Prescribing for Profits: How Pharmacy Benefit Managers Are Sabotaging Patient Health
Unmasking the Middlemen: Why Your Prescription Price Has Little to Do With the Cost of the Drug
By Eric J. Lullove, DPM
In the modern landscape of American healthcare, the bridge between a physician’s prescription pad and a patient’s pharmacy counter is no longer a direct path. It is a toll road, governed by Pharmacy Benefit Managers (PBMs). While these entities were originally designed to streamline drug delivery and negotiate lower prices, the current reality in 2026 is far more complex—and for many patients, far more dangerous.
As a physician in private practice, I see the human cost of these “administrative” decisions every day. When a PBM denies a specific wound care therapy or a life-altering specialty medication, they aren’t just managing a formulary; they are actively altering the trajectory of a patient’s life.
Market Concentration and Pricing Dynamics
To understand the problem, we must first look at the sheer scale of market dominance. A staggering 79% of all prescription drug claims in the United States are controlled by just three entities: CVS Caremark (33%), Express Scripts (24%), and OptumRx (22%). When you expand that to the top six PBMs, they handle 96% of the market.
This extreme concentration has raised significant concerns about limited competition, prompting a series of Federal Trade Commission (FTC) investigations. The core issue is a “high-list-price/high-rebate” incentive structure. When PBMs retain percentages of rebates, they often prefer expensive drugs that generate larger “kickbacks” over lower-cost alternatives that would save patients money.
The Rebate Gap: Between 2011 and 2016, rebates and payments from manufacturers to intermediaries increased 15% annually, while net revenues for those drugs grew by only 2.7%.
The Clinical Cost of “Utilization Management”
We often hear the terms “Prior Authorization” (PA) and “Step Therapy” (the “fail-first” requirement) framed as quality control. In practice, they often serve as barriers to medically necessary care, with devastating effects on outcomes.
1. Medication Adherence
The strongest evidence base in this field relates to adherence. A systematic review of 93 studies found that 68.3% of medication adherence outcomes showed negative correlations with formulary restrictions. In plain terms: when we make it harder for patients to get their medicine through red tape and high costs, they stop taking it.
2. Clinical Outcomes in Multiple Sclerosis
A 2025 study in JAMA Network Open examined formulary exclusions for MS medications in Medicare Part D, finding that beneficiaries’ access was restricted on an average of 45% of brand-only compounds. For heterogeneous conditions like MS, where treatment effects vary wildly across patients, these exclusions are associated with increased relapse episodes and disease progression.
3. Specialty Drugs and Socioeconomic Vulnerability
The burden falls heaviest on our most vulnerable. For specialty medications, increasing cost-sharing above $100 was associated with up to 75% abandonment rates. Lower-income patients experience the worst outcomes, while those with complex neurologic or autoimmune diseases face missed doses and increased emergency department visits due to therapy delays.
Policy in Motion: Government Intervention and the 2026 Reform Wave
The administration has shifted from monitoring to active intervention on the “back end” of the PBM model. In early 2026, the Consolidated Appropriations Act, 2026 (CAA 2026) was signed into law, representing a decisive strike against these “middleman” incentives.
Combatting the “Black Box”
The federal government has recently taken several steps to accelerate the dismantling of PBM profit-taking:
Mandatory Rebate Pass-Through: PBMs are now required to remit 100% of rebates to the health plan sponsors, ending the practice of “rebate skimming.”
Delinking in Medicare Part D: PBM compensation is now “delinked” from drug list prices. They must be paid via flat, fair-market fees for service, removing the incentive to prefer high-priced drugs.
FTC Settlements: In February 2026, the FTC secured a landmark settlement following investigations into major PBMs, requiring fundamental changes to their business practices to drive down insulin costs and increase transparency for all products.
The Inflation Reduction Act: Impact Beyond Medicare
One of the most debated pieces of legislation is the Inflation Reduction Act (IRA). While famous for allowing Medicare to negotiate drug prices, its effects are rippling through the entire American economy—both positively and adversely for those not on Medicare.
The Positive Spillover
The “Shaming” Effect on Insulin: While the IRA’s $35 insulin cap only applied to Medicare, the political and market pressure forced major manufacturers to voluntarily extend that cap to the private sector.
Inflation Penalties: The IRA penalizes manufacturers who raise prices faster than inflation. Because these penalties are calculated based on national averages, it creates a “price ceiling” that helps slow cost increases for commercial insurance premiums as well.
The Adverse Consequences
Cost-Shifting to Private Plans: As manufacturers lose margin in the Medicare segment due to negotiation, there is a risk they will seek to recoup that revenue by raising prices on new drugs for the commercial market.
Increased “Red Tape”: PBMs, seeing their Medicare profit margins squeezed by the new “delinking” rules, have doubled down on utilization management in the private sector. Patients on employer-sponsored plans are now seeing more prior authorizations and stricter step therapy as PBMs pivot their revenue strategies.
Conclusion: A Market in Transition
The evidence shows that PBM restrictions directly harm medication adherence and clinical outcomes. While the administration’s recent 2026 reforms and the IRA are finally introducing transparency and price controls, we are in a volatile transition period.
As a physician, my priority remains the patient in front of me. We must continue to advocate for a system where clinical endpoints—not rebate percentages—dictate care.
Dr. Lullove is the Chief Executive and Medical Officer of the West Boca Center for Wound Healing in Coconut Creek, FL. He is a national expert in advanced wound managment and government regulatory affairs with specific interest in medical devices and clinical trials.
References
1.Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy. JAMA Health Forum. 2023. Mattingly TJ, Hyman DA, Bai G.
2.Pharmacy Benefit Managers in the Eye of the Storm: Growing Multipartite Scrutiny. Journal of the American Board of Family Medicine : JABFM. 2024. Adashi EY, O’Mahony DP, Guzick DS.
3.The Relationship Between Pharmacy Benefit Managers (PBMs) and the Cost of Therapies in the US Pharmaceutical Market: A Policy Primer for Clinicians.American Heart Journal. 2018. Schulman KA, Dabora M.
4.Policy Recommendations for Pharmacy Benefit Managers to Stem the Escalating Costs of Prescription Drugs: A Position Paper From the American College of Physicians. Annals of Internal Medicine. 2019. Daniel H, Bornstein SS.
5.Denials, Dilly-Dallying, and Despair: Navigating the Insurance Labyrinth to Obtain Medically Necessary Medications for Pediatric Inflammatory Bowel Disease Patients.Journal of Pediatric Gastroenterology and Nutrition. 2022. Kahn SA, Bousvaros A.
6.Impact of Pharmacy Benefit Managers on Oncology Practices and Patients. JCO Oncology Practice. 2020. Royce TJ, Schenkel C, Kirkwood K, et al.
7.Changes in PBM Business Practices in 2019: True Innovation or More of the Same?.Journal of Managed Care & Specialty Pharmacy. 2020. Motheral BR, Fairman KA.
8.Pharmacy Benefit Management Companies: Do They Create Value in the US Healthcare System?. PharmacoEconomics. 2017. Lyles A.
MORE FROM BLUE AMP MEDIA
 | A guest post by
|
Hi Doctor! I actually have a question. What do you think of Mark Cuban's Cost Plus Drugs?