Pharmacy benefit manager stocks dip following Trump's vow to cut drug costs

AI Sentiment: Bearish
Reason: Shares of Pharmacy Benefit Managers (PBMs) fell following President Trump's criticism of their role in high drug prices in the US, signaling a negative sentiment for these companies.

Shares in Pharmacy Benefit Managers (PBMs) took a hit following President Donald Trump's vow to cut prescription drug prices in the United States. PBMs, which are intermediaries between drug manufacturers and drug plan sponsors, were targeted by the President in his bid to lower healthcare costs for Americans.

The President criticized PBMs for being part of the problem in America's high drug prices. He argued that PBMs profited from rebates provided by drug manufacturers, which they did not pass on to consumers. The President's comments signal a significant shift in the government's approach to tackling high drug costs, which traditionally focused on pharmaceutical companies.

Among the PBM companies affected, CVS Health Corp shares fell 3.2%, UnitedHealth Group dropped 1.7%, and Cigna Corp declined 1.1%. The SPDR S&P Pharmaceuticals ETF, which is a measure of the pharmaceutical industry, fell 1.8% following the announcement.

President Trump's comments were part of a broader plan to lower drug prices in America. The plan, dubbed "American Patients First," proposes a number of changes to the pharmaceutical industry. One of the key proposals includes banning the pharmacist 'gag rule,' which prevents pharmacists from telling customers when it would be cheaper to buy medication without insurance.

Despite the negative impact on PBMs, Trump's plan was welcomed by pharmaceutical companies. The President did not propose direct negotiation of drug prices by Medicare, a move that was feared by pharmaceutical companies. Instead, his proposals focus on increasing competition and reducing regulatory burdens to bring down drug prices.

However, critics argue that the President's plan doesn't go far enough. They believe that without direct negotiation of drug prices by Medicare or a similar entity, the plan will have limited impact on reducing drug costs. Furthermore, they argue that focusing on PBMs diverts attention from the role of pharmaceutical companies in high drug prices.

The impact of Trump's vow to cut drug costs is yet to be seen. It's clear, however, that his comments have already sent shockwaves through the PBM industry, and may signal a significant change in the way America tackles high drug prices.