The pharmaceutical supply chain in the United States is undergoing a profound structural shift, one that critics argue is prioritizing corporate efficiency over patient affordability. According to a landmark analysis released by the American Medical Association (AMA), the Pharmacy Benefit Manager (PBM) industry has reached a new threshold of market concentration. In 2024, the four largest PBMs collectively controlled 75% of the national market—a steady and significant climb from the 70% share recorded just two years prior.
As the intermediaries responsible for negotiating drug prices, managing formularies, and processing claims, PBMs occupy a position of immense power. However, the AMA’s latest report suggests that this power is increasingly centralized within a small cadre of vertically integrated healthcare giants, raising urgent questions about transparency, competition, and the ultimate cost of care for the American consumer.
The Landscape of Concentration: Key Findings
The AMA analysis, which meticulously evaluated prescription drug plan and enrollment data from 2022 through 2024, highlights a dramatic consolidation of market influence among the top 10 PBMs. The data paints a clear picture: the PBM sector is not merely expanding; it is coalescing into an oligopoly where competition is being systematically eroded.
The Big Four Shift
The leaderboard of the PBM industry saw notable reshuffling between 2022 and 2024. As of 2024, the market was dominated by:
- OptumRx: 23%
- Express Scripts: 23%
- CVS Caremark: 18%
- Prime Therapeutics: 11%
Comparing these figures to 2022, when CVS Caremark and OptumRx were tied at 21% and Express Scripts held 17%, the most striking trend is the rapid ascent of Express Scripts. This volatility in rankings, coupled with the rising cumulative market share of the top four, suggests that the barriers to entry for smaller, independent PBMs have become virtually insurmountable.
Localized Monopolies
Perhaps more concerning than national market share is the degree of concentration at the local level. The AMA report found that 32 out of the 34 PBM markets (94%) were classified as "highly concentrated" in 2024. This is a marked increase from 2022, when 28 markets (82%) met that threshold. When nearly every regional market is dominated by a few players, patients and employers lose the ability to shop for competitive drug management services, effectively leaving them at the mercy of whichever PBM holds regional dominance.
Chronology: The Evolution of PBM Market Power
The current state of the PBM industry is the result of decades of mergers, acquisitions, and strategic alignments.
- Pre-2010s: The PBM industry was relatively fragmented, with many standalone entities acting as pure-play intermediaries.
- 2010–2018 (The Era of Vertical Integration): A wave of mega-mergers began to define the sector. Notable events included CVS Health’s acquisition of Caremark and the subsequent merger of Aetna and CVS. Similarly, UnitedHealth Group deepened its relationship with OptumRx, while Cigna acquired Express Scripts.
- 2022 (Baseline Analysis): The AMA identified that 70% of the market was controlled by the top four players, signaling that the "vertical integration" phase was nearing a mature state.
- 2024 (Current Snapshot): Concentration hits 75%. Regulatory scrutiny intensifies as the influence of these entities over drug pricing and formulary design reaches historic highs.
Supporting Data: The Vertical Integration Factor
The AMA report emphasizes that the consolidation of PBMs is inextricably linked to the broader trend of vertical integration within the health insurance industry. Every single one of the top 10 PBMs analyzed by the AMA shares ownership with a major health insurer.
In 2024, an estimated 69% of all individuals with commercial or Medicare Part D prescription drug coverage were enrolled with an insurer that was vertically integrated with a PBM. This structure creates a "closed loop" system: an insurer sets premiums, a PBM manages the drug list (formulary) and negotiates rebates, and the parent company captures profit at every stage of the transaction.
Insurer Market Shares
The report also assessed the top 10 insurers providing drug benefits. UnitedHealth Group maintains the largest footprint in commercial and Medicare Advantage prescription drug plans (PDP). Meanwhile, Centene leads the stand-alone Medicare Part D market. Kaiser and Humana retain significant competitive positions, but the overarching theme remains the same: the health insurance market is essentially tethered to the PBM market, creating a structural barrier that keeps drug costs high by insulating these companies from true competitive pressure.
Official Responses: The AMA’s Stance
The American Medical Association has been one of the most vocal critics of the current PBM business model. The organization argues that the lack of competition and the prevalence of vertical integration are direct threats to patient welfare.
"Competitive PBM and prescription drug plan markets help patients get the medications they need at a fair price," said AMA President Dr. Willie Underwood III. "But our analysis shows that a small number of PBMs account for a growing share of the market, while most local PBM markets remain highly concentrated and most prescription drug benefits are managed by vertically integrated insurers and PBMs."
Dr. Underwood’s statement underscores a fundamental concern: when the same company that manages the insurance plan also negotiates the drug prices, the incentive to lower costs for the patient is often secondary to the incentive to maximize rebates—which are frequently kept by the PBM rather than passed on to the consumer.
Implications: A Path Toward Reform
The concentration of market power has not gone unnoticed by federal lawmakers. The implications of this study suggest that the healthcare market is failing to provide the transparency necessary for a functioning free-market system.
Recent Legislative and Regulatory Action
- Congressional Reform: In February 2026, Congress passed landmark reforms aimed at "delinking" PBM compensation from the price of a drug in Medicare Part D. This move is designed to prevent PBMs from profiting more when drugs are priced higher, a practice known as "spread pricing."
- DOL Oversight: The Department of Labor has proposed a rule seeking to improve transparency regarding fees and compensation. This would force PBMs to disclose the "hidden" payments they receive from manufacturers, which have long been shielded by trade secret protections.
The Future of Regulation
Despite these steps, the AMA remains adamant that more must be done. The organization is calling for:
- Greater Transparency: Mandating the full disclosure of all rebates, fees, and incentives received by PBMs.
- Increased Scrutiny: Antitrust regulators should take a more aggressive stance on future mergers between insurers and PBMs to prevent further erosion of local competition.
- Accountability: Establishing clear legal standards that require PBMs to act in the best interest of the patient, rather than the parent insurer.
"These trends warrant closer scrutiny, greater transparency and stronger accountability to ensure PBM markets serve patients rather than reinforce the market power of large healthcare companies," Dr. Underwood concluded.
Conclusion
The AMA’s 2024 report serves as a diagnostic tool for a healthcare system that is increasingly dominated by a handful of massive entities. As PBMs continue to tighten their grip on the pharmaceutical supply chain, the divide between the cost of medicine and the price paid by patients will likely continue to widen unless policymakers move beyond incremental reforms. The challenge ahead lies in dismantling the systemic advantages held by vertically integrated insurers and restoring a level of competition that puts the patient’s health—and their pocketbook—at the center of the equation.
