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Investing.com -- CVS Health (NYSE:CVS) stock rose 1% on Wednesday after Bloomberg reported that Medicare Pharmacy Benefit Manager (PBM) limits were stripped from the Senate version of the tax bill.
The removal of these limits represents a positive development for CVS Health, which operates one of the largest PBM businesses in the United States through its Caremark division. PBMs act as intermediaries between drug manufacturers, health insurance companies, and pharmacies.
Other healthcare companies also saw gains following the news. UnitedHealth Group (NYSE:UNH) and Cigna (NYSE:CI) shares moved higher as these companies also have significant PBM operations that would have been affected by potential regulatory limits.
According to the report, the bill will also omit previously proposed cuts to Medicare Advantage programs. This omission is particularly beneficial for health insurers with large Medicare Advantage businesses, including Humana (NYSE:HUM).
Medicare Advantage plans, which are privately administered alternatives to traditional Medicare, have been a growing and profitable segment for health insurance companies in recent years.
The healthcare sector has faced regulatory uncertainty regarding potential reforms to drug pricing and healthcare administration. The removal of these provisions from the tax bill reduces some near-term regulatory pressure on companies operating in the PBM and Medicare Advantage spaces.
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