Insurer Stocks Fall After Trump’s Criticism of Pharmacy Benefit Managers

Trump’s comments targeted PBMs, who negotiate drug prices between manufacturers, pharmacies, and insurers.

Shares of major health insurers fell sharply on Monday after President-elect Donald Trump criticized pharmacy benefit managers (PBMs) and vowed to eliminate their role in the US healthcare system, citing their contribution to high drug costs.

Trump’s comments targeted PBMs, who negotiate drug prices between manufacturers, pharmacies, and insurers.

CVS Health, Cigna, and UnitedHealth are some of the major players in the PBM market through their subsidiaries Caremark, Express Scripts, and Optum, respectively.

These companies manage prescription drug programs for millions of Americans, negotiating prices and developing formularies for health plans. The PBMs’ influence in the healthcare system has drawn criticism for the high costs associated with prescription drugs.

At a news conference at his Mar-a-Lago club in Palm Beach, Florida, Trump took aim at PBMs, calling them “middlemen” who “make more money than the drug companies” without adding value to the system. “They don’t do anything except they’re a middleman,” Trump said, emphasizing their role in inflating drug prices. “I don’t know who these middlemen are, but they are rich.”

Trump’s remarks, which were made during a broader discussion on drug pricing and US pharmaceutical policy, promised to lower costs significantly by removing the role of these middlemen. “We’re going to knock out the middleman. We’re going to get drug costs down at levels that nobody has ever seen before,” he said.

The backlash to Trump’s comments was immediate in the stock market, with shares of health insurers and PBM-related companies experiencing notable declines. CVS Health’s stock dropped 5.35% to $46.73, Cigna’s stock fell 2.6% to $274.63, and UnitedHealth’s stock declined 3.54% to $502.07.

Industry Response to Criticism

In response to Trump’s statement, CVS Health defended the role of PBMs, highlighting their efforts to drive down drug prices and ensure affordability for patients. A spokesperson for the company emphasized CVS’s commitment to free-market competition, saying, “CVS leverages free-market competition to fight back against pharma price gouging, and we are proud of our continued work to make prescription drugs more affordable in the United States.”

The spokesperson also warned that any policy restricting the use of PBM negotiating tools could negatively impact patients. “Any policy that limits the use of pharmacy benefit manager negotiating tools would leave American patients, taxpayers, and businesses at the mercy of the prices drugmakers set,” the spokesperson said.

Meanwhile, Express Scripts and Optum have yet to respond to requests for comment.

Ongoing Investigations into PBM Practices

Trump’s comments on PBMs come amid ongoing scrutiny of their role in U.S. drug pricing. The Federal Trade Commission (FTC) filed a lawsuit in September accusing Caremark, Optum, and Express Scripts of artificially inflating profits by restricting access to cheaper insulin drugs and steering patients toward more expensive alternatives.

The House Oversight Committee has also conducted investigations into the influence of PBMs over prescription drug costs.

These developments highlight the growing tension between government regulators, healthcare providers, and pharmaceutical companies over how to control rising drug costs in the US.