Health care middlemen surge on rebate rule death

Source: FactSet; Chart: Axios Visuals

President Trump's decision to withdraw the rule that would've overhauled behind-the-scenes drug rebates led to huge stock gains yesterday for health insurance companies and pharmacy benefit managers, which have suffered since the rule was first proposed in January.

The big picture: The health care industry's largest middlemen dodged a giant bullet since rebates are an important part of their businesses. But they are not out of danger, as states and Congress are working to change how they influence the price of drugs.

Driving the news: Cigna, which recently bought Express Scripts for $67 billion, surged the most of any health insurer with a 9% boost in its stock price Thursday.

  • Anthem, Humana, CVS and UnitedHealth Group all picked up a lot of ground as well.

Between the lines: The rebate rule raised fears that drugmakers would engage in "tacit collusion," as Northwestern University health economist Craig Garthwaite recently wrote.

  • That plus the imminent threat health insurers and PBMs would raise drug premiums allowed the industry to escape any changes to a system that many believe is flawed.

Yes, but: PBMs have already faced new state regulations and still could run up against seismic changes at the federal level.

  • A new Senate bill would eliminate the practice of "spread pricing" and would require every rebate dollar to flow back to employers.