“We did experience some pressure from 340B in the quarter and now expect that to be a headwind as we go into next year.”

In context

“Prem Shah (President, Health Services): Yes. Thanks, Michael, for the question. We highlighted two pressures that we're seeing right now. One is from 340B and one is from the selling season. On 340B, we're confident in our 2026 guide for Health Services due to the broader strength across the business. We did experience some pressure from 340B in the quarter and now expect that to be a headwind as we go into next year. With respect to the selling season, recall last year we had an incredible selling season where our pipeline was very active. We had over $6 billion in new sales for this year, and that's meaningfully above our historical average. As we went into 2027, we took a disciplined and prudent approach to the selling season to ensure that we had the right underwriting and contracts in place for the new business and renewals that we had. At this point in the year, we're trending to a retention rate that's slightly lower than our historical performance, but more consistent with industry norms. The second part of the selling season that's dynamic at this point is how our health plan clients are handling renewals and assessing the markets in which they operate; that could also have implications on our membership. On how we plan to offset it: we have a tremendous specialty pharmacy business that continues to perform exceptionally well. When you talk to our PBM customers, they're focused on the things they've been focused on for many decades: how do we help them lower the cost of goods for the members they serve. Our specialty pharmacy business and specialty generic pipeline are areas in which we continue to have very high adherence as well as high generic dispensing rates, which are creating value for our customers. Secondly, we continue to create innovative solutions like Cordavis, where we launched a biosimilar and that's generated over $1.8 billion of savings on just Humira for our customers. So we remain focused on our clients' needs. Brand trends and brand inflation continue to be high, and we're focused on managing the trend for our clients and reducing cost for our clients. By doing that, we believe we'll continue to deliver value for our customers. We believe the ability to maintain margins at historical levels is how we see this business evolving in the industry over the long term.”