Stopgap Bill on Healthcare Provisions

(Reuters) – Healthcare provisions in a stopgap bill unveiled by top Republicans and Democrats are likely manageable for companies like CVS Health (NYSE:CVS) and UnitedHealth, according to Wall Street analysts on Wednesday.

The stopgap measure, aimed at averting a partial government shutdown, includes a healthcare package that prohibits these companies from deriving remuneration based on a drug's Medicare list price.

Role of Pharmacy Benefit Managers

Pharmacy benefit managers (PBMs) act as intermediaries between drugmakers and consumers. They negotiate volume discounts, or rebates, and fees with drugmakers, create lists of medications covered by insurance, and reimburse pharmacies for prescriptions.

Analyst Ann Hynes from Mizuho (NYSE:MFG) stated, "It is important to note there is no call for the total elimination of rebates in the legislation and the provisions do not go into effect until 2028, which provides time for the industry to renegotiate and restructure contracts."

Scrutiny and Market Impact

Companies have faced increased scrutiny from lawmakers over their role in high drug prices in the U.S. Shares fell earlier this week after President-elect Donald Trump blamed PBMs for driving up costs and stated he would eliminate their role.

CVS' Caremark, Cigna (NYSE:CI)'s Express Scripts, and UnitedHealth Group (NYSE:UNH)'s Optum control the majority of U.S. pharmacy benefit management, while their parent companies also operate health insurance businesses.

Analyst Michael Wiederhorn from Oppenheimer pointed out that while the PBM provisions are a win for big pharma, they may not achieve the main objective of lowering drug costs. He added, "These changes will require further evolution of the model, but we believe PBMs still have a place in the healthcare flywheel."