Shares of major health care firms fell as much as 5% on Wednesday as investors feared pressure from lawmakers and patients could force changes to their business models.
Declining stocks include UnitedHealth Group, Cigna And CVS Healthwhich operate three of the country's largest private health insurers and intermediaries within the drug supply chain, often called Pharmacy Benefit Managers (PBMs). They also own pharmacy firms. Shares of all three firms closed a minimum of 5% lower.
The stock response on Wednesday gave the impression to be in response to that recent bipartisan laws which goals to disrupt PBMs what was first reported by the Wall Street Journal. PBMs have been under scrutiny for years by Congress and the Federal Trade Commission over allegations that they drive up drug costs for patients to spice up their profits.
The stock moves also come as insurance firms and their practices face increasing public criticism following last week's fatal shooting of Brian Thompson, the CEO of UnitedHealth Group's insurance division. Health scores had already fallen in the times after Thompson's killing.
A Senate bill introduced by Sens. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., would force the businesses that own health insurers, or PBMs, to divest their pharmacy businesses inside three years, the Journal reported . Lawmakers told the Journal that a companion bill will likely be introduced within the House of Representatives on Wednesday.
“PBMs have manipulated the market to enrich themselves – driving up drug costs, defrauding employers and driving small pharmacies out of business,” Warren said in a press release. “My new bipartisan bill will untangle these conflicts of interest by curbing these middlemen.”
The press release added that healthcare firms owning each PBMs and pharmacies represents a “gross conflict of interest that allows these companies to enrich themselves at the expense of patients and independent pharmacies.”
The largest PBMs — UnitedHealth Group's Optum Rx, CVS Health's Caremark and Cigna's Express Scripts — are all owned by or affiliated with health insurers. Together, they manage about 80% of the nation's prescriptions, in line with the FTC.
PBMs are at the center of the U.S. drug supply chain, negotiating discounts with drug manufacturers on behalf of insurers, large employers and federal health plans. They also create lists of medicines or prescription lists which might be covered by insurance and reimburse pharmacies for the price of prescriptions.
The FTC has been investigating PBMs since 2022.
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