Insurer-PBM Firms Dominate Medicare Part D Market, Steering Patients to Their Pharmacies

Insurer–pharmacy benefit manager (PBM) firms make up a significant share of the Medicare Part D market and steer patients toward their pharmacies despite network protections, according to a study published in JAMA Health Forum.1

Regulatory concerns are increasing over the dominance of pharmacies owned by insurer-PBM firms, with industry reports estimating that 3 such firms control over two-thirds of the specialty and mail-order pharmacy markets in the US. Insurer-PBMs steer patients to their pharmacies by excluding rivals from networks, advertising to plan enrollees, and including their pharmacies in preferred networks with lower out-of-pocket costs. While these practices may improve access and affordability, they limit competition and restrict patient choice.

The impact of insurer-PBM–owned pharmacies may vary across markets, so the researchers emphasized the need for market-specific insights to guide regulation. For example, Medicare Part D’s “any willing pharmacy” rules prevent plans from excluding pharmacies that meet reasonable, plan-defined criteria.2 However, insurer-PBM firms can still steer patients toward their pharmacies through preferred networks and targeted marketing. To better understand the issue, the researchers quantified the use of, and steering toward, insurer-PBM–owned pharmacies within the Medicare Part D market.1

Insurer-pharmacy benefit manager (PBM) firms control most of the Medicare Part D market, steering patients to their pharmacies through network exclusions and targeted marketing. | Image Credit: Gorodenkoff - stock.adobe.com

They used a 20% sample of Medicare Part D claims data from Medicare Advantage and stand-alone prescription drug plans for 2021, along with a May 2021 snapshot of the National Council for Prescription Drug Program pharmacy directory; the data were analyzed from March to November 2024. The researchers focused on pharmacies owned by conglomerate firms that owned the 4 largest PBMs and Part D insurance plans: CVS, Cigna, Humana, and UnitedHealth Group (UHG).

They stratified the pharmacies into specialty and nonspecialty groups, defining specialty pharmacies as those with over 25% of spending on specialty drugs. To describe the use of insurer-PBM–owned pharmacies, the researchers reported the share of spending by pharmacy type (specialty vs nonspecialty), drug category, and drug class within each category.

Also, they tested for steering of enrollees by comparing the share of claims filled by insurer-PBM pharmacies for the top 100 specialty and nonspecialty drug molecules, respectively. To do so, the researchers calculated 2 metrics for each insurer-PBM firm: the share of the insurer’s claims filled by its pharmacies and the share of other insurers’ claims filled by the insurer’s pharmacies.

They analyzed 10,455,726 patients, most being women (54.8%). The mean (SD) patient age was 71.8 (10.7) years. Additionally, the researchers determined that 34.1% of all pharmacy spending, 37.1% of specialty pharmacy spending, and 32.1% of nonspecialty pharmacy spending occurred through pharmacies owned by CVS, Humana, Cigna, or UHG.

As for specialty drug molecules, they noted that there was “considerable heterogeneity by class” (overall, 39.0%; antivirals, 18.5%; antipsychotics, 29.5%; cancer, 32.5%; disease-modifying antirheumatic drugs, 41.1%; multiple sclerosis, 64.8%; pulmonary arterial hypertension and idiopathic pulmonary fibrosis, 89.7%).

The researchers also found evidence of steering. For molecule-firm pairs, 91.0% and 99.8% of specialty and nonspecialty claims, respectively, were filled at insurer-PBM pharmacies than expected without steering. Furthermore, for each insurer-PBM and drug category, more insurance claims were filled at insurer-PBM pharmacies than anticipated without steering.

Among specialty drugs, this difference was 19.8 (95% CI, 18.0-21.6) percentage points (pp) overall, 21.7 (95%CI,18.2-25.3) pp for Cigna, 18.9 (95% CI, 15.3-22.4) pp for Humana, 13.9 (95% CI, 11.5-16.3) pp for CVS, and 11.9 (95% CI, 9.7-14.2) pp for UHG. Conversely, for nonspecialty drugs, this difference was 13.9 (95% CI, 13.1-14.7) pp overall, 18.9 (95% CI, 15.3-22.4) pp for Humana, 12.9 (95% CI, 11.3-14.5) pp for Cigna, 11.6 (95% CI, 10.7-12.5) pp for CVS, and 8.5 (95% CI, 7.4-9.6) pp for UHG.

The researchers acknowledged their study’s limitations, including their inability to compare the use of insurer-PBM-owned pharmacies across all insurance segments. Despite their limitations, the researchers expressed confidence in their findings, using them to suggest areas for further research.

“The findings suggest that insurer-PBM-owned pharmacies represent an important portion of the Medicare market partly because firms steer patients to their own pharmacies, highlighting the need to understand the implications of insurer-PBM and pharmacy integration,” the authors wrote.

References

1. Kakani P, Navangul S, Lee Luo C, et al. Use of and steering to pharmacies owned by insurers and pharmacy benefit managers in Medicare. JAMA Health Forum. 2025;6(1):e244874. doi:10.1001/jamahealthforum.2024.4874
2. Prescription Drug Benefit Manual; Ch 5; §50.8.1. CMS. September 20, 2011. Accessed January 17, 2025. https://www.cms.gov/files/document/chapter-5-benefits-and-beneficiary-protection-v92011.pdf