The Texas Medical Association said on March 4 that growing consolidation among pharmacy benefit managers (PBMs) can raise prescription drug costs and restrict patient access, as a small number of middlemen now wield outsized control over formularies, rebates, and pharmacy payments. The association's statement aligns with ongoing scrutiny from state and federal policymakers regarding how PBM market power affects affordability and care access.
The issue is significant because PBMs play a central role in the prescription drug supply chain. Pharmacy benefit managers are the middlemen that run prescription drug benefits on behalf of insurers, employers, and health plans. The Centers for Medicare & Medicaid Services says PBMs may contract with pharmacy networks, set payment levels, negotiate rebate arrangements with drugmakers, and manage formularies, preferred drug lists, and prior authorization programs, giving them major influence over what drugs patients can get and what they pay.
The Federal Trade Commission reports that PBM concentration has surged alongside vertical integration, with the three largest PBMs now handling 79% of U.S. prescription drug claims for about 270 million people. That level of market power matters because the same firms can influence formularies, reimbursement, and pharmacy access, giving a few companies enormous leverage over what patients pay and where they can fill prescriptions.
FTC staff found PBM-affiliated pharmacies were often reimbursed at 20 to 40 times the National Average Drug Acquisition Cost for two specialty generic drugs, helping those affiliated pharmacies retain nearly $1.6 billion in dispensing revenue above NADAC from 2020 through part of 2022. The finding undercuts the claim that consolidation consistently lowers costs for patients or payers.
In its second interim report, the FTC said the Big 3 PBMs generated more than $7.3 billion in excess revenue on specialty generic drugs over six years by marking up many medicines dispensed at affiliated pharmacies by hundreds or thousands of percent. The agency said the markups touched cancer, HIV, and other critical treatments, raising fresh concerns about affordability and patient access.
The Texas Medical Association is the nation’s largest state medical society and one of its oldest, representing more than 60,000 physician and medical student members across Texas. In partnership with 110 county medical societies. It has worked since 1853 to uphold professional and ethical standards and improve the health of Texans.
