AMA analysis: PBM market concentration continues to rise

CHICAGO - Competition in the nation's pharmacy benefit manager (PBM) markets continues to decline with a small number of PBMs accounting for an increasingly large share of the national market, according to the American Medical Association's (AMA) latest annual analysis (PDF). The findings point to the need for continued scrutiny of PBM market concentration and vertical integration, along with greater transparency and accountability for business practices that can affect prescription drug costs, competition and access.

"Competitive PBM and prescription drug plan markets help patients get the medications they need at a fair price," said AMA President Willie Underwood III, MD, MSc, MPH. "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. These trends warrant closer scrutiny, greater transparency and stronger accountability to ensure PBM markets serve patients rather than reinforce the market power of large healthcare companies."

The AMA findings add to recent research indicating health insurer acquisition of PBMs can harm consumers by increasing costs, limiting competition and creating incentives to favor the insurer's own interests. Insurer acquisition of PBMs was shown to be associated with higher premiums for competing health plans, with no evidence that savings from the acquisition were passed through to enrollees as lower premiums. The Federal Trade Commission has also raised concerns about how PBM concentration and vertical integration can affect independent pharmacies and patients' access to prescription drugs.

Based on prescription drug plan (PDP) enrollment data from 2022 and 2024, the AMA analysis presents a snapshot of PBM market concentration, lists national-level market shares of the 10 largest PBMs, and measures the share of commercial and Medicare Part D PDP enrollees where the insurer and PBM are vertically integrated. Key findings from the AMA analysis include:

Competition in PBM Markets

The top four PBMs collectively had 75% share of the national-level PBM market in 2024, an increase from 70% in 2022, according to the AMA analysis.

• In 2024, the four largest PBMs by national market share were OptumRx (23%), Express Scripts (23%), CVS/Caremark (18%), and Prime Therapeutics (11%).
• In 2022, the top four were CVS/Caremark (21%), OptumRx (21%), Express Scripts (17%), and Prime Therapeutics (10%).
• Among these companies, Express Scripts had the largest increase, rising from 17% in 2022 to 23% in 2024. CVS/Caremark had the largest decrease, shrinking from 21% in 2022 to 18% in 2024.
• Locally, 94% (32) of PBM markets were highly concentrated in 2024 according to thresholds set by federal antitrust guidelines (PDF), an increase from 82% (28) in 2022.

Vertical integration of PBMs and insurers

Significant vertical integration was found in 2024 as each of the 10 largest PBMs shared ownership with health insurers, according to the AMA analysis.

Nationally in 2024, 69% of people with commercial or Medicare Part D prescription drug coverage were enrolled with an insurer that was vertically integrated with a PBM.

• The vertically integrated share was higher in Part D than in commercial insurance (73% vs. 67%).
• Locally in 2024, an average of 67% of people with prescription drug insurance were covered by an insurer that shared ownership with a PBM.
• There was wide variation among local regions with some having little vertical integration between insurers and PBMs, while others are almost entirely vertically integrated.

Drug insurer market shares

The analysis also reports national market shares for the 10 largest insurers offering prescription drug benefits and their rankings in three prescription drug markets: commercial, Medicare Advantage PDP and stand-alone Medicare Part D.

• UnitedHealth Group was the largest insurer offering prescription drug benefits in both the commercial market (14%) and Medicare Advantage PDP market (30%), and the third largest in the stand-alone market (18%).
• Kaiser was the second largest drug insurer in the commercial market (10%), while Humana was second in the Medicare Advantage PDP market (19%).
• Centene was the largest drug insurer in the stand-alone market (28%), followed by CVS Health (Aetna) (23%).

The AMA's analysis is intended to provide policymakers with insight into competition, vertical integration and business practices across the prescription drug supply chain. The findings can help inform ongoing examinations of how market structure and PBM business practices affect competition, prescription drug costs and access, and where greater transparency and accountability may be needed. Prohibiting PBMs from engaging in opaque and harmful business practices is a vital issue of public policy for the nation's physicians, and the AMA's TruthinRx campaign continues to call for drug pricing transparency.