Employers buying health benefits today often pay the same parent company several times over for one claim. Insurers have bought pharmacy benefit managers (PBMs), PBMs own the pharmacies that fill prescriptions, and hospital systems have absorbed independent physician practices. Benefits brokerages have consolidated too. Supporters say integration streamlines care. The problem for your plan is that the incentives of each piece stop pointing at you.
How big are the big three PBMs?
Big enough that three PBMs handle most of the prescriptions employer plans pay for. In its July 2024 interim staff report, the Federal Trade Commission found that the three largest PBMs, CVS Caremark, Express Scripts and Optum Rx, processed nearly 80% of the roughly 6.6 billion prescriptions dispensed by US pharmacies in 2023. The six largest processed more than 90%.
Each of the three sits inside a larger company that also owns a major health insurer and its own pharmacies.
| PBM | Parent company | Affiliated insurer |
|---|---|---|
| CVS Caremark | CVS Health | Aetna |
| Express Scripts | The Cigna Group | Cigna Healthcare |
| Optum Rx | UnitedHealth Group | UnitedHealthcare |
The FTC described PBMs as part of complex, vertically integrated health care conglomerates and called the industry highly concentrated. It also found that pharmacies affiliated with the three largest PBMs accounted for nearly 70% of specialty drug revenue.
Does integration raise prices?
It can. Employers lose bargaining power when fewer independent companies compete for their business. An integrated company has less reason to compete on price for a service it can route to itself.
The FTC’s second interim staff report, released in January 2025, put numbers on that. Looking at 51 specialty generic drugs from 2017 to 2022, staff found that the big three PBMs marked up many of them by hundreds or thousands of percent at their own pharmacies. Those affiliated pharmacies earned more than $7.3 billion in dispensing revenue above the drugs’ estimated acquisition cost, and they were paid more than unaffiliated pharmacies on nearly every drug examined. Staff also estimated $1.4 billion in spread pricing over the same period.
Those dollars come from plan sponsors and their employees. In 2021 alone, plan sponsors paid $4.8 billion for the specialty generic drugs in the study.
How does it affect patients?
Employees feel integration as narrower choice. When a PBM requires specialty prescriptions to be filled at its own pharmacy, or a hospital system buys the independent specialists in a market, patients have fewer places to go. In rural and underserved areas, where options were already thin, that loss of choice can mean longer drives and longer waits.
Where do the conflicts of interest come from?
Employers should expect conflicts whenever one company sits on more than one side of a transaction. An insurer that owns a PBM has to balance controlling the plan’s drug costs against the revenue its pharmacies and rebate programs bring the parent company. Your employees’ access to the most effective medication can end up in the middle.
The FTC sued the three largest PBMs in September 2024, alleging that their rebating practices inflated the list price of insulin. In February 2026, Express Scripts agreed to a proposed settlement that, among other changes, requires it to base members’ out-of-pocket costs on a drug’s net cost rather than its list price, offer plan sponsors terms that move away from rebate guarantees and spread pricing, and give plan sponsors more transparency, including disclosure of payments to brokers.
Brokerages are part of this picture. As brokerages merge, carrier bonuses and commissions can grow larger and shape which plans get recommended. Since the Consolidated Appropriations Act, 2021, brokers and consultants who expect $1,000 or more in direct or indirect compensation must disclose it to the group health plan fiduciary. Ask for that disclosure and read it.
Congress went further on PBMs in the Consolidated Appropriations Act, 2026, signed February 3, 2026. We cover what it requires and when in our look at PBM reform.
What does it cost in quality and new ideas?
Employers also pay for integration in ways that are harder to measure. When financial targets drive decisions inside a large system, cost cutting can take priority over patient outcomes. And as the largest companies grow, smaller and more agile players have a harder time reaching employers with new approaches to care and pricing. Less diversity in the market means fewer alternatives when your current vendor stops working for you.
What can employers do now?
Employers who sponsor a plan have more control than the market structure suggests. A few steps go a long way:
- Read how your PBM is paid. Look for spread pricing, how rebates are defined and passed through, and whether the PBM can steer prescriptions to its own pharmacies.
- Get your data. Ask for drug-level claims data, not a carrier summary, and compare what your plan pays per prescription with what the pharmacy was paid.
- Ask every adviser how they are paid. That includes your broker. The compensation disclosure is your right as a plan fiduciary.
- Market the contract when it can’t be fixed. Compare transparent and traditional PBMs side by side and record why your committee chose what it chose.
Ethos Benefits reviews PBM contracts and pharmacy spend through its pharmacy and PBM service.
The balance to strike.
Integration is not going away, and some coordination does help patients. But employers, regulators and policymakers should weigh the costs to competition, choice, quality and trust. For a plan sponsor, the test is simple: every party paid by your plan should be able to show that its incentives line up with your employees’ care and your plan’s dollars.