Lawmakers, drugmakers and government officials have pointed the finger at these industry middlemen, suggesting that they play a role in the high cost of prescription drugs in the US. But who are they and what is their business model?

What is a PBM?

Pharmacy Benefit Managers are companies that manage prescription drug benefits for health insurance companies, large employers and health plans, a trio often grouped together under the term "payers". On behalf of these payers, PBMs :

  • Negotiate fees and volume-based discounts (rebates) with drug manufacturers and pharmacies.
  • Establish lists of drugs covered by insurance plans
  • Reimburse pharmacies by processing claims for reimbursement
  • Manage pharmacy networks.
  • Manage (most of them) their own mail-order pharmacies.

Remunerate themselves by collecting both fees from payers and rebates from drug manufacturers. Their impact is controversial. Some studies, including one by the Congressional Budget Office, show that rebates reduce drug costs for the government and consumers. Others tend to prove that there is a correlation between an increase in the sale price of a drug and an increase in discounts on that same drug.

Who are the main players?

According to the Statista data platform, three companies will control 79% of pharmacy benefit management in the USA in 2022: CVS Caremark with 33% (CVS Health), Express Scripts (Cigna) with 24% and OptumRx (UnitedHealth) with 22% of the market. Other major companies in terms of market share are Humana Pharmacy Solutions (8%), Prime Therapeutics (5%) and MedImpact Healthcare Systems (4%). Together, these six companies control 96% of the PBM market.

Who owns these companies?

The top five pharmacy benefit managers are owned by companies that also offer insurance and other healthcare services.

CVS Health owns Caremark and insurer Aetna, as well as mail-order pharmacies, a national pharmacy chain and a physician group.

UnitedHealth owns OptumRx, the United Healthcare insurer, specialty pharmacies, physician groups and express medical and surgical centers.

Cigna operates an insurer, Express Scripts and a specialty pharmacy.

Humana is an insurer and owns a benefits manager.

Blue Cross Blue Shield and its affiliates own a stake in Prime Therapeutics.


Contrasting sector performances on the stock market

Where is the debate?

In 2022, the US Federal Trade Commission (FTC) began investigating the major PBMs and their impact on pricing and access to prescription drugs. The FTC is examining the fees they charge, how they reimburse pharmacies, the recoupment of payments to pharmacies outside their networks, and whether the companies refer patients to their own pharmacies. It also investigates whether benefit managers favor the most expensive drugs, which attract larger discounts, over less expensive drugs.

Since last year, lawmakers have introduced about two dozen bills targeting PBMs, including at least five with bipartisan support, according to congressional records. Several have passed committees, but have yet to be voted on by the full Senate or House of Representatives.

Separate bills aim to ban so-called spread pricing, a practice whereby PBMs charge health plans more for a drug than they pay pharmacies. Others call for greater transparency, under which companies would be required to provide more information about their non-public negotiations.

Rebates have also been the subject of proposals for new government rules. In 2020, the Trump administration sought to make rebates illegal for prescription drug plans by removing the safe harbor that protects rebates from federal bribery laws. The Biden administration delayed the rule until 2023, and Congress delayed it again until 2027.

The Justice Department is investigating UnitedHealth Group, including the relationship between its UnitedHealthcare health insurance business and its OptumRx PBM unit, according to a report published in February by the Wall Street Journal.