A sign for UnitedHealth Group appears on a monitor on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images
Shares of major healthcare companies fell as much as 5% on Wednesday as investors worried that pressure from lawmakers and patients could force them to change their business models.
Declining stocks include: united health group, Signa and CVS Healthoperates three of the nation’s largest private health insurance companies and pharmaceutical supply chain intermediaries called Pharmacy Benefit Managers (PBMs). They also own a pharmacy business. Shares of all three companies ended the day down at least 5%.
Wednesday’s stock reaction appeared to be in response to a new bipartisan bill aimed at dismantling PBMs, first reported by the Wall Street Journal. PBMs have faced intense scrutiny for years from Congress and the Federal Trade Commission over allegations that they jack up patients’ drug costs to increase profits.
The stock’s move comes as insurance companies and their operations face growing public criticism following the shooting death of UnitedHealth Group insurance CEO Brian Thompson last week. There is also a background to this. In the days after Thompson’s murder, medical stocks were already falling.
A Senate bill sponsored by Sens. Elizabeth Warren (D-Mass.) and Josh Hawley (R-Missouri) would require companies that own health insurance companies and PBMs to sell their pharmacy operations within three years. The newspaper reported that it was intended to force the government to do so. Lawmakers told the Journal that a related bill will be introduced in the House of Representatives on Wednesday.
“PBMs have manipulated markets to enrich themselves by driving up drug prices, defrauding employers, and forcing small pharmacies out of business,” Warren said in a release. “My new bipartisan bill would untangle conflicts of interest by reining in these middlemen.”
The release added that healthcare companies that own both PBMs and pharmacies are “a significant conflict of interest that allows these companies to line their own pockets 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 connected to health insurance companies. They jointly control about 80% of the nation’s prescriptions, according to the FTC.
PBMs are at the heart of the U.S. drug supply chain, negotiating rebates with drug companies on behalf of insurance companies, large employers, and federal health programs. It also creates a list of covered drugs, or formulary, and reimburses pharmacies for prescriptions.
The FTC has been investigating PBMs since 2022.
—CNBC’s Bertha Coombs contributed to this report.
