The American Medical Association has released a comprehensive new analysis detailing a significant surge in market concentration within the pharmacy benefit manager sector, revealing that the four largest entities now command 75% of the national market. This figure represents a notable increase from 2022, when the top four PBMs held a 70% share, highlighting a trend toward consolidation that physicians and consumer advocates warn could limit competition and inflate prescription drug costs for patients across the United States.
The AMA’s report, which utilized prescription drug plan and enrollment data from 2022 and 2024, examined the market shares of the ten largest PBMs in the country. The findings underscore a rapidly narrowing landscape where a handful of massive corporations exert unprecedented control over the accessibility and pricing of essential medications. As the healthcare industry grapples with rising costs, the AMA’s data suggests that the "middlemen" of the pharmaceutical supply chain are becoming increasingly entrenched, often through vertical integration with major health insurance providers.
The Shift in National Market Dominance
According to the 2024 data, the four dominant players in the PBM market are OptumRx, Express Scripts, CVS Caremark, and Prime Therapeutics. While these names have long been at the forefront of the industry, their collective grip on the market has tightened. In 2024, OptumRx and Express Scripts each held 23% of the national market share. They were followed by CVS Caremark at 18% and Prime Therapeutics at 11%.
When compared to the 2022 rankings, the shifts in market share reveal a volatile yet consolidating environment. In 2022, CVS Caremark led the pack with 21%, followed by OptumRx at 21%, Express Scripts at 17%, and Prime Therapeutics at 10%. The most significant growth during this two-year window was observed in Express Scripts, which saw its market share climb by six percentage points. This growth is indicative of aggressive acquisition strategies and the securing of large-scale contracts with major employers and government entities.
Beyond the national aggregate, the AMA report delved into regional and local market dynamics. The analysis found that 32 PBM markets—representing 94% of the markets studied—were classified as "highly concentrated" in 2024. This is a sharp rise from 2022, when 28 markets (82%) met that criteria. In these highly concentrated regions, patients and healthcare providers have fewer alternatives, often being forced to work with a single dominant PBM to access insurance coverage for prescriptions.
Vertical Integration and the Insurer Connection
One of the most critical aspects of the AMA’s findings is the extent of vertical integration between PBMs and health insurance companies. The report revealed that every one of the ten largest PBMs in the United States shares ownership with a health insurer. This structural alignment means that the companies responsible for deciding which drugs are covered (the PBMs) are owned by the same companies that collect insurance premiums (the insurers).
In 2024, approximately 69% of individuals with commercial or Medicare Part D drug coverage were enrolled in plans where the insurer was vertically integrated with a PBM. This integration creates a closed-loop system that critics argue incentivizes companies to prioritize their internal profit margins over patient outcomes. For instance, a vertically integrated insurer might require its members to use a PBM it owns, which in turn might steer patients toward specialty pharmacies also owned by the same parent corporation.
The AMA analysis also highlighted the leading insurers in the prescription drug benefit space. UnitedHealth Group, the parent company of OptumRx, maintained the largest market share in both commercial and Medicare Advantage Prescription Drug Plan (PDP) coverage. Meanwhile, Centene emerged as the leader in the stand-alone Medicare Part D market. Other major players included Kaiser and Humana, which ranked second in the commercial and Medicare Advantage PDP markets, respectively. CVS Health, which owns Aetna and CVS Caremark, held the second-largest share in the stand-alone Medicare Part D market.
The Role of PBMs and the Growing Scrutiny
Pharmacy benefit managers were originally established to help insurers manage drug spending by negotiating rebates with pharmaceutical manufacturers and processing claims. However, as they have grown in size and complexity, their role has become a subject of intense debate. PBMs are responsible for developing formularies—lists of covered drugs—and determining the co-pays patients must pay at the pharmacy counter.
AMA President Dr. Willie Underwood III emphasized the necessity of competition to ensure these functions serve the public interest. “Competitive PBM and prescription drug plan markets help patients get the medications they need at a fair price,” Underwood stated. “But our analysis shows that a small number of PBMs account for a growing share of the market, while most local PBM markets remain highly concentrated and most prescription drug benefits are managed by vertically integrated insurers and PBMs.”
