The Role and Impact of Pharmacy Benefit Managers on Healthcare Costs
Pharmacy benefit managers (PBMs) continue to be a pivotal force in the prescription drug landscape, but their influence is stirring considerable debate, especially in rural communities.
For patients like Alpena resident Selena Kenny, PBMs represent convenience and cost-efficiency. By using Express Scripts, Kenny accesses her Medicare Advantage plan’s preferred mail-order services for blood pressure and cholesterol medications, benefiting from a streamlined process that reduces costs. "Having medications delivered by mail is very convenient for ongoing needs," Kenny shared, highlighting a growing trend towards mail-order prescriptions.
The Expanding Role of PBMs
PBMs, such as CVS Caremark, Express Scripts, and Optum Rx, play a crucial role in negotiating drug prices and managing pharmacy benefits, particularly in areas with limited access to pharmacies. Their expanding roles have sparked concerns among state officials and independent pharmacists. These entities argue that PBMs’ growing market control is linked to the closure of numerous independent pharmacies. In 2024, Michigan saw 272 pharmacy closures, including 91 independent stores—a number partly influenced by Rite Aid's exit due to bankruptcy.
Community Impact and Concerns
Pharmacists emphasize the importance of brick-and-mortar stores for services like vaccinations and immediate medication access, which mail-order services cannot provide. Eric Roath from the Michigan Pharmacists Association remarked on the diminishing quality of care as independent pharmacies shutter, forcing communities to depend more on mail orders.
Despite this, Ashley McGinn of Michigan’s State Health Insurance Assistance Program notes that the convenience of mail-orders, with 80% of her clients opting for it in the previous year, remains a strong factor. This trend is propelled further by insurance plans that favor mail-order prescriptions, especially in regions where older residents face transportation challenges.
Market Dynamics and Federal Oversight
The competitive landscape is evolving, with major retailers like Walmart and Amazon launching swift mail-in drug services—a shift accelerated by the pandemic's impact on healthcare delivery. Yet, rising operational costs owing to PBM reimbursement rates are adding pressure to traditional pharmacies. Independent pharmacist John Gross highlighted how inadequate reimbursements challenge the economic viability of maintaining physical stores.
Data from the Federal Trade Commission (FTC) in July 2024 revealed that these three dominant PBMs control about 80% of filled prescriptions in the U.S., significantly impacting drug access and pricing. An FTC interim report in 2025 identified significant markups on specialty generics by PBMs. Nonetheless, Express Scripts claims that its services promote cost-efficiency and improved health outcomes.
Legal and Legislative Developments
Amid rising criticism, legal and legislative actions are taking shape. The Michigan Attorney General has initiated a lawsuit against Prime Therapeutics LLC over allegations of harmful practices towards small pharmacies. Prime Therapeutics defends its practices as beneficial to patient savings. Legislative changes aimed at reforming PBM operations are in progress, with full implementation anticipated by 2028. This evolving situation warrants close observation by all stakeholders in the insurance and healthcare sectors.