The nation’s four largest pharmacy benefit managers control two-thirds of the market. This high concentration, along vertical integration between PBMs and insurers, may contribute to higher prices and lower reimbursement rates, according to a new report from the American Medical Association.
“These are important findings, because low competition may lead to higher prices paid by insurers for PBM services, higher insurance premiums, PBMs not fully passing rebates through and lower reimbursement to pharmacies,” according to a new report from the American Medical Association. “Moreover, given extensive vertical integration of insurers and PBMs, non-affiliated insurers may be losing access to PBMs.”
The analysis, based on 2022 and 2023 prescription drug plan (PDP) enrollee information, found low PBM market competition and high vertical integration as the largest PBMs share ownership with health insurers. Among the key findings:
- OptumRx was the largest PBM in the United States in 2023, with a 22.2% market share, up slightly from 20.8% in 2022. CVS Health followed with an 18.9% share, down from 21.3% in 2022. Express Scripts was third largest, with a 15.5% share, followed by Prime Therapeutics, with a 10.6% share.
- Seventy-nine percent of PDP region-level PBM markets lacked adequate competition and were “highly concentrated,” according to 2023 federal antitrust guidelines.
- Nationally, 77% of commercial and Part D enrollees were in a PDP where the insurer and PBM were vertically integrated. The vertically integrated share was higher in Part D than in commercial insurance (88% vs. 71%).
- At the regional level, an average of 76% of enrollees were in a PDP where the insurer and PBM were vertically integrated.
- There was wide variation across PDP regions, with some having little vertical integration between insurers and PBMs, while others were almost entirely vertically integrated.
- Nine of the 10 largest PBMs share ownership with health insurers.
This report comes at a time of heightened scrutiny of low competition and high vertical integration in the PBM industry. Reports from both the Federal Trade Commission and U.S. House Committee on Oversight and Accountability found that a handful of PBMs have vast power and control over medication access and affordability. Both government reports concluded that the unchecked influence of PBMs allows bad actors to inflate drug prices, limit access to necessary medications and undermine competition.
“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,” AMA President Bobby Mukkamala, M.D., said. “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. The AMA fully supports greater transparency and accountability that is needed to prohibit PBMs from engaging in opaque and harmful business practices.”