Fact-Checking Trump’s Claims on Pharmacy Benefit Managers: A Look at CVS, CI, UNH, JNJ, ABBV, MRK, and PFE According to Barclays
Description:
Barclays analyst Andrew Mok said that while the existential risk to pharmacy benefit managers is low, President-elect Trump’s comments yesterday point to additional headline risk and greater support for legislation. Trump said he planned to “knock out the middleman” which is the latest in a string of negative headlines that drove PBM-owned stocks Cigna (CI), CVS Health (CVS) and UnitedHealth (UNH) lower, the analyst told investors yesterday in a research note. The firm believes PBMs “are the only market-based check on drug pricing that exists today,” and eliminating the “middleman” would effectively put the government in charge of negotiating drug prices for both private and government-sponsored health plans. Trump, said, “The horrible middleman that makes more money frankly than the drug companies and they don’t do anything except they’re a middleman, we’re going to knock out the middleman.” Barclays fact-checked this and notes the average EBIT margins of the top six U.S. pharmaceutical companies is 37%, nearly 8-10 times PBM margins, which are closer to 3%-5%. Four of the six largest drug manufacturers, Johnson & Johnson (JNJ), AbbVie (ABBV), Merck (MRK), Pfizer (PFE) are estimated to earn more operating profits this year than the “Big Three” PBMs combined, according to Barclays. CVS Health -2.11 (-4.53%) Cigna -8.06 (-2.95%) UnitedHealth -19.06 (-3.83%) Johnson & Johnson +1.65 (+1.15%) AbbVie +2.88 (+1.68%) Merck +0.07 (+0.07%) Pfizer +1.115 (+4.41%)
How Will This Affect Me?
As a consumer, the potential elimination of pharmacy benefit managers could impact you in terms of the negotiation of drug prices for both private and government-sponsored health plans. If the government takes over negotiating drug prices, it could lead to changes in the availability and cost of medications.
How Will This Affect the World?
The potential removal of pharmacy benefit managers could have a significant impact on the healthcare industry worldwide. It could lead to shifts in drug pricing strategies, government involvement in negotiations, and overall accessibility to medications for populations globally.
Conclusion:
In conclusion, Trump’s comments regarding the elimination of pharmacy benefit managers have sparked discussions and concerns within the healthcare and pharmaceutical industries. The impact of such a move could have far-reaching consequences on drug pricing, negotiation strategies, and overall accessibility to medications for individuals and populations. It is essential to closely monitor any developments in this area to understand the full implications of such potential changes.
