Although PBMs claim integration reduces costs and improves efficiency, the reality is more complicated—and often leaves patients footing the bill.
Imagine walking into your pharmacy only to find that your medication is no longer covered—or worse, you now must pay more because your insurance insists you use a mail-order service. Millions of Americans are facing similar challenges as prescription costs and access to medications become more complex and costly.
At the center of these changes are pharmacy benefit managers (PBMs), powerful middlemen who negotiate drug prices, determine medication coverage, and influence where patients can fill prescriptions. PBMs hold enormous sway over the health care system, directly affecting patients’ costs and access to care.
In recent years, the rise of vertical integration has radically reshaped the PBM landscape. This is a trend in which companies such as CVS Health, OptumRx, and Express Scripts consolidate control over insurance, PBMs, and pharmacies into a single entity. Although these companies claim this integration drives down costs and improves efficiency, the reality is more complicated—and it often leaves patients footing the bill.
Vertical integration occurs when a single company controls multiple layers of the health care process—such as health insurance, PBM services, and pharmacy operations. For example, a company might manage a health plan, decide which medications are covered, and own the pharmacy where patients are required to fill prescriptions.
Although this might seem like an efficient approach to streamline health care, it raises serious concerns about competition, fairness, and rising costs. By controlling every step of the process, vertically integrated companies hold immense power over patients’ health care journeys, from premiums to the pharmacy counter.
Three major corporations dominate the vertically integrated PBM market, collectively managing pharmacy benefits for over 75% of Americans1:
This consolidation squeezes out competition, making it difficult for independent pharmacies and smaller PBMs to survive. For patients, it often translates to fewer choices and higher costs.
Vertical integration is fueled by 3 primary goals: cost control, efficiency, and profitability. Companies claim that integration allows better drug price negotiations and reduces health care costs. By centralizing control, companies streamline processes such as prior authorizations and claims management. Additionally, controlling multiple layers of health care allows companies to maximize revenue by favoring their own services and products.
Although these goals sound beneficial, the promised savings and efficiencies rarely reach patients. Instead, they often lead to inflated prices and restricted access to care.2
Vertical integration stifles competition, often at the expense of independent pharmacies. PBMs controlled by large corporations typically reimburse independent pharmacies at unfairly low rates, forcing many to close their doors.3 For patients, this means fewer personalized pharmacy options. Insurance plans tied to vertically integrated PBMs frequently require patients to use their owned pharmacies or mail-order services, limiting both choice and convenience.2,3
Despite claims of cost control, patients often experience higher prices due to PBM practices such as the following2:
For example, a 2022 report by the National Community Pharmacists Association found that spread pricing alone cost state Medicaid programs over $900 million in a single year.4
Patients often face restricted access to medications due to vertical integration. Some patients are forced to use mail-order pharmacies, which can result in delays, higher costs, or incorrect shipments. Patients may have to travel farther or settle for less convenient pharmacy options, and prior authorization requirements and formulary restrictions can prevent timely treatment, potentially worsening health outcomes.3
Critics of vertical integration argue that vertical integration leads to reduced competition, lack of transparency, and conflicts of interest. Independent pharmacies often close due to unfair reimbursement rates, opaque pricing makes it difficult for patients to understand their costs, and PBMs place profits above patient care by prioritizing their own pharmacies and high-rebate drugs.
However, supporters claim vertical integration delivers better price negotiations by allowing consolidated companies to secure significant discounts on medications. They also argue that integrated systems reduce redundancies and simplify processes such as prior authorizations. Finally, supporters say centralized control improves care delivery by aligning services.
Although supporters emphasize potential cost savings, critics highlight how these benefits rarely reach the patients most in need.
Push for Transparency: Legislation such as the PBM Transparency Act could require PBMs to disclose their pricing structures, rebate practices, and conflicts of interest.5 Transparency would empower patients and policymakers to demand fairer practices.
Empower Patients: Encourage them to seek clarity from their insurer or PBM about medication coverage and pharmacy options. They can also use tools like GoodRx to find the lowest drug prices, file complaints with state insurance commissioners or the Federal Trade Commission, and support organizations fighting for PBM reform and fair competition.
Demand Policy Change: Patients and pharmacists alike can demand that policymakers regular PBMs to protect patients and promote competition. They can do this by enforcing fair reimbursement rates for independent pharmacies, prohibiting practices that favor vertically integrated pharmacies, and supporting alternative care models such as value-based based care.
Muhammad Cheema, PharmD, MPBA, completed his MPBA degree at the University of Pittsburgh. He has worked in high-traffic community pharmacy settings, managed care, and specialty pharmacy, showcasing his commitment to operational excellence and patient care. His diverse background positions him as a forward-thinking leader in the pharmacy and health care industries.
Vertical integration in PBMs is reshaping health care, but not always for the better. Companies like CVS Health, OptumRx, and Express Scripts dominate the market, prioritizing profits over patients. The consequences are clear: higher costs, reduced access, and fewer choices for millions of Americans.
It’s time to demand a fairer, more transparent system. By advocating for reform, supporting transparency, and holding PBMs accountable, we can work toward a health care system that truly serves the needs of patients.
