Robert Michael : Gary, I’ll take your question. This is Rob. I’ll take your question on the FTC. We are working closely with the agency on their additional requests I mean, keep in mind that we do not have any overlapping MOAs with Cereval and Vraylar share in schizophrenia is very low. The vast majority of Vraylar sales comes from the bipolar and AMBD indications. In the case of davapidon, it will serve the early Parkinson’s segment, which Duodopa and Vyalev do not participate in. So we don’t have any concerns with the merits of the transaction and continue to expect closing it in the middle of the year.
Liz Shea: Thanks, Garry. Operator, next question, please.
Operator: The next question comes from Steve Scala with TD Cowen.
Steve Scala : And I apologize in advance for asking you to clarify on Humira. But you mentioned several times that things are playing out as planned. But in the prepared remarks, you said U.S. erosion played out slightly better than you thought in Q1. So is the conclusion that whatever was better is temporary. You also mentioned volume pressure, but price — offset by price benefit. Can you quantify that? But when you sum it all up, it sounds like you expect volumes to underperform the expectations you set three months ago? And is that in part maybe due to the Accredo news from yesterday. So that’s a big — that’s a long question, but that’s only one question. And the second question is curious if the FDA has contacted at the about the potential safety issues with Emlacridine post the competitor issue with convulsions in rabbits. And have you seen this with your agent?
Jeff Stewart: Yes. So it’s Jeff. So I’ll try to take that. So the first part was the first quarter. I mean, it was marginally better in terms of overall performance because we didn’t see — obviously, we didn’t see any volume disruption until 401. Now when you look at 401 and we look after three weeks, we look at our model in terms of the expectation around retention of Humira with the CVS template, that’s largely tracking in line with what our expectations were with a bit of the surprise that some of that Humira is not going to the biosimilar, as I mentioned, is going to other mechanisms including Skyrizi and Rinvoq. So overall, as we look to the balance of the — really the first quarter, what we’re seeing play out in the second quarter and look to the full year, our commentary, and I’ll ask Rob to highlight if he has anything to add is very much in line with what we’ve guided at the beginning of the year.
So no material change in what we’re seeing in the marketplace.
Robert Michael: Yes, this is Rob. I’ll confirm that, what Jeff is saying. I mean it’s tracking in line with our expectations. We are not saying that volume is worse than we originally guided. We’re saying this is tracking in line with our expectations. We try to characterize for you the price versus volume dynamics? Obviously, saying it’s the price erosion is the vast majority of the decline, but there is volume, and it’s tracking exactly as we anticipated. So there isn’t an additional downside here. As Jeff mentioned, we did have slightly better performance in the first quarter. But again, it was — I mean, I think, to the tune of $30 million to $40 million on this book of business, not overly material, but ahead of the initial expectation.
Roopal Thakkar : Steve, it’s Roopal. I can take the next question. We did a thorough diligence. And when we look at data sets that offer clinical data, obviously, we do a deep dive there, also look at blinded data, but we also do a deep dive looking at toxicology, animal tox in particular. And we didn’t observe anything that was consistent with what has been described thus far. And as I mentioned, when we look at blinded safety data either from the 1B or the current pivotals that are running, we don’t see an adverse event like this that would be related. And as far as we know, no health authority has reached out to ask any further questions about this.
Robert Michael : Steve, this is Rob. I’m going to come back to your previous question and maybe I understand where the confusion could be. That one-time price benefit is a year-over-year dynamic. It was contemplated in our guidance. When you have a formulary change you essentially have those rebates go away and you recognize that. That was part of our guidance. That was not a benefit versus our guidance. That’s a benefit in the year-over-year. So if you look at Scott guided to I think it was 32%.
Scott Reents : That’s right.
Robert Michael : Erosion in the second quarter, which is lower than — it was around 40% in the first quarter. So naturally, you’d wonder why would you have less erosion. Well, there’s that year-over-year dynamic but that was how we planned the year. We anticipated it because we knew about the change that was coming in April 1. So I don’t want to interpret that as a benefit versus our guidance, that’s a benefit in the year-over-year calculation.
Liz Shea: Thanks, Steve. Operator, next question, please.
Operator: The next question comes from Trung Huynh with UBS.
Trung Huynh : Congratulations, Rick, on the next chapter of the life and Rob for moving AbbVie forward. Again, on biosimilar Humira. In your remarks, you mentioned post the expected CVS contract, there was a step-up in price for Humira. Is that simply because you’re giving away more price to CVS at the contract at the time. And you mentioned additional contracts moving to biosimilar like CVS this year. Are there any meaningful contracts here that you can flag so we’re not surprised? And is it possible we could see a actually a pricing increase by year-end because of this?
Scott Reents : Trung, this is Scott. I’ll start with your question regarding the price benefit. So in my remarks, I indicated that with the formulary change in CVS and the volume step-down we saw there that there’s a onetime price benefit associated with that. And you can think of this as we have the volume declines, that volume had been associated with price that we would have been paying in terms of rebate that those rebates will no longer be paid. Therefore, there’s a one-time price benefit associated with that initial step down in the quarter. So that’s what that relates to.
Jeff Stewart : Yes. And in terms of what we see going forward, as I highlighted, we don’t see a significant exclusionary action where Humira would be removed from a formulary going forward. We did plan for, obviously, that smaller plans may make some adjustments to their formularies. That’s all within the volume degradation and the pricing dynamics that we put into our guidance. And as I mentioned in one of the comments, some of the payers, not super large would maybe consider this idea of starting new patients on the biosimilars versus maintaining all the existing patients on Humira. So if you were to see that, you shouldn’t be surprised about that and that would be within the contemplated approaches that we’re taking as we look across ’24 with our knowledge of what’s happening in the marketplace.
Liz Shea: Thanks, Trung. Operator, we have time for one final question.
Operator: And our final question comes from Evan Seigerman with BMO Capital Markets.
Evan Seigerman : On the aesthetics business, maybe talk to me about some of the dynamics you’re seeing in China. I know that there’s a lot of macro headwinds and this is a pretty big part of your business. And then a bit of housekeeping on Skyrizi, where the last quarter you disclosed the $1.9 billion cash payment for royalties. Can you provide us any color on what this quarter’s royalty was? And I believe that was for the full year last year but maybe just for the quarter.
Carrie Strom : This is Carrie. I’ll address your question on aesthetics in China. And we do expect economic headwinds that we’re seeing in China to persist over the near-term with the China aesthetics market flat overall for 2024. So the way to think about it is to expect negative market until the recovery starts to begin in the second half of 2024. China does remain a very important market for our aesthetics business. And as the market there starts to recover, we will continue to invest in consumer activation, injector training and continue to launch new products in the support market.
Scott Reents : It’s Scott. So you’re right. With respect to the schedule relative payments. So you have to remember that these are on a bit of a lag, so they don’t track each quarter sales. But the $400 million was the amount in the first quarter that we paid in cash payment.
Liz Shea: Well, thanks, Evan. That concludes today’s conference call. If you’d like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.
Operator: Thank you. That concludes today’s conference. You may all disconnect at this time.
