Third-party companies known as pharmacy benefit managers, which administer prescription drug benefits for health insurance plans, employers, and other organizations including governments, are driving up prescription drug costs, putting small pharmacies out of business, and interfering in the relationship between doctors and their patients, says Sen. Rochelle Nguyen, a Democrat from Las Vegas and the sponsor of Senate Bill 316, a measure that seeks to reform PBMs.
Nevadans are being deprived of “life-changing and life-saving prescription drugs and often have to make difficult decisions based on what they can and cannot afford,” Nguyen told members of the Senate Committee on Labor and Commerce during a hearing Monday, adding escalating prescription prices are just one component of high costs. “This isn’t a magic pill that’s going to solve all our health care problems.”
Nguyen said PBMs operate “as an invisible middleman responsible for negotiating drug prices on behalf of a health insurer or a self-insured plan,” and are intended to benefit patients and employers. Instead, she said, drug costs are rising “while large corporate PBMs profit off the negotiations meant to serve all Nevadans.”
Nguyen told lawmakers that three PBMs – CVS Health, Optum Rx, and Express Scripts – control 80% of the prescription drug market.
The American Medical Association reported last year that the four largest PBMs collectively have a 70% share of the market, with CVS Health leading with 21.3% market share, Optum Rx with 20.8%, Express Scripts with 17.1% and Prime Therapeutics with 10.3%.
The largest three PBMs are owned by the nation’s largest health insurers, Nguyen said. Aetna owns CVS Health, Cigna owns Express Scripts and United Healthcare owns Optum RX.
CVS Health is bigger than JP Morgan Chase, the largest bank in America, noted Kaylyn Kardavani of New Day Nevada, a non-profit organization. CVS Health had total revenue of $372.8 billion in 2024, compared with $278.9 billion for Chase. However, Chase earned higher profits than CVS Health.
Failure to trickle down
PBMs, which receive rebates and discounts from pharmaceutical companies, were intended to pass those savings on to patients.
In 2023, drug manufacturers paid $356 billion in rebates and discounts to PBMs that are not making their way back to patients, Nguyen testified.
- A state audit of Maryland’s Medicaid plan in 2020 found that PBMs pocketed $72 million in spread pricing, leading to a ban on the practice and a push for reforms;
- A 2024 report from the Office of Inspector General found that Express Scripts overcharged the US Postal Service by $45 million for their prescription drugs during a five-year period;
- Texas reported in 2022 that of $4.39 billion in rebates negotiated with drug manufacturers, only $866,000 (.02%) was passed on to patients at the point of sale; and,
- A February 2025 report from the Department of Veterans Affairs Office of Inspector General found that the VA overpaid OptumRx more than $1 billion between 2020 and 2024.
Vertical integration of insurance companies, PBMs, pharmacies, and providers “is consolidating the market share and eliminating patient choice,” Nguyen testified, adding health insurance parent companies of PBMs are designing plans with large out-of-pocket costs such as high deductibles and co-insurance.
A bipartisan group of 39 state attorneys general, including Nevada AG Aaron Ford, wrote to Congress last year about concerns that PBMs are “profiting at the expense of patients, employers, and government payers,” Nguyen said.
Last year, the Federal Trade Commission sued the largest three PBMs, however, President Donald Trump’s firing of two FTC commissioners could jeopardize the lawsuit, Politico reported last week.
“It does not matter if you are from a blue, red or purple state like Nevada, if you are rural or urban, whether or not you have commercial insurance or Medicaid. PBMs are costing all of us, including our state budgets, the bottom lines of our small businesses, and the pocketbooks of our families across the state of Nevada.”
SB 316 would put “guardrails on how much profit” PBMs can make, Nguyen said, adding the standard practice initially “was to negotiate the drug price and receive a standard fee for each drug they negotiated. The rebate was then used to lower the cost of the drug for patients.”
The model, she said, has evolved into a structure that allows PBMs to pocket a “substantial percentage of the rebate,” resulting in an “adverse incentive for profit-motivated PBMs to negotiate on high-price drugs instead of lower-cost generics, because they can profit more.”
SB 316 would require that “100% of the rebate, minus agreed upon fees and other required reimbursements, go to the benefit of the patient, either at the point of sale at the pharmacy counter or through lowering their out of pocket cost sharing obligations with their health insurer,” Nguyen said. “There’s just simply no reason patients should be paying more for their prescription drugs than their PBM is.”
PBMs contend they retain 6% of the prescription drug dollar.
“This is not the complete picture,” Kardavani said, adding a 2025 study from the Berkeley Research Group found PBMs are receiving 18 times the amount of the prescription drug dollar they retained in 2010, and the oft-cited 6% figure leaves out billions earned from prescriptions filled via mail and at PMB-owned specialty pharmacies, which account for more than half of their profits.
Additionally, she said, PBMs are creating instability in the independent pharmacy market by “squeezing out local pharmacies. This creates pharmacy deserts across the country. More than 1,000 independent rural pharmacies have closed since 2003, leaving 630 communities, with no retail drugstore.”
PBMs and insurers are excluding a growing number of medicines, Nguyen testified, adding the exclusions leave patients with fewer options.
Since 2014 medicine exclusions on PBM controlled formularies have increased by more than 1,000%, Kardavani of New Day Nevada testified, amounting to 1,156 medications excluded by the three top PBMs.
Democratic Sen. Edgar Flores suggested adding an educational component to the bill to notify patients of their rights and direct them to assistance.
Lobbyist Danny Thompson, representing the Pharmaceutical Industry Labor and Management Association (PILMA), said PBMs in Nevada “have operated with limited oversight, profiting from opaque pricing schemes and practices that hurt patients, independent pharmacies and even insurers.”
“I call them the prescription benefit manipulators,” testified Liz McMenamin of the Retail Association of Nevada. “They manipulate the market and take advantage of their ability to rake in high profits under their parent company. While PBMs could use their power to negotiate lower drug prices, they instead use it to line their own pockets.”
Jacqueline Nguyen of the Nevada State Medical Association said PBM reform is a top legislative priority for doctors, stating “PBMs and insurers are now interfering with medical decisions that should be between the doctor and their patient.”
Bill Head of the Pharmaceutical Care Management Association, the trade association for PBMs, testified the average annual list price of a new drug coming to market is $300,000.
“PBMs are the only entity in the entire drug supply chain that exert any downward pressure on what payers and patients pay for a drug,” he said. “I think the best evidence of that is the fact that every single state employee, program including PEB, hires a PBM. Virtually every state Medicaid program, including Nevada Checkup, hires a PBM. What we’re doing works.”