AMA: PBM markets are at risk of harming patients

CHICAGO – Pharmacy benefit managers had little competition in 2023, with just four firms having two-thirds share of the national market, according to a new annual analysis published by the American Medical Association (AMA). 

The analysis, based on 2022 and 2023 data on prescription drug plan (PDP) enrollees, measures competition in PBM markets and vertical integration of insurers with PBMs. The assessment demonstrates low competition in PBM markets across the nation and high vertical integration as the largest PBMs share ownership with health insurers. 

Competition in PBM markets 
Competition in the PBM market was assessed based on three functions for which insurers typically hire an external PBM: rebate negotiation, retail network management and claims adjudication. As the AMA’s findings are similar across all three functions, the results reported below focus on rebate negotiation. 

• The four largest PBMs collectively had a 67% share of the national PBM market in 2023. 

• OptumRx was the largest PBM in the U.S. in 2023 with a 22.2% market share—up slightly from 20.8% in 2022. It was followed by CVS Health 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. 

Vertical integration of insurers and PBMs 
There was significant vertical integration of insurers with PBMs in 2023, according to the AMA analysis. 

• At the national level, 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 PDP region-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 are almost entirely vertically integrated. 

• Nine of the 10 largest PBMs share ownership with health insurers. 

The AMA says its analysis adds to growing concern over anticompetitive harm resulting from low competition and high vertical integration in the PBM industry. It comes on the heels of reports by the Federal Trade Commission and U.S. House Committee on Oversight and Accountability that found 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,” said AMA President Bobby Mukkamala, M.D. “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.”