Here’s a shocking truth: Just three pharmacy benefit managers (PBMs) control the majority of retail prescriptions in Medicare Part D and Medicaid managed care across the U.S., leaving markets in nearly every state highly concentrated—and this is the part most people miss. But here’s where it gets controversial: Is this dominance driving up drug costs, forcing pharmacy closures, and limiting patient access to essential medications? A groundbreaking study from the USC Schaeffer Center for Health Policy & Economics (https://schaeffer.usc.edu/pbms/) sheds light on this critical issue, revealing just how widespread the problem is.
Published on February 6 in JAMA Health Forum (https://jamanetwork.com/journals/jama-health-forum/fullarticle/10.1001/jamahealthforum.2025.6546), the research offers one of the most comprehensive analyses to date of PBM competition within states. Using a federal antitrust index, the authors uncovered startling trends:
- 40 states have highly concentrated PBM markets in Medicare Part D.
- 37 states face the same issue in Medicaid managed care.
- 31 states struggle with high concentration in both programs, including 10 states where commercial insurance markets are also dominated by a few players.
- 93% of Medicaid managed care prescriptions and 75% of all Part D prescriptions are filled in states with highly concentrated PBM markets.
For context, imagine living in a state where just a handful of companies dictate where you can fill your prescriptions, how much you pay, and whether your medication is even covered. That’s the reality for millions of Americans. (Explore the state-by-state breakdown in the interactive map here: https://schaeffer.usc.edu/research/pbm-markets-medicare-part-d-medicaid-market-concentration/)
This study arrives at a pivotal moment. Policymakers and regulators are already scrutinizing PBMs for their role in rising drug costs and shrinking pharmacy access. Congress recently passed legislation to curb PBM practices, and states have been tightening regulations for years. But is it enough?
Here’s the bold question: Are PBMs acting as gatekeepers to healthcare, or are they exploiting their market power at the expense of patients? Lead author Dima Mazen Qato (https://schaeffer.usc.edu/people/dima-m-qato-pharmd-mph-phd/), a senior scholar at the Schaeffer Center, warns, “When a few PBMs dominate, they hold disproportionate control over drug prices, pharmacy availability, and medication coverage. This isn’t just about numbers—it’s about people’s lives.”
The study, co-authored by Yugen Chen and Karen Van Nuys, isn’t just an academic exercise. It’s a call to action. Its findings can shape federal and state policies to increase PBM accountability and transparency, especially in Medicare Part D and Medicaid. They also bolster ongoing efforts to tackle market concentration, from new laws to regulatory proposals and federal enforcement actions.
But here’s the counterpoint: Some argue that PBMs negotiate lower drug prices for insurers and patients. Is their market dominance a necessary evil, or is it time for a complete overhaul? We want to hear from you. Do you think PBMs are part of the solution—or the problem? Share your thoughts in the comments below.
About this Study: The research was co-authored by Yugen Chen and Karen Van Nuys. For author disclosures, refer to the full study. This material is edited for clarity and style, and all views expressed are those of the authors. View the original release here: https://www.miragenews.com/pbm-markets-for-medicare-medicaid-highly-1616385/.
