Think there is more behind the stock drop?
Stocks from UnitedHealth Group, Cigna, and CVS Health dropped 5% following the assassination of CEO Brian Thompson and a new bill that seeks to eliminate pharmacy benefit managers (PBMs), CNBC reported.
The three companies operate as the nation’s largest private health insurers and drug supply chain middlemen. They also own pharmacy businesses. The stock drop is being labeled as a response to a new bipartisan bill targeting the break up of PBMs after facing decades-long backlash from lawmakers and the Federal Trade Commission (FTC) due to allegations they cause an increase of drug costs for patients to boost their profits.
A Senate bill, sponsored by Massachusetts’ Democratic Sen. Elizabeth Warren and Republican Sen. Josh Hawley of Missouri, forces companies that own PBMs to divest their pharmacy businesses within three years. In a statement, Warren said the legislation would “untangle” certain conflicts of interest, such as UnitedHealth Group’s OptumRx, CVS Health’s Caremark, and Cigna’s Express Scripts, which are either owned by or connected to health insurers. “PBMs have manipulated the market to enrich themselves—hiking up drug costs, cheating employers, and driving small pharmacies out of business,” the Senator said.
“My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen.”
Fellow insurers like Humana and Centene also took hits in their stock, and had a 3% decline. Healthcare equity strategist for Mizuho Financial Group, Jared Holz, thinks the drop is a response to “renewed rhetoric” surrounding insurance companies. “I think the response investors have had is, ‘Do we want to own this category of stocks if there’s going to be this now renewed negative focus on the industry?’” Holz said.
RELATED CONTENT: UnitedHealth CEO Killing Forces Healthcare Insurance Industry To Secure Its Company Leaders
Source: Black Enterprise
