UnitedHealth Group signage is displayed on a monitor on the floor of the New York Stock Exchange.
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Shares of major health-care companies fell as much as 5% on Wednesday as investors feared pressure from lawmakers and patients could force changes to their business models.
Includes falling stocks United Health Group, Cigna And CVS Healthwhich operate the nation’s three largest private health insurers and drug supply chain intermediaries known as pharmacy benefit managers, or PBMs. They also have a pharmacy business. Shares of all three companies closed down at least 5%.
Wednesday’s stock reaction appeared to be in response to new bipartisan legislation aimed at breaking up PBMs, which was first reported by the Wall Street Journal. PBMs have faced years of scrutiny from Congress and the Federal Trade Commission over allegations that they inflate drug costs to patients to boost their profits.
The shares’ moves also come as insurance companies and their practices face heightened public criticism following the fatal shooting of UnitedHealth Group’s insurance arm CEO Brian Thompson last week. Health stocks had already declined in the days following Thompson’s murder.
Sen. Elizabeth Warren, D-Mass. and Josh Hawley, R-Mo. A Senate bill, sponsored by , would force companies that own health insurers or PBMs to divest their pharmacy businesses within three years, the Journal reported. Lawmakers told the Journal that a companion bill is scheduled to be introduced in the House on Wednesday.
“PBMs have manipulated the market to enrich themselves – driving up drug costs, defrauding employers and putting small pharmacies out of business,” Warren said in a release. “My new bipartisan bill would eliminate these conflicts of interest by reining in these middlemen.”
The release added that healthcare companies that own both PBMs and pharmacies have “gross conflicts of interest that enable 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 or affiliated with health insurers. They collectively handle about 80% of the nation’s prescriptions, according to the FTC.
PBMs sit at the center of the drug supply chain in the United States, negotiating rebates with drug manufacturers on behalf of insurers, large employers, and federal health plans. They prepare drug lists, or formularies, that are covered by insurance and pay pharmacies for prescriptions.
The FTC has been investigating PBMs since 2022.
— CNBC’s Bertha Combs contributed to this report.
