Lawmakers on both the left and right are increasingly blaming pharmacy benefit managers (PBMs) — the intermediaries that negotiate prescription drug prices between manufacturers, insurers, and pharmacies — for rising healthcare costs. Last month, a bipartisan group of legislators reintroduced the Patients Before Monopolies Act, which would prohibit companies that own PBMs from also owning retail pharmacies.Supporters of the legislation argue that vertical integration between PBMs and pharmacies is inherently anti-competitive and contributes to higher prices. But this reflects a familiar antitrust mistake: treating integration as evidence of market failure rather than recognizing the efficiencies it can create.Today, healthcare giants such as Cigna, CVS Health, and UnitedHealth Group operate across multiple segments of the prescription drug market. Through subsidiaries, they own insurers, pharmacies, and the “Big Three” PBMs — Express Scripts, CVS Caremark and OptumRx.
STATES ALREADY HAVE PHARMACY DESERTS. PBM REFORMS MAKE IT WORSE
This structure has drawn scrutiny from policymakers who contend that pharmacy-owned PBMs face conflicts of interest when negotiating drug prices. Yet the existence of integration alone does not demonstrate harm. In many industries, firms integrate because doing so lowers costs, improves coordination, and benefits consumers.
