By Josh Nathan-Kazis
A year-end federal spending bill unveiled late Tuesday by congressional leaders includes proposals that could have deep impacts on the pharmacy benefit managers, but shares of the companies that own the largest PBMs were bouncing higher on Wednesday morning.
PBMs, which negotiate with drugmakers and pharmacies on behalf of insurers, have come in for increasing scrutiny in recent years for their role as middlemen in the healthcare system.
The industry has been the target of recent investigations by Congress and by the Federal Trade Commission, and earlier this week was the subject of a broadside by President-elect Donald Trump.
"We're gonna knock out the middleman," Trump said Monday at a press conference at Mar-a-Lago. "I don't know who these middlemen are, but they are rich as hell. And we're going to knock out the middleman and we're going to get drug costs down."
Trump's comments echoed attacks by the drug industry on the PBMs, and he said he had discussed the issue with top pharmaceutical executives at a recent dinner.
The reforms in the spending bill would, among other things, require PBMs to pass through all the rebates they receive from drugmakers to the employers who pay for employer-sponsored health plans.
The PBM trade organization, called the Pharmaceutical Care Management Association, said Wednesday that it opposed the changes that would be imposed by the spending bill.
"The inclusion of costly, unvetted health care provisions in the released text of the year-end spending package would be disastrous for America's employers, patients, families, and taxpayers," the group said.
Analysts, however, seemed unbothered. "While the PBM provisions may concern investors," Raymond James healthcare policy analyst Chris Meekins wrote in a note to investors, the language of the bill "will give PBMs plenty of time and capacity to readjust business practices. This should not lead to a consequential impact on earnings."
The three largest PBMs are owned by the healthcare services giants UnitedHealth Group, Cigna, and CVS Health. Shares of UnitedHealth, which have seen significant volatility in recent weeks, were up 3% on Wednesday. CVS shares were up 4.4%, while Cigna shares were up 5.3%. The S&P 500 was up 0.3%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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(END) Dow Jones Newswires
December 18, 2024 11:35 ET (16:35 GMT)
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