Glass-Steagall for Healthcare: What the Break Up Big Medicine Act Actually Means for Founders and Investors

Table of Contents

- The Setup: What Is This Bill and Why Does It Matter Right Now

- How We Got Here: A Very Brief, Very Grim History of Vertical Integration

- What the Bill Actually Does (In Plain English)

- The Divestiture Math: Assets Looking for Owners

- Opportunity Map Part 1: The Independent Provider Stack

- Opportunity Map Part 2: PBM Alternatives and Drug Distribution

- Opportunity Map Part 3: MSO Infrastructure

- What the Bears Get Right

- How to Think About Timing and Passage Probability

- Closing Take

Abstract

Introduced February 10, 2026 by Sens. Elizabeth Warren (D-MA) and Josh Hawley (R-MO), the Break Up Big Medicine Act is the most significant structural health policy proposal since the ACA. It is explicitly modeled on the Glass-Steagall Act, which separated commercial and investment banking after the 1929 crash.

Key provisions:

- Prohibits common ownership of a medical provider or MSO and an insurer or PBM

- Prohibits wholesale drug distributors (think McKesson, Cencora, Cardinal Health) from owning medical provider organizations

- One-year compliance window for violations

- Automatic disgorgement of profits and forced asset sales for non-compliance

- FTC, DOJ, HHS, state AGs, and private citizens all have standing to sue

- FTC and DOJ can review and block future actions that would recreate banned structures

Companies immediately affected: UnitedHealth Group (owns Optum, 2,000+ provider orgs, 10% of US physician workforce), CVS Health (Aetna, Caremark, Oak Street), Cigna/Evernorth (Express Scripts), Elevance Health (Carelon), McKesson, Cencora, Cardinal Health.

Scale of concentrated market power:

- Three PBMs process 79-80% of all US prescription drug claims for ~270M Americans

- Three drug wholesalers control 98% of US drug distribution

- Nearly 80% of US physicians now work for a corporate parent

- ~4,000 independent pharmacies have closed since 2019

- Healthcare spending approaching 20% of GDP, over $14,500/person/year

- FTC found Big Three PBMs paid affiliated pharmacies up to 7,736% more than unaffiliated competitors

- UnitedHealth pays affiliated providers 17% more on average, up to 61% more in markets where it holds at least 25% share

Bipartisan momentum: Warren-Hawley previously teamed up on PBM legislation in 2024. The bill has House co-sponsors across both parties including a physician (Murphy, R-NC) and a pharmacist (Harshbarger, R-TN). New PBM regulations were included in the recent appropriations package signed by President Trump. As of January 2026, over 77,000 Americans have signed onto the Break Up Big Medicine initiative.

Investment thesis in brief: Even if this bill does not pass in its current form, it is already reshaping the competitive landscape for health tech. The arc of regulation is bending toward structural separation, and the assets being shed or stranded create multi-billion dollar whitespace for founders and capital.

The Setup: What Is This Bill and Why Does It Matter Right Now

There is something almost funny about Elizabeth Warren and Josh Hawley teaming up on anything. These two senators occupy basically opposite corners of the American political universe. Warren has spent her career going after Wall Street; Hawley built his brand by going after Big Tech. The fact that they found each other on healthcare should tell investors something important: the political risk calculus on vertical integration in health has flipped. When the populist right and the progressive left converge, the corporate center gets squeezed. That is not a partisan observation, it is just how legislative momentum works.

The Break Up Big Medicine Act dropped on February 10, 2026, and the concept it rests on is dead simple. One company should not be on both the payer side and the provider side of the same healthcare transaction. The bill draws an explicit parallel to Glass-Steagall, the 1932 Depression-era law that forced commercial banks to separate from investment banking. The analogy is more apt than it sounds. In both cases, you had giant institutions that were essentially judging their own homework, self-dealing through affiliated entities, gaming regulations designed to protect the public, and doing it all at scale under a veneer of market efficiency. The banking sector did not fix that voluntarily, and healthcare will not either.

The sheer scale of what these companies have assembled is worth sitting with for a second. UnitedHealth Group is simultaneously the country’s largest insurer, its largest private physician employer, its largest claims clearinghouse (via Change Healthcare), and the third-largest PBM through Optum Rx. It has contractual or employment ties to roughly 10% of the entire US physician workforce. CVS owns Aetna, Caremark, and now runs Oak Street Health, a primary care chain. Cigna’s Evernorth division houses Express Scripts, Accredo specialty pharmacy, and behavioral health services. Together, Caremark, OptumRx, and Express Scripts process somewhere around 79-80% of all US prescription drug claims for approximately 270 million Americans. On the distribution side, McKesson, Cencora, and Cardinal Health collectively control 98% of drug distribution in this country, and McKesson has quietly become the largest owner of community oncology clinics in the US while also being the distributor shipping drugs to those same clinics.

These are not coincidences or organic outcomes of competitive markets. They are the product of roughly two decades of acquisitions that regulators mostly waved through, and the resulting conflict of interest is structural, not incidental. When you own the insurer, the PBM, the pharmacy, and the doctor’s office, you are not a healthcare company, you are a toll booth at every single intersection of the patient journey.

How We Got Here: A Very Brief, Very Grim History of Vertical Integration