Shares of UnitedHealth Group (NYSE: UNH) were pulling back again today on reports that the Senate is working on a bill that would force health insurers like UnitedHealth to divest their pharmacy benefit managers (PBMs) within three years.
As a result, the stock was trading down 5% at 11:44 a.m. ET. Other health insurance stocks, including Cigna and CVS Health, were down on the news as well.
The bill, which was reported by The Wall Street Journal, appears to have bipartisan support, as it was sponsored by Democrat Elizabeth Warren and Republican Josh Hawley. The bill is intended to unwind a key source of bureaucracy in healthcare, as pharmacy benefit managers are companies that act as middlemen in the drug industry, operating prescription drug programs on behalf of insurance companies. There have been previous regulatory efforts to diminish their power.
UnitedHealth, the country’s largest health insurance company, owns one of the largest PBMs, Optum Rx, which in 2023 managed $159 billion in pharmaceutical spending and $63 billion in specialty pharmaceutical spending.
UnitedHealth, one of the most valuable companies in the country at a market cap of around $500 billion, has grown both organically and through acquisitions and is now a sprawling business that covers nearly every aspect of healthcare.
It’s unclear what will come of the new Senate bill, but the bipartisan sponsorship seems like a promising sign.
UnitedHealth’s practices have come under scrutiny since the murder of a top company executive last week. In the wake of his death, social media was filled not with sympathy but with expressions of outrage at UNH and the rest of the insurance industry. Congressman Dean Philips, who represents UNH’s district in Minnesota, also said that Congress must do more to make healthcare work for everyone.
Given the public outcry, we could see more regulation over UNH and its peers over the coming years, but that will depend on the next administration and whether the story remains in the public consciousness.
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