The AMA’s concerns echo a broader national movement to increase transparency in the pharmaceutical supply chain. For years, PBMs have been accused of "spread pricing," a practice where they charge an insurer more for a drug than they pay the pharmacy, pocketing the difference. They have also faced criticism for "rebate harvesting," where they prioritize high-priced drugs on formularies because those drugs offer larger rebates from manufacturers, even if lower-cost alternatives are available.
A Timeline of Regulatory and Legislative Action
The release of the AMA analysis comes amid a flurry of activity in Washington D.C. and state capitals aimed at reining in PBM practices. The timeline of recent scrutiny reflects a bipartisan consensus that the current PBM model requires reform.
In February 2024, Congress took a significant step by passing reforms aimed at "delinking" PBM compensation from the list price of drugs within the Medicare Part D program. Traditionally, PBM fees were often calculated as a percentage of a drug’s price, creating a perverse incentive for PBMs to favor more expensive medications. By delinking these fees, lawmakers hope to remove the incentive for price inflation.
Simultaneously, the Department of Labor has proposed a new rule that would mandate improved transparency regarding the fees and compensation received by PBMs. This rule is designed to give employers—who often hire PBMs to manage their employee benefits—a clearer understanding of where their healthcare dollars are going and whether they are receiving the best possible value.
Furthermore, the Federal Trade Commission (FTC) has been conducting a multi-year investigation into the six largest PBMs. In an interim report released earlier in 2024, the FTC suggested that PBMs may be using their market power to disadvantage independent pharmacies and increase costs for consumers. The commission noted that the "Big Three" PBMs (CVS Caremark, Express Scripts, and OptumRx) now process nearly 80% of all prescriptions in the U.S., a level of dominance that allows them to dictate terms to pharmacies and manufacturers alike.
Implications for Patients and Independent Pharmacies
The consolidation of the PBM market has profound implications for the daily lives of patients. When a market is highly concentrated, PBMs have the leverage to implement restrictive "step therapy" protocols, requiring patients to try and fail on cheaper medications before gaining access to the drugs originally prescribed by their doctors. They can also mandate the use of mail-order pharmacies, which may not be convenient for all patients, or exclude certain local pharmacies from their networks.
Independent pharmacies have been particularly vocal about the impact of PBM consolidation. Many community pharmacists argue that PBMs use "direct and indirect remuneration" (DIR) fees to claw back payments months after a transaction has occurred, often resulting in pharmacies losing money on the prescriptions they dispense. As PBMs increasingly own their own specialty and mail-order pharmacies, independent operators claim they are being squeezed out of the market through unfair reimbursement rates and patient steering.
The AMA’s findings suggest that without intervention, these trends will likely continue. Dr. Underwood noted that the current market structure tends to "reinforce the market power of large healthcare companies" rather than serving the needs of the individual.
Future Outlook and the Path to Reform
The American Medical Association is calling for closer scrutiny from antitrust regulators and more robust legislative action to ensure that PBM markets operate fairly. The organization advocates for policies that would require PBMs to pass 100% of negotiated rebates directly to patients or plan sponsors, as well as measures to prohibit PBMs from favoring their own affiliated pharmacies.
Industry trade groups representing PBMs, such as the Pharmaceutical Care Management Association (PCMA), often counter these arguments by stating that PBMs are the only entities in the healthcare system working to lower drug costs. They argue that their scale allows them to negotiate more effectively against pharmaceutical manufacturers, who set the initial high list prices for medications.
However, the AMA’s data provides a stark counterpoint to the industry’s defense, showing that as PBMs have grown larger and more integrated, the "highly concentrated" nature of the market has only intensified. The rise from 82% to 94% of local markets being classified as highly concentrated suggests that the competitive forces intended to keep costs in check are diminishing.
As the 2024 election cycle progresses and healthcare remains a top concern for voters, the role of PBMs is expected to remain a focal point of policy discussions. With the AMA’s latest analysis serving as a statistical foundation, advocates for reform are likely to push for more aggressive "transparency" laws and perhaps even structural "un-siloing" of vertically integrated healthcare giants.
The goal, according to the AMA and other physician groups, is a system where the clinical judgment of doctors and the needs of patients take precedence over the financial maneuvers of supply chain intermediaries. For now, the trend toward consolidation shows no signs of slowing, leaving the future of prescription drug pricing in the hands of a dwindling number of powerful corporate entities.
