Some of the most difficult conversations we have with our patients begin with, “I cannot afford my medication.” While drug manufacturers 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.
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 AMA’s latest analysis on competition in PBM markets highlights what physicians have long suspected: low competition among PBMs and high vertical integration with insurers. These conditions pose significant risk for patients, many of whom are already struggling to afford the high cost of medication. These are patients I see every day at my small otolaryngology practice in Flint, Michigan—people who already face enormous barriers to getting the care they need or even following a course of treatment when they do.
The AMA’s findings underscore reports by the Federal Trade Commission and U.S. House Committee on Oversight and Accountability that show how a handful of PBMs have accumulated vast power and control, resulting in rising medication costs and lower competition. This is worrisome at a time when several factors, including 25 years of declining Medicare payments to physicians and the recently signed One Big Beautiful Bill Act, are reducing access to care for millions of people and worsening health outcomes.
Just four PBMs had a 67% share of the national market in 2023. OptumRx, CVS Health, Express Scripts and Prime Therapeutics dominate the field. Seventy-nine percent of PBM markets were deemed “highly concentrated” by federal antitrust standards. In other words, competition is low—and patients can pay the price.
Also concerning is the extensive vertical integration between PBMs and insurers. In 2023, 77% of commercial and Medicare Part D beneficiaries were enrolled in a plan where the insurer and PBM were owned by the same parent company. In the Medicare Part D space alone, that number jumps to 88%. Nine of the 10 largest PBMs share ownership with health insurance companies. That means fewer choices for patients, fewer independent checks and balances in the system and increasing opacity in how drug prices are negotiated and passed on—or not passed on—to patients.
Time to shine a light
The AMA has long pushed Congress to create greater transparency and accountability in PBM markets and prohibit PBMs from engaging in opaque practices that are harmful to patients. This is part of a larger effort to shine a light on unfair business practices in pharmaceutical drug pricing and alleviate some of the financial burdens patients face in our costly health systems.
Thankfully, there is bipartisan legislation being considered in Congress, which the AMA supports (PDF), that aims to bring greater transparency, accountability and fairness to the prescription drug supply chain. The PBM Reform Act of 2025 (H.R. 4317) would ban spread pricing in Medicaid and create a transparent reimbursement model to ensure pharmacies are fairly compensated for serving beneficiaries. Importantly, the bill also would sever any ties between PBM compensation and drug costs.
Studies have shown that drug prices in the U.S. can be more than double the cost of identical drugs in other high-income nations, an impetus for the AMA’s national TruthinRx campaign, which continues to call for greater drug pricing transparency. Through the TruthinRx campaign, the AMA has developed model bills to better regulate PBM practices and supported several state bills—as well as federal legislation later signed into law—that would prohibit gag clauses so that patients could be better informed about lower-cost medication options.
In an anticompetitive environment where PBMs are free to put profit margins over patient needs, physicians too often find ourselves explaining this complex and unjust system to patients experiencing medication sticker shock. There is something inherently wrong with a system in which physicians have as little insight into prescription drug pricing as our patients—and few options to give them when the medication they need is unaffordable.
We can’t have a serious discussion about solutions to fix what is wrong in health care today without putting PBMs at the center of the conversation. It’s long past time policymakers took action to bring greater clarity and transparency to PBMs’ mostly hidden practices so that patients—and physicians—better understand how they contribute to soaring drug prices. Bureaucracy and opacity are symptoms of an unhealthy health care system. And sadly, our patients are paying the cost for it.
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