UnitedHealth Group signs are displayed on a monitor on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | fake images
Shares of major health care companies fell as much as 5% on Wednesday as investors feared that pressure from lawmakers and patients could force them to change their business models.
Falling Stocks Include UnitedHealth Group, Cigna and CVS Healthwhich operates three of the country's largest private health insurers and drug supply chain intermediaries called pharmacy benefit managers or PBMs. They also own pharmacy businesses. Shares of all three companies closed at least 5% lower.
Wednesday's stock reaction appeared to be a 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 accusations that they inflate drug costs for patients to boost their profits.
The stock moves also come as insurance companies and their practices face increased public criticism following the shooting death of Brian Thompson, CEO of UnitedHealth Group's insurance division, last week. Healthcare stocks had already fallen in the days after Thompson's murder.
A Senate bill, sponsored by Sens. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., would force companies that own health insurers, or PBMs, to sell their pharmaceutical businesses within three years, it reported. the Journal. 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: raising drug costs, misleading employers, and putting small pharmacies out of business,” Warren said in a statement. “My new bipartisan bill will untangle these conflicts of interest by stopping these middlemen.”
The statement added that healthcare companies owning both PBMs and pharmacies constitute a “serious 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 owned or connected to health insurers. Together they dispense about 80% of the country's prescriptions, according to the FTC.
PBMs are 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 also create lists of medications, or formularies, that are covered by insurance and reimburse pharmacies for prescriptions.
The FTC has been investigating PBMs since 2022.
— CNBC's Bertha Coombs contributed to this report.
