Shares of CVS Health, UnitedHealth Group Plunge After Trump Remarks

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After President-elect Trump criticized pharmacy benefit managers and vowed to remove them, shares of major companies that own these middlemen tumbled, signaling investor fears about potential new regulations and costs.

Key Facts:

– Shares of CVS Health fell as much as 4.3%, UnitedHealth Group dropped up to 3.9%, and Cigna slid about 2.6%.
– Trump labeled the pharmacy benefit managers “the horrible middleman” and pledged to eliminate them.
– Congress may soon change how PBMs are paid, according to pending legislative proposals.
– Industry groups representing these companies warn that reforms could drive costs higher for consumers.
– A bipartisan bill introduced last week could break apart the integrated PBM-pharmacy businesses of large health insurers.

The Rest of The Story:

Following Trump’s meeting with top drugmakers, he openly targeted the role of Pharmacy Benefit Managers (PBMs), pointing directly to these intermediaries as a root cause of higher prescription prices.

Investors reacted quickly, pulling down the stock values of health conglomerates that rely heavily on these middlemen for profits.

In the meantime, lawmakers on both sides of the aisle are introducing measures to either regulate or dismantle these complex arrangements.

The outcome could reshape the drug supply chain, potentially removing what Trump calls the “middleman” and forcing companies to adjust their business models.

While PBM advocates claim this might inflate consumer prices, there’s growing momentum behind efforts to curb or remove these intermediaries.

Commentary:

President-elect Trump has a point: foreign pharmacies often offer the same medications at lower prices because they don’t have long chains of markups.

Stripping away layers of bureaucracy could lower drug costs for American patients.

If the U.S. simplifies its rules, pharmacies might gain freedom to negotiate prices directly, saving patients money and improving access.

By doing so, we could finally see a market-driven reduction in drug prices rather than continuing to shield entrenched middlemen.

The Bottom Line:

With Trump’s sharp criticism rattling PBM-related stocks, the pressure to reform is mounting.

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Whether these changes reduce costs or merely shift them around remains to be seen, but the industry appears headed for a major shakeup.