New Market Analysis: PBM Consolidation Linked to Less Prescriber Autonomy

Washington, D.C. (November 28, 2023)—Aggressive consolidation in the Pharmacy Benefit Manager (PBM) market has contributed to less physician autonomy, according to a new economic analysis from the Hayden Consulting Group. The first-of-its-kind analysis, released today by the Job Creators Network Foundation (JCNF)—which developed a free market healthcare reform framework called HealthcareForYou.com—explores the surprising influence large PBMs have over physician prescribing patterns and patient care.

PBMs are the middlemen of the drug supply chain who handle virtually every aspect of prescription drug benefit design and administration. The powerful position has fueled major consolidation within the market, with three PBMs now shepherding roughly 80 percent of prescribed medicine.

The new analysis goes beyond national averages and investigates the impact of PBM concentration from a local perspective. It finds that 30 percent of U.S. communities show high levels of PBM concentration while only five percent of local areas enjoy a competitive marketplace. Areas in the Northeast and Midwest are most likely to face a consolidated PBM landscape.

Building off these data, the analysis finds that within concentrated local markets, a dominant PBM’s choice of preferred medicine influences doctors’ prescribing patterns—even for patients not covered by the leading PBM. It indicates there is a spillover effect from the middleman’s practice of steering patients towards certain drugs over others. The analysis concludes this influence in local markets is most dramatic among oncology drugs.

“Pharmacy Benefit Managers are a powerful force behind the scenes within the U.S. healthcare market,” said Elaine Parker, President of the Job Creators Network Foundation. “This new, unique economic analysis reveals the degree to which these middlemen are influencing the way doctors prescribe medicine—and not necessarily for the better. In short, patient treatments are being influenced by PBM executives who have no direct stake in their health. It’s a dynamic that should concern policymakers on both sides of the political aisle.”

“As we enter the final month of the year, momentum is building behind concrete policy proposals that would help to rein in the questionable behavior of Pharmacy Benefit Managers,” said Dr. Tom Price, former HHS Secretary and senior healthcare policy fellow at the Job Creators Network. “This analysis further demonstrates that additional policy guardrails are needed to help hold the middlemen of the drug supply chain accountable.”

Read the full analysis, Market Dynamics: PBM Consolidation and its Impact on Geographic Prescribing Patterns, here.