Why PBMs Should Not Be Allowed to Operate Pharmacies: A Call for Fairness and Transparency
Why PBMs Should Not Be Allowed to Operate Pharmacies: A Call for Fairness and Transparency
The pharmacy landscape has changed dramatically over the past two decades, with Pharmacy Benefit Managers (PBMs) playing an increasingly dominant role in determining medication access, cost, and reimbursement. While PBMs were originally designed to negotiate drug prices and manage formularies on behalf of insurers, many now own or are affiliated with their own mail-order and specialty pharmacies, raising major concerns about conflicts of interest, anticompetitive practices, and harm to patient care.
For pharmacists on the front lines, this vertical integration is not just a policy issue—it’s an urgent threat to the integrity of our profession and the accessibility of community-based care.
What Are PBMs and What Do They Do?
PBMs serve as middlemen between insurers, drug manufacturers, and pharmacies. Their roles include:
Creating and managing drug formularies
Negotiating rebates from drug manufacturers
Determining reimbursement rates for pharmacies
Processing prescription drug claims
The three largest PBMs—CVS Caremark, Express Scripts, and OptumRx—collectively control more than 75% of the U.S. prescription drug market.¹ All three own or are affiliated with large pharmacy chains or mail-order services.
Why PBMs Should Not Also Be Pharmacies
1. Conflict of Interest
When a PBM owns a pharmacy, it has a direct financial interest in steering patients toward its own services. This is an inherent conflict of interest. The PBM sets reimbursement rates, and it can pay its own pharmacy more while under-reimbursing or even excluding independent pharmacies from the network.
Example: CVS Caremark may reimburse an independent pharmacy $7 for a prescription while paying its own CVS retail pharmacy $15 for the same drug.²
This self-dealing leads to unfair market competition and jeopardizes the survival of local pharmacies.
2. Reduced Patient Choice
Patients often find themselves forced to use PBM-owned mail-order or specialty pharmacies, even when they prefer local options. This reduces patient autonomy and can compromise care—especially when urgent medications are delayed, or complex regimens require face-to-face counseling.
A 2020 survey by the National Community Pharmacists Association (NCPA) found that 78% of community pharmacists reported that patients were “steered” toward PBM-owned pharmacies.³
3. Anticompetitive Behavior
Vertical integration allows PBMs to suppress competition through practices such as:
Gag clauses that prevent pharmacies from telling patients when paying cash is cheaper
DIR fees (Direct and Indirect Remuneration) retroactively clawed back from pharmacies months after dispensing
Exclusion from preferred networks for non-affiliated pharmacies
Independent pharmacies—especially those in rural or underserved areas—are being systematically squeezed out of the market.
4. Harm to Transparency and Cost Control
Despite claims of lowering drug costs, PBMs often obscure actual pricing through spread pricing (charging insurers more than they reimburse pharmacies) and complex rebate systems that do not always benefit the patient.
In Ohio, a 2018 audit found that PBMs charged the state $224 million more than they paid pharmacies in one year alone.⁴
A 2021 Congressional report noted that PBMs’ opaque practices “may increase drug prices and reduce access.”⁵
When PBMs also dispense medications, they have less incentive to reduce costs or offer transparency.
Pharmacists and Patients Deserve Better
As healthcare professionals, pharmacists are ethically bound to advocate for evidence-based, patient-centered care. But when PBMs double as pharmacies, they:
Prioritize profits over patients
Undermine competition and innovation
Harm local economies
Reduce access to care, especially in underserved communities
This issue is not just about business—it’s about preserving a healthcare system where decisions are made in the best interest of patients, not corporate shareholders.
Legislative Momentum Is Growing
Bipartisan efforts at both state and federal levels aim to rein in PBMs. Some of the most promising reforms include:
Prohibiting PBMs from owning or steering patients to affiliated pharmacies
Banning retroactive DIR fees
Requiring reimbursement transparency and fair network inclusion
Pharmacists can play a vital role by educating legislators and the public about how PBM-pharmacy consolidation harms healthcare.
Conclusion
PBMs should not be allowed to act as both gatekeepers and providers. Allowing them to operate pharmacies creates clear conflicts of interest, reduces patient choice, and threatens the viability of community-based care. Pharmacists must continue to speak out and demand reforms that restore fairness, transparency, and integrity to the system.
References
Fein AJ. The 2023 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. Drug Channels Institute.
U.S. House Committee on Oversight and Reform. "Drug Pricing Investigation: Industry Spending on Medicare and Pharmacy Benefit Managers." 2021.
National Community Pharmacists Association. "NCPA Survey: Patients Being Steered to PBM-Owned Pharmacies." 2020.
Ohio Auditor of State. "Ohio’s Medicaid Managed Care Pharmacy Services." August 2018.
U.S. Senate Finance Committee. "Pharmacy Benefit Managers and the Prescription Drug Supply Chain." December 2021.