PBM Consolidation Concerns Medicine for Impacts on Drug Costs, Access
By Phil West

 

With pharmacy benefit managers (PBMs) growing in market share, medicine continues to express concern these intermediary entities are increasingly acting like insurers, as they determine medication lists and rebates with risk of negative downstream impacts on drug costs and access to care.

State and federal legislators also have started addressing the evolving role of PBMs, paving the way for organized medicine to weigh in and advocate for physicians and their patients. The Texas Medical Association is analyzing related provisions in the federal budget bill and continues to track what tends to be a handful of state bills that arise each session.

PBMs function as what the American Medical Association describes as “middlemen” in the prescription drug supply chain, managing prescription drug plan benefits for insurers and employers. According to Drug Channels, the three largest PBMs are owned by insurers: Caremark (CVS), Express Scripts (Cigna), and Optum RX (United), which cumulatively process 75% to 80% of prescription claims in the U.S. 

PBMs’ work also involves coordination with drug manufacturers and pharmacies. Specifically, the entities are responsible for negotiating rebates and discounts on drug prices, managing medication lists, and administering benefits on behalf of insurance companies. 

With much of the PBM market vertically integrated with health insurers, the same organization may design benefits, decide which medications are covered, and manage pharmacy payments – roles that increasingly blur the line between managing drug benefits and functioning like an insurer. 

Over the years, PBMs role has evolved “to no longer simply negotiate drug prices on behalf of their clients, but rather fully administer the drug benefit, creating formularies, making coverage decisions, and determining medical necessity with utilization management tools,” AMA's Council on Medical Services explains in a 2019 report to the AMA House of Delegates – practices that can add to drug costs and limit availability for patients. 

AMA’s 2025 report on PBM competition and vertical integration also shows the top four PBMs in the U.S. comprise 67% of the market share, while also noting low competition may impact the prescription drug market in the following ways:  

• Higher prices paid by insurers for PBM services;
• Negotiated rebates not fully passing through to consumers; 
• Higher insurance premiums; and 
• Lower payments to pharmacies. 

“PBMs’ role managing drug benefits now resembles the typical role of insurers, and they should be treated as such by regulators,” AMA’s Council on Medical Services wrote in 2019. 

Zeke Silva, MD, chair of TMA’s Council on Legislation, expects PBMs will be the subject of future advocacy from organized medicine, now that physicians are gaining greater awareness of how PBMs impact both the cost of drugs and access to care.  

“There’s a lot of frustration among physicians,” he said. “It feels like prior authorization, where our docs are prescribing a medication because ... it's the best option for their patients … and then almost overnight, that medication is no longer available. It's no longer on the formulary. It's no longer on the benefit plan. 

“It's frustrating from both an administrative burden perspective, but also from a purely clinical patient care perspective.” 

Dr. Silva added that PBMs even go as far as to hold patients and physicians accountable for paying back prior claims on medications, a process known as a “clawback.”  

TMA supported the Texas Legislature’s step toward PBM reform in the 2025 session, backing Senate Bill 1236. The new law establishes guardrails on how health plans and PBMs can interact with pharmacies and pharmacists. Most notably, SB 1236 established that health plans and PBMs cannot: 

• Require pharmacists or pharmacies to participate in a pharmacy benefit network;
• Condition participation in one pharmacy benefit network on participation in another; 
• Charge a fee before providing a pharmacist or pharmacy with a full proposed pharmacy benefit network contract; or
• Penalize a pharmacist or pharmacy from refusing to participate in a pharmacy benefit network. 

The latest federal budget bill also addresses several issues tied to PBMs, including allowing the Centers for Medicare & Medicaid Services to monitor how pharmacies are paid by PBMs and to regulate their contracts with Medicare Part D prescription drug plans. TMA is dissecting the PBM provisions and monitoring their implementation. 

As federal and state lawmakers pursue PBM reforms, TMA will be watching closely to see whether the changes translate into fewer administrative hurdles and increased patient access to needed medications.