(Reuters) – Shares of health insurers that operate pharmacy benefit managers fell on Monday after newly-elected U.S. President Donald Trump called them middlemen who drive up costs and said he plans to eliminate their role.
CVS Health (NYSE:)’s Caremark, Cigna (NYSE:)’s Express Scripts and UnitedHealth Group (NYSE:)’s Optum control most of the U.S. pharmacy benefits market, with their parent companies also operating health insurance and pharmacy businesses.
Pharmacy benefits managers negotiate drug costs with pharmacies and drug manufacturers and help prepare drug coverage lists for health plans, usually on behalf of employers and the government. They reimburse pharmacies directly for prescription drugs included under their agreed terms.
“The horrible middleman who, quite frankly, makes more money than the drug companies, and they do nothing other than be a middleman,” Trump said Monday at a news conference at his Mar-a-Lago club in Palm. Beach, Florida.
“I don’t know who these middlemen are, but they are rich,” he said.
Referring to his dinner earlier this month with key drug company executives Pfizer (NYSE:) and Eli Lilly (NYSE:), as well as the industry lobbying group PhRMA, Trump said he spent much of it talking about the high cost of drugs and how the US pays much more than other countries.
“We’re going to cut out the middleman. We are going to lower drug costs to levels no one has ever seen before,” Trump said.
Shares of CVS fell 5.35% to $46.73, Cigna fell 2.6% to $274.63, while UnitedHealth fell 3.54% to $502.07 in afternoon trading.
“CVS is using open market competition to fight back against pharmaceutical price increases, and we are proud of our continued work to make prescription drugs more affordable in the United States,” a CVS spokesperson said, adding adding that the company welcomes the support from the federal government. state officials to discuss its value.
“Any policy that limits the use of bargaining tools (pharmacy benefits manager) would leave American patients, taxpayers and businesses at the mercy of the prices that drug manufacturers set.”
ExpressScripts and Optum were not immediately available for comment.
Pharmacy benefits managers came under a House Oversight Committee investigation for their influence over prescription drug prices.
The Federal Trade Commission filed a lawsuit in September, accusing Caremark, Optum and Express Scripts of artificially inflating their profits by unfairly limiting access to cheaper insulin drugs and steering patients toward more expensive options.
