CHICAGO – Pharmacy Benefit Managers (PBMs) faced little competition in 2023, with just four companies controlling two-thirds of the national market, according to a new analysis by the American Medical Association (AMA).
Based on data from 2022 and 2023 covering prescription drug plan (PDP) enrollees, the AMA study assessed PBM market competition and the extent of vertical integration between PBMs and health insurers. The findings reveal both low competition and high consolidation, as many of the largest PBMs are owned by or affiliated with major insurers.
PBM Market Competition
The AMA measured PBM competition across three key services typically outsourced by insurers: rebate negotiation, retail network management, and claims adjudication. Results were consistent across all three, with rebate negotiation highlighted here.
In 2023, the four largest PBMs held a combined 67% share of the national market:
- OptumRx led with 22.2%, up from 20.8% in 2022.
- CVS Health followed with 18.9%, down from 21.3%.
- Express Scripts had 15.5%.
- Prime Therapeutics held 10.6%.
According to 2023 federal antitrust guidelines, 79% of PDP region-level PBM markets were considered “highly concentrated,” indicating a lack of adequate competition.
Vertical Integration with Insurers
The analysis also showed extensive vertical integration between PBMs and health insurers:
- Nationally, 77% of commercial and Medicare Part D enrollees were in plans where the insurer and PBM were vertically integrated.
- This integration was more pronounced in Part D plans (88%) than in commercial plans (71%).
- At the regional level, 76% of enrollees were in vertically integrated plans, though integration levels varied widely across regions.
Overall, nine of the 10 largest PBMs are owned by health insurers, raising concerns over potential conflicts of interest and market control.
AMA Raises Alarm Over Anticompetitive Practices
The AMA warns that this concentration of market power and lack of transparency among PBMs poses serious risks to patients.
The report echoes recent findings by the Federal Trade Commission and the U.S. House Committee on Oversight and Accountability, both of which concluded that dominant PBMs can drive up drug prices, restrict access to needed medications, and suppress competition.
“Our analysis aims to help policymakers recognize how these anticompetitive market conditions can harm patients. The AMA fully supports efforts to increase PBM transparency and prohibit harmful business practices.”
“As PBMs increasingly act in their own self-interest without transparency or accountability, drug prices rise and patients face health risks from cost-prohibitive treatments,” said AMA President Dr. Bobby Mukkamala.
