Health care stocks decline as lawmakers and patients advocate for modifications to their operations.

• On Wednesday, the stock prices of major healthcare companies dropped by almost 5% due to worries about possible alterations to their intricate business operations.
• Three of the largest private health insurers and pharmacy benefit managers in the US are UnitedHealth Group, Cigna, and CVS Health.
• On Wednesday, the stock reaction seemed to be linked to a new bipartisan law aimed at splitting up pharmacy benefit managers.

On Wednesday, major health-care companies' shares dropped by up to 5% due to concerns about potential changes to their business models resulting from pressure from lawmakers and patients.

In early afternoon trading, the three largest private health insurers and drug supply chain middlemen called pharmacy benefit managers (PBMs) in the US saw their shares decline by at least 4.8%. These companies, which also own pharmacy businesses, include , , and .

The new bipartisan legislation aimed at breaking up PBMs was first reported by the Wall Street Journal, which has faced years-long scrutiny from Congress and the Federal Trade Commission over allegations they inflate drug costs for patients to boost their profits.

The fatal shooting of Brian Thompson, the CEO of UnitedHealth Group's insurance arm, has led to increased public criticism of insurance companies and their practices, causing health stocks to fall.

Sens. Elizabeth Warren and Josh Hawley have proposed a Senate bill that requires health insurers or PBMs to divest their pharmacy businesses within three years. The Journal reported that a companion bill will be introduced in the House on Wednesday.

"Warren's new bipartisan bill aims to address the conflicts of interest held by PBMs, which have manipulated the market to increase drug costs, deceive employers, and drive small pharmacies out of business."

The release stated that the ownership of both PBMs and pharmacies by healthcare companies creates a "gross conflict of interest that benefits these companies at the expense of patients and independent pharmacies."

The three largest Pharmacy Benefit Managers (PBMs) in the US, namely Optum Rx from UnitedHealth Group, Caremark from CVS Health, and Express Scripts from Cigna, are all linked to health insurers. These PBMs collectively manage approximately 80% of the country's prescription drugs.

In the U.S., PBMs play a crucial role in the drug supply chain, acting as intermediaries between drug manufacturers and insurers, large employers, and federal health plans. They negotiate rebates on behalf of these entities and compile formularies, which outline the medications that are covered by insurance and compensate pharmacies for prescriptions.

The FTC has been investigating PBMs since 2022.

— CNBC's Bertha Coombs contributed to this report