What’s the news: A report from the AMA details how a few firms have a large collective share of the pharmacy benefit manager (PBM) market.
Based on data from 2022 and 2023, the AMA report—“Competition in PBM Markets and Vertical Integration of Insurers with PBMs: 2025 Update” (PDF)—suggests low levels of market competition and raise antitrust concerns as PBMs operate in markets with high levels of concentration.
On top of that, high vertical integration between PBMs and insurers threatens independent insurers and reduces transparency in the pharmaceutical supply chain. Most concerning of all is the potential for these factors to raise drug prices and jeopardize patients’ access to medications.
“As PBMs increasingly act in their own self-interest without transparency or accountability, drug prices rise and patients face health risks from cost-prohibitive drug treatments,” said AMA President Bobby Mukkamala, MD, an otolaryngologist in Flint, Michigan. “The AMA’s analysis is intended to provide insight to help policymakers understand the anticompetitive conditions in the PBM market that can result in harm to patients.”
Insurers typically use a PBM for three services: rebate negotiation, retail network management and claims adjudication. A mere four PBMs had about 67% of the market in each of those three services in 2023.
Those companies and their rebate-negotiation market shares for that year were:
- OptumRx—22.2%.
- CVS Health—18.9%.
- Express Scripts—15.5%.
- Prime Therapeutics—10.6%
High market concentration is also common at the local level. The Centers for Medicare & Medicaid Services (CMS) divides the country into 34 prescription drug plan (PDP) regions where insurers bid to offer prescription-drug coverage. Nearly 80% of PBM markets within those areas have been classified as “highly concentrated,” per federal antitrust guidelines.
Why it’s important: Large-scale consolidation leaves smaller insurers, employers, and patients with fewer choices. The lack of pricing transparency makes it difficult for consumers to understand why their drugs cost as much as they do, and why prices continue to rise.
“The AMA fully supports greater transparency and accountability that is needed to prohibit PBMs from engaging in opaque and harmful business practices,” said Dr. Mukkamala. This environment could lead to a marketplace in which insurers that don’t own or control a PBM cannot compete, which would increase the largest firms’ domination of the market further.
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The AMA report documents high vertical integration between insurers and PBMs. In 2023, 77% of all prescription-drug plan enrollees, including those covered under both commercial and Medicare Part D plans, were covered by vertically integrated entities.
On average, 76% of drug-coverage lives across PDP regions were vertically integrated. This was even more pronounced in Medicare Part D, where 88% of enrollees were part of a vertically integrated plan, compared with 71% in the commercial market.
The largest PDP insurers share ownership with the largest PBMs, including:
- UnitedHealth Group, first in commercial PDP (13.2%) and Medicare Advantage PDP (29.4%) markets and third in the stand-alone PDP market (18.5%).
- CVS Health, the top stand-alone PDP insurer (27.2%).
- Humana, second in Medicare Advantage PDP and fourth in stand-alone PDP.
- Kaiser Permanente, second in the commercial PDP market.
These market conditions pose a risk of a lessening of competition and of driving up the price of insurance and drugs. Also, PBMs may lower reimbursements to pharmacies, especially smaller chains and independent drugstores, and not pass manufacturer rebates on to consumers. This also limits access for unaffiliated insurers to PBMs.
Learn more: All this has, properly, drawn the attention of policymakers and regulators, and some movement to rein in PBMs is underway. For example, Arkansas enacted a law barring PBMs from owning or operating pharmacies within the state. The law takes effect Jan. 1, 2026. Nearly 40 state attorneys general have urged Congress to take similar action. The House version of the recently enacted budget-reconciliation package did include measures to boost PBM transparency, but those elements were not included in the final measure signed into law.
The AMA’s TruthinRx campaign continues to call for system-wide regulatory reforms and more protection for patients and independent providers.
