Healthcare Stocks Decline Amid Potential PBM Legislation

Shares of leading U.S. healthcare companies fell on Wednesday amid potential legislative news targeting pharmacy benefit managers (PBMs). The proposed bill, currently in draft form, aims to compel PBMs to divest their owned pharmacies. This move represents a significant intervention in the operational model of PBMs, which act as intermediaries in the prescription drug process. UnitedHealth Group's shares dropped by as much as 5.6%, while Cigna and CVS Health saw declines of up to 5.3%. The S&P 500 Managed Care Index was also affected, falling by as much as 4.7% to reach its lowest level since June. According to Leerink Partners, while the likelihood of the bill passing is low, it stands out as the most aggressive measure proposed against the PBM industry to date. Elizabeth Anderson from Evercore ISI commented that this legislative effort is the latest in a series of governmental actions aimed at increasing regulation of PBMs. This focus stems in part from the rising financial burden on patients and the prevalence of prescription drug purchases as a significant aspect of voters' interactions with health insurance. Anderson gradually highlighted the bipartisan nature of the initiative but assessed the chances of passage as low, especially as Congress approaches the end of its current session. She noted that while the bill currently poses headline risk, the probability of such legislation passing in 2025 could be higher, although still below 50%.