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Healthcare Stocks Drop Amid Push for Legislative Changes to Business Models

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Shares of major healthcare companies, including UnitedHealth Group, Cigna, and CVS Health, dropped by up to 5% on Wednesday as concerns mounted over new legislation and public backlash that could disrupt their business operations. These companies, which are key players in the private health insurance sector and pharmaceutical supply chain, also face increasing pressure from lawmakers and patients to change their business practices.

The decline in stock prices follows the introduction of bipartisan legislation aimed at breaking up pharmacy benefit managers (PBMs), which are companies that act as intermediaries between insurers, pharmacies, and drug manufacturers. The legislation, first reported by The Wall Street Journal, targets the growing scrutiny PBMs have faced for inflating drug prices to boost profits, a practice that has drawn the attention of both Congress and the Federal Trade Commission (FTC).

Shares of UnitedHealth Group, Cigna, and CVS Health, which also own pharmacy businesses, all closed down at least 5% following the news. This stock movement comes at a time when insurance companies are already under public scrutiny, particularly after the tragic shooting of Brian Thompson, the CEO of UnitedHealth Group’s insurance arm, last week, which had already caused a dip in healthcare stocks.

The new Senate bill, backed by Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.), proposes that companies owning both health insurers and PBMs divest their pharmacy operations within three years. According to The Wall Street Journal, a companion bill is also expected to be introduced in the House.

Warren criticized PBMs for driving up drug costs and harming small pharmacies. “My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen,” she said, emphasizing the negative impact PBMs have on both patients and independent pharmacies.

The largest PBMs in the U.S., including Optum Rx (UnitedHealth), Caremark (CVS), and Express Scripts (Cigna), collectively manage around 80% of the country’s prescriptions, according to the FTC. These companies play a central role in negotiating drug prices and administering insurance formularies, creating potential conflicts of interest when they also own pharmacies.

 

Understanding Daylight Saving Time and Its Ongoing Debate

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Daylight saving time (DST) is a long-standing practice in North America, impacting nearly 400 million people. Originating over a century ago, it involves setting clocks forward an hour in spring and back in autumn. However, public and legislative scrutiny around DST has increased in recent years, prompting reconsideration of its place in modern life.

WHEN DOES DAYLIGHT SAVING TIME OCCUR?

In the U.S. and several other countries, DST ends annually on the first Sunday in November at 2 a.m. local time, granting an extra hour of sleep as clocks “fall back.” This shift makes mornings brighter but causes earlier sunsets. The U.K. and other European nations also observe DST, though they follow slightly different schedules. DST in the U.S. runs from the second Sunday in March to the first Sunday in November, while in Europe it spans from the last Sunday in March to the last Sunday in October.

The Winter Solstice

In 2024, the shortest day will be December 21, marking the winter solstice, when daylight hours reach their minimum. In northern latitudes, daylight is extremely limited, with regions near the North Pole in full darkness, while areas farther south still enjoy over 10 hours of daylight.

THE HISTORY AND PURPOSE OF DAYLIGHT SAVING TIME

DST traces its roots back to the late 19th century when New Zealand entomologist George Hudson suggested adjusting clocks to extend daylight hours for post-work activities. Though slow to catch on, DST gained momentum during World War I as a fuel-saving measure. Germany adopted DST in 1916, and the United States followed in 1918. Various modifications occurred before the U.S. standardized DST in 1966 through the Uniform Time Act, allowing states to opt out of DST but not to adopt it permanently.

CONTROVERSIES SURROUNDING DAYLIGHT SAVING TIME

Despite popular belief, DST was not introduced for the benefit of farmers, who generally find the practice disruptive. The original goal—energy conservation—has also come under question, as recent studies indicate minimal energy savings associated with DST. Additionally, research shows potential health risks linked to DST, such as increased heart attacks, strokes, and traffic accidents immediately following the spring shift. A 2023 poll by YouGov revealed that 62% of Americans support ending the biannual clock change, though opinions vary on whether permanent DST or standard time is preferable.

DO ALL U.S. STATES OBSERVE DST?

Not all states observe DST. Hawaii and most of Arizona, except the Navajo Nation, follow standard time year-round. Additionally, U.S. territories such as American Samoa, Guam, Puerto Rico, the Northern Mariana Islands, and the U.S. Virgin Islands do not observe DST. While 19 states have passed measures to adopt permanent DST if allowed by Congress, current federal restrictions prevent permanent DST.

IS THE U.S. MOVING TOWARD PERMANENT DAYLIGHT SAVING TIME?

While the U.S. is not set to end DST immediately, federal legislation called the Sunshine Protection Act proposes making DST permanent. This bipartisan bill passed the Senate in 2022 but stalled in the House over disagreement about permanent standard time versus DST. Reintroduced in 2023, the bill is currently under review by the Committee on Commerce, Science, and Transportation and must pass both chambers before the President can sign it into law.