What’s the news: There’s been tangible progress toward lowering prescription drug costs and improving fairness in the drug supply chain after Congress’ latest budget deal included targeted pharmacy benefit manager (PBM) reforms.
The changes are aimed at enhancing transparency, curbing abusive Medicare drug rebate practices and strengthening federal oversight against anticompetitive behavior.
The Congressional Budget Office estimated that the federal government would save about $2 billion over 10 years, with most of the savings coming from transparency requirements, according to news reports. And for drugs covered under Medicare, PBMs would be paid based on a flat fee rather than the drug’s sticker price beginning in 2028. The change is aimed at discouraging PBMs from pushing a higher-priced drug over less expensive options.
This is one of eight major wins for patients and physicians included in the latest federal budget deal. These victories didn’t happen by chance. They happened because the AMA fought for them, and they were only possible because the AMA brought the full strength of its advocacy to Capitol Hill. That powerful effort encompasses thousands of interactions with congressional offices, hundreds of letters and resources, congressional testimony and more, says the “AMA Advocacy Impact Report.”
Why the win matters: A handful of PBMs have accumulated vast power and control that has led to higher prescription medication costs and less competition
According to an AMA analysis published last year, just four PBMs had a 67% share of the national market, suggesting low competition among PBMs.
“In other words, competition is low—and patients can pay the price,” AMA President Bobby Mukkamala, MD wrote in a Leadership Viewpoints column last summer.
“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,” he wrote.
At the local level, the AMA analysis found that 79% of PBM markets were “highly concentrated,” based on federal antitrust standards.
The AMA study, “Competition in PBM Markets and Vertical Integration of Insurers with PBMs: 2025 Update” (PDF), also found significant vertical integration between insurers and PBMs.
Among the findings were that nationally, 77% of PDP lives are covered by an insurer that is vertically integrated with a PBM. In addition, 71% of commercial PDP lives are vertically integrated, compared with 88% in Part D.
Dr. Mukkamala wrote that the environment has allowed PBMs to act in their own self-interest without transparency or accountability, increasing drug prices and increasing the chance that patients will face health risks from treatments they are unable to afford.
“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,” Dr. Mukkamala wrote in his column. “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.”
Learn more: The AMA report's findings are important and should be considered in light of other evidence that PBM consolidation has led to reduced competition and increased pricing, as found in reports from the Federal Trade Commission and the House Committee on Oversight and Accountability.
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 and discover how the AMA has lobbied Congress, including through this letter to congressional sponsors in support (PDF) of HR 4317, the Pharmacy Benefit Manager Reform Act of 2025.
