TOPSHOT - US President Donald Trump signs executive orders in the Oval Office of the White House in Washington, DC, on January 20, 2025. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
In December 2024, former President Donald Trump made comments about Pharmacy Benefit Managers (PBMs), which immediately caused a significant drop in the stock prices of major pharmaceutical middlemen and their affiliated companies. His criticism of these so-called “middlemen” in the healthcare system, including his assertion that they “make more money than the drug companies,” shook the market and drew widespread attention to PBMs’ role in the rising cost of healthcare and prescription drugs.
The impact was swift and clear. Shares in health insurers that rely on PBMs, such as CVS Health, UnitedHealth Group, and Cigna, took a substantial hit. The comments ignited new debates about the role of PBMs in the pharmaceutical supply chain and raised questions about the need for regulatory reform. In this article, we will explore the implications of Trump’s remarks, the structure of PBMs, the market impact on pharmacy middlemen stocks, and the broader conversation around healthcare costs and regulatory changes.
Pharmacy Benefit Managers are intermediaries between health insurers, pharmacies, and drug manufacturers. They negotiate drug prices, manage prescription drug plans, and often administer programs that determine which medications are covered by health insurance policies. PBMs are typically employed by health insurance companies to manage the prescription drug benefit of their plans, and in turn, they control access to certain medications based on price negotiations and formulary structures.
The role of PBMs has been controversial for several reasons. Critics argue that while PBMs have the ability to negotiate lower prices with drug manufacturers, they do so in a way that prioritizes their own profits over the best interests of consumers and health insurers. PBMs can extract rebates from drug manufacturers for including specific drugs on their formularies, sometimes resulting in higher drug prices for patients who rely on these medications. Furthermore, critics contend that PBMs can impose “spread pricing,” where they pay pharmacies one price for a drug and charge insurers a higher price, pocketing the difference.
While PBMs argue that they help reduce drug costs by leveraging their bargaining power, the lack of transparency and the complexity of their pricing structures have led to growing concerns. For years, the Federal Trade Commission (FTC) has investigated PBMs for anti-competitive behavior, including allegations that some PBMs mark up drug prices by over 1,000%, further contributing to inflated healthcare costs. Trump’s comments brought these criticisms to the forefront of public discourse, triggering a market reaction that left investors and stakeholders rethinking their positions.
When Donald Trump made his remarks, stocks in companies associated with PBMs experienced immediate and substantial drops. Leading health insurers that rely on PBMs as part of their business model saw their stock prices fall sharply. For example:
These losses reflect investor concerns that Trump’s comments could lead to increased regulatory scrutiny of PBM practices. If regulators decide to intervene and impose stricter rules on PBMs, it could have a significant impact on the profitability of companies that rely on them. Additionally, the idea of “knocking out the middleman” raised the possibility of potential policy changes that could disrupt the current business model.
These declines were not isolated events. The broader healthcare sector also experienced some turbulence, as the discussion of PBM practices triggered fears about increased regulation and reduced margins for companies that benefit from these middlemen arrangements. As stock prices dropped, analysts and industry experts began to reexamine the role of PBMs in the pharmaceutical supply chain and whether these intermediaries would continue to play a central role going forward.
Trump’s statement about PBMs and their role in the pharmaceutical supply chain hit a nerve for several reasons. For one, Trump’s critique of PBMs was a direct challenge to the established business models of health insurers, pharmacy networks, and pharmaceutical companies that rely heavily on PBMs to manage the complexities of drug pricing.
During his tenure as president, Trump took a strong stance on addressing rising drug prices, making it one of his key policy platforms. Although his administration took some steps to curb drug costs, including efforts to increase transparency and limit the influence of middlemen, his comments about PBMs seemed to suggest that these intermediaries were one of the key reasons why prescription drugs were still so expensive for American consumers. Trump’s rhetoric stoked the fires of public frustration with the healthcare system and added fuel to the ongoing debate about healthcare reform.
His remarks also brought attention to the growing role of direct-to-consumer drug pricing and the possibility of eliminating the need for intermediaries altogether. While many policymakers and healthcare professionals argue that PBMs play an essential role in controlling costs and ensuring access to medications, Trump’s comments suggest that PBMs are simply another layer of inefficiency contributing to the overall cost of care.
Trump’s comments regarding PBMs and their role in drug pricing add fuel to an ongoing debate about healthcare reform in the United States. With prescription drug costs continuing to rise, Americans are looking for solutions to make medications more affordable. While the role of PBMs is just one part of the larger equation, the stock market’s reaction underscores the high stakes of any potential regulatory changes in this area.
The Federal Trade Commission (FTC) has long scrutinized the role of PBMs, noting that they can drive up drug prices through practices such as spread pricing and lack of transparency. In fact, an FTC report published in 2023 revealed that PBMs had inflated prices by as much as 1,000% in some cases, earning $7.3 billion in revenue and $1.4 billion in profits from 2017 to 2022. These findings have spurred calls for greater regulation and more transparency in the way PBMs operate. Trump’s comments could accelerate the conversation around the need for reform, potentially prompting regulatory bodies like the FTC or the Department of Health and Human Services to impose stricter guidelines on the way PBMs do business.
At the same time, the remarks also point to the challenge of balancing regulation with market forces. PBMs argue that they provide significant value by negotiating lower drug prices and managing pharmacy benefits. Without these intermediaries, some experts worry that drug prices could rise even further, as insurers would have to take on additional responsibilities to control costs.
Following Trump’s comments and the subsequent market reaction, several key questions remain about the future of PBMs and health insurers. Will Trump’s rhetoric lead to more regulatory scrutiny of PBMs? Will new laws or executive actions be enacted to limit the influence of middlemen on drug pricing? And what impact will these potential changes have on the profitability of companies like CVS, UnitedHealth, and Cigna?
As of now, the future remains uncertain. The healthcare sector is already facing pressure to reduce drug prices, and further scrutiny of PBMs could be just the beginning of a broader push for reform. While the market has reacted negatively to Trump’s comments, the long-term effects will depend largely on how policymakers respond and whether any concrete changes to PBM regulations are implemented.
Donald Trump’s recent comments regarding PBMs and their role in the pharmaceutical industry have sparked an important conversation about the future of healthcare pricing in the United States. The drop in stocks of major pharmacy middlemen following his remarks reflects the growing uncertainty in the sector. While PBMs have long been integral to the structure of the U.S. healthcare system, their role in driving up drug prices has come under increasing scrutiny, especially as prices for prescription medications continue to rise.
Whether or not Trump’s criticism leads to significant policy changes remains to be seen. However, his remarks highlight the ongoing debate over the role of middlemen in the healthcare industry and the need for transparency and reform to ensure that drug prices become more affordable for consumers. As the conversation continues, both healthcare companies and consumers alike will be closely watching any potential regulatory changes that could reshape the way prescription drugs are priced and delivered in the United States.
Recession & USA Politics: How Economic Downturns Shape Policy & Elections
Vintage and thrift culture is making a strong comeback across the United States. What once…
Cultural Differences Between Urban and Rural America reflect more than just geography. These differences shape…
America’s obsession with true crime is everywhere—on streaming platforms, in podcasts, bookstores, and even in…
American Teen Culture has gone through dramatic changes in the last ten years. From how…
The role of sports in American culture is more than just entertainment. It’s a powerful…
In the past decade, the cultural impact of streaming services on U.S. entertainment has been…