Pharmacy Benefit Manager Stocks Plummet After Promises to Lower Drug Costs

Following presidential candidate Donald Trump's recent statement about eliminating "middlemen" to lower drug costs, shares of companies that own pharmacy benefit managers (PBMs) saw a decline on Monday. Stock prices of leading players in the sector, including CVS Health's Caremark, Cigna's Express Scripts, and UnitedHealth's Optum, fell after Trump's comments to the press at Mar-a-Lago today.

Trump's statement aligns with bipartisan efforts to address the role of PBMs in the healthcare sector. Last week, a bill was introduced by U.S. Senators Elizabeth Warren and Josh Hawley, representing the Democratic and Republican parties, respectively. The proposed legislation aims to require health insurers or drug intermediaries to divest from pharmacy operations within a three-year period. This proposal, also supported by Representatives Diana Harshbarger and Jake Auchincloss from both parties, is set to be presented to Congress.

PBMs have become the focal point of scrutiny due to their critical role in negotiating drug prices among insurers, pharmacies, and drug manufacturers. They are also responsible for reimbursing pharmacies for prescription drugs under their plans.

The market's reaction to Trump's remarks was evident on Monday afternoon, with CVS shares dropping by 3%, Cigna's by 1.2%, and UnitedHealth's by 2.8%. These movements highlight the increasing political and regulatory pressures PBMs are facing as lawmakers from both major parties push for reforms in the pharmaceutical industry.