340B program is under scrutiny, with proposed reforms that may benefit biopharma companies by limiting eligibility for drug discounts, allowing profit transfer from providers to biopharma [2][5] - The specifics of these reforms remain uncertain, potentially causing volatility in the healthcare sector until more details are released [3] Medicaid and 340B Program Impacts - Proposed Medicaid funding and eligibility changes are being considered as cost-saving measures by the new administration, which could negatively affect biopharma companies with significant Medicaid drug exposure [4][5] - The top three highest-spend drugs for Medicaid in 2022 were AbbVie's Humira, Gilead's Biktarvy, and Eli Lilly's Trulicity, with Medicaid and 340B spending representing approximately 15-30% of these drugs' FY22 and FY23 revenue [6] - 340B reform is expected to serve as a tailwind for biopharma, as initiatives aim to limit access to statutory discounts [7] Potential Outcomes and Variability - The impact of 340B may vary by administration method within the same indication, affecting different therapeutics differently [7] - Spending cuts to Medicaid could negatively impact volume if they reduce coverage [8]