As someone who can look up double digit profit margins for Eli Lilly/J&J/Pfizer/Novartis/Novo Nordisk/Abbvie/Merck/etc, it doesn’t look like a complicated problem.
https://www.drugchannels.net/2025/03/the-top-pharmacy-benefi...
The PBMs are departments of these companies, hence they don’t have profit margins. Prime Therapeutics is owned by the various non profit Blues.
I don’t see how they are relevant. If they are earning more money from medicine, then it is being used to subsidize premiums.
There is a reason the market cap for almost all the pharmaceutical companies are bigger than the managed care organizations. UNH is slightly different because they sell far more high margin healthcare rather than just low margin managed care services.
This issue has been so well-known that it has been addressed in national legislation as early as 1992 and in federal court in 2009, but the new integrated PBM's managed to sidestep regulation and transparency.
Bulk contracts specify price as a percentage of various averages (like driving contracts off LIBOR or federal funds rate), but there are few enough players and prices are private, inviting list price inflation. Contracts are not actually using federally-regulated/defined metrics (WAC, NADAC) but legacy (unregulated) AWP.
The few owners of the main PBM's (roughly matching public capital value):
- Cigna/Evernorth/Express Script: Qualient (most expansive offerings)
- CVS: Cordavis
- UnitedHealth/Optum: Nuvaila
Integrated players give themselves a discount but charge others inflated rates. The insurers might also patients charge more for going to out-of-network pharmacies. Both are relatively normal mechanisms to capture benefits of integration.
Very helpful post (but structural solutions out of scope)
toomuchtodo•2mo ago
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