A short seller tweeted that Trump could crush a healthcare company and now the stock's tanking

Andrew LeftBloombergAndrew Left, founder of Citron Research.

On Thursday short selling firm Citron Research tweeted that Express Scripts, a pharmacy benefits manager, might be targeted during the Trump administration.

“When @realdonaldtrump tells $ESRX ” you’re fired” heads will roll. The culprit behind pharmaceutical price gouging. Price Target $45,” the firm, which was founded by investor Andrew Left, tweeted.

The stock is now down around 7%. In an interview with Time, President-elect Trump said that he thought that drug price gauging across the pharmaceutical industry was wrong, but gave little detail about what he would do about the practice.

And that’s where Express Scripts come in.

Pharmacy benefit managers (PBMs) manage lists called formularies for insurance companies. Those lists determine which drugs insurers will and will not pay for and how much they will pay. PBMs also collect a rebate from drug companies which they may or may not pass on to their clients. Those rebates are secret, as are the fees that insurers pay to the PBMs.

That lack of transparency has led critics to believe that PBMs contribute to high drug costs by taking fat rebates for drugs without passing them on to customers, among other shady practices. They have some powerful enemies on Capitol Hill too — Republican Congressmen Earl “Buddy Carter and Doug Collins, both of whom are from Georgia.

Insurer Anthem, one of Express Scripts’ largest clients, is suing the company for allegedly self-dealing. A number of pharmacies are also suing the company for allegedly diverting prescriptions from them, to Express Scripts’ own in-house mail order pharmacy without permission. Federal investigators in New York and Massachusetts are also looking into the company.

$ESRX is Philidor of the pharma industry,” Citron also tweeted, referring to the secret pharmacy that was discovered inside battered drug company Valeant Pharmaceuticals last year. “@therealdonaldtrump promises to fix drug pricing? Two words: EXPRESS SCRIPTS”

Three PBMs dominate the market, taking 80% of share. Of those three, Express Scripts is the largest and the only one that is not part of another company. The other two large PBMs are CVS Caremark and United Health’s OptumRx.

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