MW UnitedHealth now has to fight the government on another front. The stock is sinking.

By Tomi Kilgore

The health insurer reportedly is being investigated over its Medicare billing practices, while it continues to face a backlash against its role in high drug pricing

Shares of UnitedHealth Group Inc. were in danger of suffering their worst day in five years in early trading Friday, as the health insurer and so-called drug middleman now has yet another fight with the government on its hands.

The company $(UNH)$ has faced public and government backlash over its practices, which have been blamed for high rates of coverage denial and high costs of healthcare.

Wall Street started to take note of those issues in early December, as the stock tumbled following the murder of Brian Thompson, the chief executive of the company's health-benefits unit, and as Donald Trump, president-elect at the time, was vowing to "knock out" drug middlemen.

And on Friday, the Wall Street Journal reported that the Department of Justice has launched a civil investigation into UnitedHealth's Medicare billing practices.

The stock was down 11.3% in premarket trading. That put it on track to open at a 10-month low and to suffer its biggest one-day selloff since it plunged 17.3% on March 16, 2020.

The implied price decline ahead of the open would slash roughly 350 points off the Dow Jones Industrial Average's DJIA price. Dow futures (YM00) were down 220 points in recent trading.

The Wall Street Journal said the Medicare billing investigation is separate from a Justice Department antitrust probe that it reported on last year regarding UnitedHealth's network of doctor groups. In addition, the department has sued to block UnitedHealth's $3.3 billion of Amedisys Inc. $(AMED)$, saying the deal would hinder home health and hospice services.

UnitedHealth's Optum business is a pharmacy benefit manager, or PBM, a business category often referred to as a drug middleman.

Besides the criticism from Trump, now back in the White House, PBMs are under fire from a bill introduced by Republican Sen. Josh Hawley and Democratic Sen. Elizabeth Warren that looks to prevent PBMs from owning pharmacies, and from driving up prescription costs.

But that's not all. The Federal Trade Commission said earlier this year that PBMs engaged in "significant markups" in drug prices over what they cost, in some cases by "thousands of percent."

UnitedHealth has argued, however, that higher drug prices are the fault of the drug manufacturers, not the PBMs. Chief Executive Andrew Witty said PBMs actually play a "vital role" in holding down drug prices.

See: UnitedHealth fights back: Blame drug makers for high costs, not the 'middlemen.'

UnitedHealth's stock had already dropped 15.9% over the past three months through Thursday, while the Health Care Select Sector SPDR ETF XLV has gained 2.2% and the Dow, of which UnitedHealth has been a member since 2012, has tacked on 0.7%.

-Tomi Kilgore

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February 21, 2025 09:14 ET (14:14 GMT)

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