Let’s start with a number PCMA wants you to admire: 98% of employers say specialty pharmacy services are an important factor when choosing a PBM.[1] They present this as evidence the system works beautifully — employers love specialty pharmacy, specialty pharmacy lives inside their PBM, everybody wins.
Worth noting: the survey was commissioned by PCMA — the PBM industry’s own trade lobby — and conducted by a health policy research firm hired for the purpose. Could there be cause for bias in a survey designed, funded, and released by the industry being surveyed? We’ll let you decide. What we can say is that satisfied customers and structural conflicts of interest are not mutually exclusive.
One Company, One Closed Loop
The Big 3 PBMs — the ones managing nearly 95 percent of all prescriptions filled in the United States[2] — are not just middlemen anymore. They are vertically integrated conglomerates: the PBM negotiates drug prices, the affiliated insurer covers the patient, and the affiliated specialty pharmacy dispenses the drug. In some cases, the affiliated medical group employs the physician who wrote the prescription.
Drug Channels, the industry trade publication that maps this architecture annually, describes organizations that continue to exert greater control over patient access, sites of care, and pricing.[4] Its running editorial commentary on the resulting dynamic: “Whoever has the gold gets to make the rules.”
That’s not our opinion. That’s the industry watching itself.
The Specialty Pharmacy Problem
Specialty drugs — biologics for autoimmune disease, chemotherapy for cancer, antiretrovirals for HIV — represent the most expensive and fastest-growing segment of commercial drug spending. They’re also where the Big 3 have concentrated their pharmacy ownership most aggressively.
The FTC’s July 2024 interim staff report documented the result: pharmacies affiliated with the Big 3 PBMs received 68% of the dispensing revenue generated by specialty drugs in 2023, up from 54% in 2016.[2] The FTC’s characterization of what drives this concentration: vertically integrated PBMs “appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs.“[2]
Note the careful regulatory language: appear to have the ability and incentive. The FTC is not alleging a specific illegal act in that sentence. It is describing an observable structural condition. We think the implication is worth sitting with.
The Numbers Behind the Incentive
In January 2025, the FTC published a second interim report focused specifically on specialty generic drugs — the cheaper versions of expensive brand treatments for cancer, MS, and HIV that should cost less than the brands they replaced. The findings covered 51 drugs dispensed between 2017 and 2022.
Key findings, drawn directly from the report’s summary:[3]
Of specialty generic drugs dispensed by Big 3-affiliated pharmacies for commercial health plan members between 2020 and 2022, 63 percent were reimbursed at rates marked up by more than 100 percent over their estimated acquisition cost. Twenty-two percent were marked up by more than 1,000 percent.
On dispensing patterns: 44 percent of commercial specialty generic prescriptions were dispensed by PBM-affiliated pharmacies over the 2020–2022 period, compared with 72 percent of prescriptions for drugs marked up more than $1,000 per prescription. The FTC’s language: these dispensing patterns “suggest that the Big 3 PBMs may be steering highly profitable prescriptions to their own affiliated pharmacies.”
“Suggest” and “may be” are the FTC’s words. Ours too. But when the most profitable prescriptions flow to the in-house pharmacy at nearly double the rate of baseline volume, the question of why is a reasonable one to ask.
Total excess dispensing revenue above estimated acquisition cost for the Big 3’s affiliated pharmacies across those 51 drugs: over $7.3 billion, growing at a compound annual rate of 42 percent from 2017 through 2021.[3]
The Employer’s Dilemma
Employers in PCMA’s survey report high satisfaction with specialty pharmacy services. That satisfaction may be genuine — clinical coordination for complex therapies, medication adherence support, and prior authorization management are real services with real value. The clinical case for specialty pharmacy isn’t in dispute here.
What is harder to evaluate is whether those services are priced appropriately when the entity providing them also controls the formulary, the network design, and the data on what everything actually costs. As one legal analysis of the FTC’s second report put it: PBMs “often inflate the acquisition costs of specialty generics, making it difficult for plan sponsors to determine whether they are being charged fair prices. This opacity not only obscures the true cost of drugs but also makes it challenging for plan sponsors to hold PBMs accountable.“[6]
In our view, satisfaction measured against an opaque baseline is not the same as satisfaction measured against a transparent one. But that’s an editorial position — the underlying opacity finding belongs to the FTC and the attorneys analyzing the report, not to us alone.
The Referral Network You Didn’t Consent To
One documented feature of deep vertical integration: physicians employed by an insurer “can be mandated to send patients to the specialty pharmacies and providers owned by the vertically integrated organizations.“[5] That’s Drug Channels describing an operational practice — not an allegation of wrongdoing, but a description of how incentive structures can function when enough of the supply chain is under common ownership.
Your doctor may be writing a prescription under contractual terms that channel it to a specific pharmacy before you leave the exam room. Whether that happens in your plan, and whether it affects your costs or your access to care, is something your employer — and arguably you — should be able to find out. Whether you actually can is a different question.
What Honest Accounting Would Require
The FTC’s finding that PBMs oversee critical decisions about access to and affordability of life-saving medications “without transparency or accountability to the public"[2] points to the core structural problem. The information asymmetry is not accidental. It is, in our view, a feature of a market design that advantages the intermediary.
PCMA’s 98% satisfaction figure isn’t fabricated. Employers probably are satisfied — with specialty pharmacy services as a clinical capability they’ve come to rely on. What they’re not doing, in most cases, is benchmarking those services against a counterfactual where the same clinical coordination is delivered by an entity that doesn’t also own the pharmacy capturing the margin.
There are PBMs that operate without that conflict — pass-through models where the pharmacy economics are visible and the employer’s interests aren’t competing with the PBM’s own revenue model. These PBMs exist today. The biggest PBMs prefer you don’t notice.