Three companies handle 80 percent of U.S. prescriptions. They also own three insurers. Here is the ledger.

When a doctor in Cleveland writes a prescription for a 70-year-old patient on Medicare, the price the patient pays is not set by the doctor, the pharmacist, the drug manufacturer, or the patient’s insurer. It is set by a fourth party most patients have never heard of: a pharmacy benefit manager.

Three of those companies handle approximately 80 percent of all prescription claims in the United States [1]. CVS Caremark belongs to CVS Health, which also owns the insurer Aetna. Express Scripts belongs to The Cigna Group, which also operates the insurer Cigna. OptumRx belongs to UnitedHealth Group, which also operates the insurer UnitedHealthcare. The same three corporate parents that decide which drugs your insurance will cover also operate the insurance.

The Federal Trade Commission documented this structure in a July 2024 interim staff report titled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies” [1]. The report concluded that vertical integration between PBMs and insurers had created a system in which the same corporate group sat on both sides of every drug pricing negotiation, and that this structure produced higher drug costs for patients while suppressing reimbursement to independent pharmacies.

The Official Story

The PBM industry’s public position is that pharmacy benefit managers exist to negotiate lower drug prices on behalf of insurers and employers. The argument runs like this: a PBM uses its scale to bargain rebates from drug manufacturers, those rebates flow back to the health plan, the health plan passes the savings to patients in the form of lower premiums, and the system as a whole costs less than it would without the PBM in the middle.

The Pharmaceutical Care Management Association, the trade group representing the largest PBMs, argues that PBMs negotiate discounts that would not otherwise exist and that those discounts make drugs more affordable. The FTC’s interim staff report addressed and contested that framing directly [1].

The federal record tells a different story. The FTC report, the GAO’s 2019 audit, and the Senate Finance Committee’s 2021 investigation into insulin pricing all documented a pattern in which rebates negotiated by PBMs do not reach patients [2][3]. Instead, the rebates flow back to the PBM and its parent insurer. The patient at the pharmacy counter pays a copay calculated against the drug’s list price, not the post-rebate net price the parent company actually paid for the drug.

Follow the Money

The financial mechanics work in three steps.

First, the PBM negotiates a rebate from the drug manufacturer in exchange for placing the manufacturer’s drug on the PBM’s preferred formulary. A formulary is the list of drugs the insurer will cover at the lowest patient copay tier. Manufacturers compete for placement because formulary tier determines whether their drug gets prescribed at all.

Second, the rebate flows from the manufacturer to the PBM. The PBM keeps a portion as administrative fees and passes the rest to the parent insurer or self-insured employer that hired it. In a vertically integrated PBM, the PBM and the insurer are the same corporate group, so the rebate moves between subsidiaries of one parent.

Third, the patient pays a copay calculated against the drug’s list price, not the post-rebate price. The Senate Finance Committee’s 2021 insulin investigation documented this directly: insulin list prices rose more than 270 percent between 2002 and 2013 while the post-rebate net price the manufacturers received stayed roughly flat [2]. The difference flowed to PBMs and insurers as growing rebates, while patients paid copays calculated against the rising list price.

The FTC’s 2024 report extended this analysis beyond insulin to the broader specialty-drug market and concluded that PBM rebate practices systematically advantage drugs with higher list prices over drugs with lower net prices, because higher list prices generate larger absolute rebates [1].

The Network

The three dominant PBMs and their parent companies, drawn from each parent’s most recent 10-K filing with the Securities and Exchange Commission:

CVS Health Corporation reported $373 billion in 2024 revenue [4]. Its three operating segments include Health Services, which contains the CVS Caremark PBM. CVS Health acquired Aetna for $69 billion in 2018, bringing one of the country’s largest insurers under the same corporate roof as one of the country’s largest PBMs and one of the country’s largest retail pharmacy chains [4]. The 10-K describes this as an integrated healthcare model [4].

The Cigna Group reported $247 billion in 2024 revenue [5]. Its Evernorth Health Services segment contains the Express Scripts PBM, acquired by Cigna in 2018 for approximately $54 billion [5]. Cigna’s commercial health insurance business operates under the Cigna Healthcare segment of the same corporate parent [5].

UnitedHealth Group reported $400 billion in 2024 revenue [6]. Its Optum subsidiary contains the OptumRx PBM. UnitedHealth’s UnitedHealthcare segment is the largest commercial health insurer in the country by enrollment. Both segments are owned by the same publicly traded parent.

Together, these three corporations represent more than $1 trillion in combined annual revenue [4][5][6]. Three companies. Three of the largest U.S. insurers. Three of the largest U.S. PBMs. Approximately 80 percent of all U.S. prescriptions [1].

What Was Buried

The 2019 GAO audit of PBM rebate flows reported that 99.6 percent of all manufacturer rebates negotiated by PBMs in Medicare Part D went back to the plan sponsor rather than the patient at the counter [3]. The patient continued to pay copays calculated against the list price.

The 2021 Senate Finance Committee insulin investigation found that the three insulin manufacturers and the three largest PBMs collectively raised insulin list prices in coordinated patterns that maximized rebate revenue, with the manufacturers and PBMs each blaming the other for the resulting patient prices [2]. Internal industry documents subpoenaed by the committee showed both sides understood the structure and continued to operate within it.

The FTC’s 2024 interim report stated that the largest PBMs had used their scale to systematically reduce reimbursement to independent pharmacies below acquisition cost, accelerating closures of independent and rural pharmacies [1]. Patients in those areas lose access to a pharmacy entirely, while the same corporate parents continue to operate the chain pharmacies and mail-order operations the PBM steers prescriptions toward.

The Stakes Now

Federal action against the structure has been slow. The FTC opened its current PBM investigation in 2022, with the interim staff report published in July 2024 [1]. No enforcement case had followed as of this writing. Multiple bills introduced in the 117th and 118th Congresses proposed requiring PBMs to pass negotiated rebates through to plan sponsors and separating PBM ownership from insurer ownership. None had passed as of early 2026.

The structural condition that drives the system is straightforward: when one corporate parent owns both the entity that decides which drugs an insurer covers and the entity that pays the claims, the parent company benefits from higher drug prices, not lower ones. The patient does not benefit. The pharmacist does not benefit. The drug manufacturer captures less of the price than the PBM and insurer combined. Three corporate groups capture the largest share of the difference.

The One Thing That Matters

If the three largest U.S. insurers were forced to divest their PBM subsidiaries, the rebate machine would not disappear. Independent PBMs would still negotiate with manufacturers. Rebates would still flow. But the rebates would flow to a third party with a fiduciary duty to the plan sponsor, not to the same corporate parent that decides what counts as a covered drug. The structural conflict that defines the current system would end.

Until that happens, the price of your prescription is set in a negotiation where one company sits on both sides of the table. The negotiation produces a rebate. The rebate goes back to that company. You pay the list price.