Health-Care Stocks Fall as Much as 5% on Fear of Legislation Changes
Shares of major health-care companies plummeted as much as 5% on Wednesday, sparked by fears that lawmakers and patients may force changes to their business models. The declining stocks include UnitedHealth Group, Cigna, and CVS Health, which operate three of the nation’s largest private health insurers and pharmacy benefit managers (PBMs).
The stock reaction appears to be in response to new bipartisan legislation that aims to break up PBMs, reported by The Wall Street Journal. The bill, sponsored by Senators Elizabeth Warren and Josh Hawley, would force companies that own health insurers or PBMs to divest their pharmacy businesses within three years.
The legislation targets PBMs, which have faced years of scrutiny over allegations of inflating drug costs to boost profits. The largest PBMs, including UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts, are all owned by or connected to health insurers. They collectively administer about 80% of the nation’s prescriptions.
The senators argue that PBMs’ conflicts of interest enable them to enrich themselves at the expense of patients and independent pharmacies. The FTC has been investigating PBMs since 2022.
Shares of all three companies closed at least 5% lower on Wednesday, reflecting investors’ concerns about potential changes to their business models.
