PBMs Reimburse $4 on Prescriptions That Cost $100 to Fill

The three largest pharmacy benefit managers -- CVS Caremark, Express Scripts, and OptumRx -- control nearly 80% of the approximately 6.6 billion prescriptions dispensed annually in the United States. These vertically integrated conglomerates own or are affiliated with their own mail-order and retail pharmacies, and they systematically set reimbursement rates that drive independent competitors out of business. Some prescriptions cost $100 to fill, but PBMs reimburse as little as $4, creating an impossible economic equation for independent pharmacies. This is not a market inefficiency -- it is a structural feature of vertical integration. When a PBM owns the insurance plan, the formulary, and the pharmacy, it can direct prescriptions to its own affiliated pharmacies while starving independent pharmacies of volume and margin. The FTC's 2024 staff report confirmed that PBMs engage in practices that squeeze independent pharmacies, including steering patients to PBM-owned pharmacies and imposing onerous contract terms. Nearly 4,000 pharmacy closures since 2019 have been attributed to these vertically integrated networks. The patients who suffer most are in rural and underserved communities where independent pharmacies are often the only option. When these pharmacies close, there is no CVS or Walgreens waiting to fill the gap. The community simply loses pharmacy access entirely. USC research found that independent pharmacies were twice as likely to close as chain stores, and closure rates were highest in Black neighborhoods (37.5%) and Latino neighborhoods (35.6%) compared to predominantly white neighborhoods (27.7%). This problem persists because PBMs operate with minimal transparency and enormous lobbying power. Congress attempted PBM reform in 2024, but it was blocked. The American Economic Liberties Project documented that 326 additional pharmacies closed in the period after PBM reform was killed. Some states have begun acting independently -- Arkansas became the first state to ban PBM-owned pharmacies -- but federal reform remains stalled despite bipartisan support.