By Josh Nathan-Kazis and Elsa Ohlen

The Trump administration's Monday executive order could restructure how Americans buy prescription drugs, pushing them away from insurers and pharmacy-benefit managers and toward cash pay options.

A White House official said on a press call early Monday that a new executive order from President Donald Trump will push drugmakers to sell prescription drugs at low prices directly to patients. The order lays out a list of threatened actions if the drugmakers don't comply.

Investors had been dreading the threatened order that Trump on Sunday night called "one of the most consequential Executive Orders in our Country's history." But it looks like it could be a blessing in disguise for drugmakers, fundamentally restructuring the U.S. drug industry in a way that hurts pharmacy-benefit managers.

Big pharma stocks were rebounding after dropping in the premarket hours. Pfizer shares were up 2.2% after dropping premarket. Eli Lilly shares were flat, while Merck shares were up 4.1%. The SPDR S&P Biotech exchange-traded fund, which tracks the biotech industry, was up 2.8%.

Shares of the insurance giants that own the pharmacy-benefit managers, meanwhile, were falling hard. Cigna Group shares were down 7%, while UnitedHealth Group shares were down 0.5%, and CVS Health shares were down 3.8%.

"We're going to totally cut out the famous middlemen," Trump said during a Monday morning press conference. "We're going to cut out the middlemen and facilitate the direct sale of drugs at the most favored nation price directly to the American citizen."

Analysts had expected Trump to reintroduce a rule from his first term in office that would have set the prices Medicare pays for certain drugs at the lower levels paid in other wealthy nations. That isn't what is happening.

The new order has lots of pieces, but the crux appears to be an unprecedented focus on the direct-to-consumer market, a cash pay option that cuts out insurers and pharmacy-benefit managers.

A White House official said on the call that the Secretary of Health and Human Services will be "directed to facilitate, where appropriate, direct to consumer sales at most favored nation prices" and set "clear targets for price reductions."

The official said those targets would "open a round of negotiations between Health and Human Services and industry, and if adequate progress is not made through the price reduction targets, the Secretary of Health and Human Services will impose most favored nation pricing via rulemaking."

The unexpected focus on the direct-to-consumer market comes as a surprise. Most Americans have medical insurance that covers prescription drugs. Asked about the insurance market, the White House official gave a vague answer.

"We again are looking for price reductions for people across all markets, including commercial insurance and federal payers," the official said. "I have indicated that where appropriate, the President has directed the Secretary of Health and Human Services to facilitate direct-to-consumer sales. However, that's obviously not going to be appropriate in all circumstances. So I mean, there will still be a role for insurance."

Drugmakers have spent considerable political capital attacking the pharmacy-benefit managers, whose rebates they blame for high U.S. drug prices. Drug prices are higher in the U.S. than in other countries, even taking the rebates into account.

Shares of the large insurers that own the pharmacy-benefit managers were dropping early Monday. CVS Health was down 1%, while Cigna Group was down 1.8%. UnitedHealth Group was up 1.7%. Drug distributor shares were falling, too. Cardinal Health was down 0.1%, while McKesson was down 2.7%, and Cencora was down 2.6%.

Hims & Hers Health, meanwhile, which sells mostly generic drugs directly to consumers and recently signed a deal to sell Novo Nordisk's Wegovy, was up 11%.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Elsa Ohlen at elsa.ohlen@barrons.com

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May 12, 2025 10:48 ET (14:48 GMT)

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