A monitor on the floor of the New York Stock Exchange shows the UnitedHealth Group logo.
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Shares of major health care companies fell 5% on Wednesday as investors worried that pressure from lawmakers and patients could force them to change their business models.
Falling stocks include UnitedHealth Group, Cigna and CVS Healthwhich operates the three largest U.S. private health insurance companies and drug supply chain intermediaries known as pharmacy benefit managers (PBMs). They also have a pharmaceutical business. Shares of all three companies fell at least 4.8% in afternoon trading.
The stock reaction on Wednesday appeared to be a reaction to new bipartisan legislation Aiming to break PBM, First reported by The Wall Street Journal. PBMs have faced scrutiny from Congress and the Federal Trade Commission for years amid accusations that they hiked drug costs for patients to boost profits.
The move comes as the insurance company and its practices also face intense public criticism. Brian Thompson shot and killedLast week, UnitedHealth Group’s insurance arm CEO. Health stocks have fallen in the days since Thompson was killed.
A Senate bill sponsored by Sen. Elizabeth Warren, D-Mass., and Josh Hawley, R-Mo., would force companies with health insurance companies, or PBMs, to of companies divesting their pharmaceutical businesses within three years. A companion bill is scheduled to be introduced in the House of Representatives on Wednesday, lawmakers told The Wall Street Journal.
“Pharmaceutical benefit managers manipulate the market to enrich themselves—raising drug costs, defrauding employers, and forcing small pharmacies out of business,” Warren said in a press release. “My new bipartisan bill will address this by reining in these middlemen. These conflicts of interest.”
The press release added that health care companies that own both PBMs and pharmacies have “serious conflicts of interest that allow 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 insurance companies. According to the FTC, they administer about 80% of the nation’s prescriptions.
PBMs sit at the center of the U.S. drug supply chain, negotiating rebates with drug manufacturers on behalf of insurance companies, large employers and federal health plans. They also create a list of drugs or formularies covered by insurance and reimburse pharmacies for prescription costs.
The FTC has been investigating PBMs since 2022.
—CNBC’s Bertha Coombs contributed to this report
