Health Insurers' Shares Drop Following Trump's Comments

(Reuters) – Shares of health insurers operating pharmacy benefit managers fell on Monday after U.S. President-elect Donald Trump criticized their role as middlemen driving up costs and announced plans to eliminate it.

CVS Health (NYSE:CVS)'s Caremark, Cigna (NYSE:CI)'s Express Scripts, and UnitedHealth Group (NYSE:UNH)'s Optum dominate the U.S. pharmacy benefit market, while also operating health insurance and pharmacy services.

Pharmacy benefit managers (PBMs) negotiate drug costs with pharmacies and manufacturers, assist in compiling drug coverage lists for health plans, and directly reimburse pharmacies for prescription drugs under their agreements.

Trump stated at a news conference, "The horrible middleman that makes more money, frankly, than the drug companies, and they don't do anything except they're a middleman." He expressed concerns over high drug costs in the U.S. compared to other countries, stating, "We're going to knock out the middleman. We're going to get drug costs down at levels that nobody has ever seen before."

Following Trump's comments, CVS shares fell 5.35% to $46.73, Cigna dropped 2.6% to $274.63, and UnitedHealth declined 3.54% to $502.07 in afternoon trading.

A CVS spokesperson defended the company, saying, "CVS leverages free-market competition to fight back against pharma price gouging. Any policy limiting PBM negotiating tools would leave American patients, taxpayers, and businesses at drugmakers' mercy."

Neither Express Scripts nor Optum provided immediate comments. PBMs have come under scrutiny from the House Oversight Committee for their effect on prescription drug pricing, and the Federal Trade Commission has filed a lawsuit against Caremark, Optum, and Express Scripts for allegedly inflating profits by restricting access to affordable insulin and directing patients to pricier alternatives.