Pharmaceutical Industry Clash with Pharmacy Benefit Managers Heats Up

As the Trump administration shapes its healthcare policies, a renewed battle is brewing between pharmaceutical companies and pharmacy benefit managers (PBMs).

PhRMA, the pharmaceutical industry's leading lobbying organization, released its 2025 policy priorities, emphasizing transparency and accountability in PBM practices. Specifically, the organization advocates for sharing negotiated drug savings with patients and holding PBMs accountable for limiting patient choices.

In response, PBMs like CVS Caremark (CVS) have defended their role in lowering branded drug costs. CVS President Prem Shah claims that PBMs have effectively reduced drug expenses for Fortune 500 companies. Shah highlights that generic drugs, which PBMs prioritize, have significantly decreased prescription costs, with Caremark customers averaging $8 out-of-pocket per prescription.

However, critics question the equity of PBM rebate strategies, which negotiate lower list prices in exchange for patient access to specific drugs. Studies have linked higher rebates to elevated list prices and out-of-pocket costs.

Bipartisan scrutiny is increasing, examining whether PBMs favor higher-rebate drugs over lower-net-cost alternatives. Trump's 2018 legislation empowered pharmacists to inform patients about affordable options, a move that challenged PBM contracts limiting generic drug disclosure.

In the face of these challenges, PBMs are diversifying their services. CVS launched CostVantage, a program that calculates drug costs based on production costs and a fixed markup. Walmart and other retailers offer $4 generics. Additionally, telehealth and online platforms like GoodRx, Mark Cuban's Cost Plus Drugs, and Amazon Pharmacy provide low-cost drug access.

Despite these developments, Shah argues that PBMs remain essential for health insurance companies. CVS's PBM business generated $178 billion in revenue in 2024.

The outcome of this escalating battle will shape the future of drug pricing and patient access to affordable medications.