PBMs Are Duping Business Owners and Crushing Workers

As prescription drug costs soar, business owners are left in the dark — and beholden to a rigged system run by pharmacy benefit managers with little transparency or accountability.

The fastest-growing cost for most large to medium business owners this year won’t be due to tariffs. It will be providing prescription drug benefits for their employees. And evidence suggests those plan sponsors don’t know what to do about it or even why it’s happening.

Business owners expect to pay nearly 8% more this year to provide health insurance for their employees. That’s the highest increase in nearly 15 years, according to a survey of large business owners by the Business Group on Health.

A similar study found insurance premiums for individual employees increased from $7,739 in 2021 to $8,951 in 2024. For families the premiums went from $22,221 2021 to $25,572.

The study found a reason for the increase is the pharmacy drug spend fueled, in part, by the inflation of prices by pharmacy benefit managers (PBMs) and the popularity of GLP-1s. As the study pointed out, most employers are clueless about how their drug benefits are managed. 

New numbers also came out last month that show employer-provided health care plans are becoming too expensive for a growing number of American workers. The main reason is that insurers are forcing employers to provide high-deductible plans that put a heavy financial burden on employees when they need to pay for medical care.

Why is this happening?    

Nearly 160,000 million Americans receive health benefits through their employers.

Those health plans that employers offer are often negotiated through their respective human resources departments and a health care consultant or broker. In other words, business owners and CEOs farm this out. It’s often too complicated for them to understand. It’s not their fault. The system has been designed this way over the last 25 years.

Every major health insurer in America has a PBM running its prescription drug program. There are three major PBMs in America: CVS Caremark (owned by CVS/Aetna), Optum Rx (owned by UnitedHealth) and Express Scripts (owned by Cigna). They control nearly 80 percent of the drug spend by American workers.

PBMs negotiates the drug price, decides which drugs will be covered by the health insurer and then how that drug will be provided to the patient, either at a brick-and-mortar pharmacy or a mail-order one.

That allows the PBM and its health insurer to control costs and stack the deck against business owners who don’t have health policy backgrounds.

When negotiating, consultants promise business owners rebates on their health care spend. That rebate can be lucrative. Business owners can pocket that money or reinvest it back into their employee health funds to reduce costs to their employees.

The large PBMs told members of Congress at a hearing in July that they pass along 95% to 98% of the rebates they get from drug manufacturers to employers. Yet they provided no evidence to support that; the PBM officials expected Congress to take them at their word.

But the big caveat here is that the PBMs don’t tell business owners how much they will charge for the drugs their employees use. PBMs also determine which drugs are covered by an employer’s health plan and how much the employees have to pay for those drugs. This creates a volatile, murky environment for business owners.

“When you do a deal with the big three PBMs you are crushing your sickest employees financially and killing off your local pharmacy and as a result creating pharmacy deserts where you may have members,” said billionaire Mark Cuban.

Cuban has started his own PBM-like venture called Cost Plus Drugs, which he bills as a transparent and low-cost prescription drug supplier. Many patients with health insurance can save money by bypassing their employer-chosen and ordering their medications through Cost-Plus Drugs.

At that same July hearing in front of the House Committee on Oversight and Accountability, Rep. James Comer (R-Kentucky) offered a blunt assessment of how PBMs approach relationships with business owners and their employees.

“Instead of prioritizing the health of Americans across the country, evidence obtained by the House Oversight Committee shows how the three largest pharmacy benefit managers colluded to line their own pockets.”

Luke Sullivan has been an investigative reporter for 22 years. