The state Senate Health and Human Services committee advanced a bill on Monday to increase oversight of pharmacy benefit managers.
Pharmacy benefit managers are pharmaceutical industry middlemen. They’re largely responsible for overseeing the prescription drug side of health insurance plans. In that role, they negotiate the cost of drugs on behalf of insurance companies, often receiving discounts on expensive drugs in exchange for placing those medicines on a given plan’s formulary. They are also responsible for reimbursing pharmacies for the cost of drugs when patients pay only a copay upfront.
The nation’s largest pharmacy benefit managers have lately come under heavy scrutiny from state lawmakers, like in Pennsylvania, and federal regulators.
The FTC is currently engaged in an antitrust investigation into some of the largest pharmacy benefit managers. The three largest pharmacy benefit managers operate under parent companies that also have their own massive health insurance companies and pharmacy chains. The nation’s three largest pharmacy benefit managers are estimated to be responsible for overseeing prescription benefits for 70% of Americans’ health care plans.
Take, for example, CVS Health, one of the most profitable healthcare companies in the country, and one of the most profitable companies more generally. In the latest Fortune 500 list, CVS Health ranked as the country’s 6th largest company by revenue, with over $357 billion earned in 2023 alone. Aside from owning the nation’s largest pharmacy chain, CVS Health also owns one of the largest pharmacy benefit managers, Caremark, and one of the largest health insurance providers, Aetna.
