When Congress passed a spending package earlier this year, few industries were more disappointed than pharmacy benefit managers. PBMs are middlemen who liaise between insurers, drug manufacturers and pharmacies to determine which drugs are covered at what price. Their job, as the New York Times reported in 2024, “is to reduce drug costs. Instead, they frequently do the opposite. They steer patients toward pricier drugs, charge steep markups on what would otherwise be inexpensive medicines and extract billions of dollars in hidden fees.”
The spending bill’s provisions limited some common PBM practices, and the industry declared itself sufficiently regulated. But policymakers are rightly refusing to move on. They are now proposing even more aggressive legislation that would extend not just to PBMs but to other “Big Medicine” middlemen — such as insurance conglomerates and wholesale drug distributors — that drive healthcare costs up and independent providers out of business
Americans receive middling healthcare yet face the highest medical costs in the world. Meanwhile, six of the country’s 15 most valuable companies are Big Medicine conglomerates, more than from any other sector, including Big Tech. Together, these six generated nearly $34 billion in profits last year alone, according to annual reports.
Big Pharma abuses patents to keep drug costs high and block competition from more affordable generics. But that doesn’t let Big Medicine off the hook
PBMs demonstrate, in microcosm, the Big Medicine problem. The “big three” PBMs — CVS Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx — not only control 80% of U.S. prescriptions but also are each vertically integrated with a major insurance conglomerate and a major pharmacy. There is overwhelming evidence that these three companies leverage their market power to drive drug costs up and independent pharmacies out of business. For example, a 2025 report by the Federal Trade Commission found that the big three PBMs paid their affiliated pharmacies up to 7,736% more than unaffiliated competitors.
In addition to the three PBM parent companies are three drug wholesalers: McKesson, Cencora and Cardinal Health. They control 96% of U.S. drug distribution and, like the PBMs, are increasingly vertically integrated with medical providers, including oncology clinics and other specialty practices with high drug costs. This arrangement is rife with conflicts. For instance, in March 2026, Cencora agreed to pay $1 million to resolve allegations that (in the words of the Justice Department) “it violated the False Claims Act by paying kickbacks to health care providers (HCPs) and medical practice executives to induce them to purchase specialty pharmaceutical products.” In other words, wholesalers’ profit margins rather than doctors’ clinical judgment can dictate which drug a patient receives in the chemo chair or during another potentially lifesaving treatment.
PBMs have been quick to point the finger elsewhere, recently launching a seven-figure advertising campaign to blame the pharmaceutical industry for high drug costs. To be clear, Big Pharma abuses patents to keep drug costs high and block competition from more affordable generics. But that doesn’t let Big Medicine off the hook. Unfortunately, even incremental PBM reform efforts stalled for years in the face of fierce opposition from industry groups. Elon Musk even played a supporting role, tanking a bipartisan government funding bill that included PBM reforms at the behest of President Donald Trump. (Musk later admitted he didn’t even know what a PBM was.)
