Shares of pharmacy benefit managers (PBMs) continued to decline on Tuesday after Pfizer CEO Albert Bourla stated that President-elect Donald Trump is “very committed” to reforming drug industry intermediaries.
Bourla’s comments, following similar remarks by Trump on Monday and ongoing criticism from Congress, indicate that PBMs will likely face continued political scrutiny during a second Trump term.
UnitedHealth Group Inc., CVS Health Corp., and Cigna Group saw significant losses after Bourla’s statement. UnitedHealth dropped as much as 4.5%, CVS fell by up to 3.9%, and Cigna slid by as much as 4.1%.
Bourla remarked, “The president has very strong views” on PBMs, adding that Trump “wants transparency” in the system. He further stated, “It seems to me that he is very committed to make this happen.”
The three companies, which control the largest prescription drug intermediaries, also experienced stock declines on Monday after Trump criticized the PBM system during a news conference. Trump referred to PBMs as “the horrible middleman” who “makes more money frankly than the drug companies” without adding value, stating, “We’re going to knock out the middleman.”
PBMs have been criticized by both Republicans and Democrats for driving up medicine costs.
Leerink Partners analysts noted, “PBMs are currently in a negative headline spiral.”
Trump’s comments followed a dinner with leaders from Pfizer, Eli Lilly & Co., and Robert F. Kennedy Jr., his nominee to head the Department of Health and Human Services.
Congress is considering measures to limit PBMs in a year-end spending package that could alter their payment structure, as reported by Bloomberg Government on December 13. The Pharmaceutical Care Management Association, which represents PBM companies, warned that such changes would increase costs.
In a separate development, a bipartisan group of lawmakers introduced a bill last week that would require companies owning insurers or PBMs to divest their pharmacy businesses. If passed, this could disrupt a profitable and expanding segment of health conglomerates.
Leerink analysts cautioned, “Assuming these proposals make it to enactment, it would force some adjustments to business models and profit streams but is far from the most severe potential proposals, such as forced divestitures of owned pharmacies.”
A 2017 analysis by the University of Southern California showed that PBMs typically have smaller profit margins than drug manufacturers.
–With assistance from Angel Adegbesan.
