What’s the news: A new AMA analysis shows that concentration in U.S. pharmacy benefit manager (PBM) markets grew even worse over a two-year period. In all, 94% of PBM markets were considered “highly concentrated” in 2024, according to federal antitrust guideline thresholds. That’s up from 82% in 2022.
The researchers behind the AMA Policy Research Perspectives report—“Competition in pharmacy benefit manager markets and vertical integration with insurers: 2026 Update” (PDF)—also found that the nation’s largest four PBMs together held a 75% share of the national-level PBM market in 2024, up from 70% in 2022.
“Competitive PBM and prescription drug plan markets help patients get the medications they need at a fair price,” said AMA President Willie Underwood III, MD, MSc, MPH. “But our analysis shows that a small number of PBMs account for a growing share of the market, while most local PBM markets remain highly concentrated and most prescription drug benefits are managed by vertically integrated insurers and PBMs. These trends warrant closer scrutiny, greater transparency and stronger accountability to ensure PBM markets serve patients rather than reinforce the market power of large healthcare companies.”
AMA researchers analyzed prescription-drug plan enrollment data from 2022 and 2024 to produce a snapshot of PBM market concentration, discover national-level market share of the 10 largest PBMs and provide a measure of the share of commercial and Medicare Part D prescription drug plan enrollees where the insurer and PBM are vertically integrated. That phenomenon occurs when a single parent company or conglomerate owns both the insurer and the PBM.
The AMA research shows that these were the four largest PBMs based on national market share in 2024 and that this is their national market share:
- OptumRx—23%, up from 21% in 2022.
- Express Scripts—23%, compared with 17%.
- CVS/Caremark—18%, down from 21% share.
- Prime Therapeutics—11%, an increase from 10%.
The AMA analysis also found that there was significant vertical integration in 2024, with each of the 10 largest PBMs sharing ownership with health insurers. Here are some other key findings that physicians and policymakers should know:
- Nationally, 69% of those with commercial or Medicare Part D prescription-drug coverage were enrolled with an insurer that was vertically integrated with a PBM.
- Part D had a higher share of enrollees vertically integrated when compared to commercial insurance—73% versus 67%.
- Locally, an average of 67% of those with prescription-drug insurance were covered by an insurer that shared ownership with a PBM.
- There were wide variations between local regions when it came to vertical integration: Some had very little vertical integration between insurers and PBMs, yet others were almost entirely vertically integrated.
Why it’s important for patients and physicians: The AMA findings add to recent research indicating that health insurer acquisition of PBMs can harm consumers by increasing costs, limiting competition and creating incentives to favor the insurer's own interests. Insurer acquisition of PBMs was shown to be associated with higher premiums for competing health plans, with no evidence that savings from the acquisition were passed through to enrollees as lower premiums. The Federal Trade Commission has also raised concerns about how PBM concentration and vertical integration can affect independent pharmacies and patients’ access to prescription drugs
Unchecked power in the PBM industry puts patients at risk of harm, as AMA Immediate Past President Bobby Mukkamala, MD, explained in a Leadership Viewpoints column published last year.
“While drug manufactures are an easy target for patients and policymakers concerned about out-of-control drug prices, the truth is that pharmacy benefit managers (PBMs) operating with little transparency or accountability share the blame,” he wrote. “As administrators of prescription-drug programs for government and the nation’s largest commercial health plans, PBMs have long played an outsized— and little known—role in determining the costs our patients pay for their medications.”
The opaque nature of PBM negotiations and operations make it “exceedingly difficult” for physicians to determine what treatments a particular payer at the point-of-care prefers, what their patients will face when it comes to cost-sharing and whether medications they prescribe to a patient are subject to step therapy or other utilization requirements,” the AMA wrote in a letter lobbying Congress on the topic last year.
Moreover, consumers want change, according to a PSG survey of 250 benefits leaders across employers, health plans, health systems and unions. Nearly two-thirds rated their desire for PBM industry change at seven or higher out of 10.Overall PBM satisfaction held at 7.2 out of 10, close to its lowest mark in a decade and down from 8.2 in 2021.
Learn more: Patients and physicians made tangible progress on reform when Congress included some PBM reforms in its budget deal earlier this year.
The changes are aimed at enhancing transparency, curbing abusive Medicare drug rebate practices and strengthening federal oversight against anticompetitive behavior. Beginning in 2028, PBMs are set to be paid based on a flat fee rather than the drug’s sticker price for drugs covered under Medicare. The change seeks to discourage PBMs from pushing a higher-priced drug over less expensive options.
The Congressional Budget Office estimated the reforms would save the federal government about $2 billion over 10 years. Most of those savings would come from transparency requirements.
The AMA has for years supported and pushed for greater transparency, accountability, and fairness to the PBM industry, including through its TruthinRx initiative.
Find out more about what PBMs are and why the reform is needed. Learn how the AMA’s research adds to reports from the Federal Trade Commission and the House Committee on Oversight and Accountability that have shown that PBM consolidation has led to reduced competition and increased pricing.
