Pharmacy and health insurance stocks jumped on Thursday after the White House announced it would scrap its drug rebate plan.
The proposal was part of the Trump administration’s efforts to reduce drug costs. If implemented, the rebate rule would’ve prevented pharmacy benefit managers from profiting on deals made between drug companies and insurers.
Administration officials and Health and Human Services Secretary Alex Azar disagreed on whether the rebate rule would be worth the approximately $180 billion it would cost the government over a decade.
The decision spares PBMs from having a major chunk of their revenues taken away.
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CVS, Cigna, and other major players in the pharmacy benefits management space rose in surged on Thursday after the Trump administration said it will abandon its effort to eliminate rebates from government drug plans.
The now-scrapped proposal would have banned PBMs — or intermediaries who negotiate between drug manufacturers and insurance plans — from collecting portions of drug rebates for themselves as profit. PBMs would pass rebates to patients covered by Medicare and Medicaid and find a different way to increase revenue.
The rebate rule served as a centerpiece for the …read more
Source:: Businessinsider – Finance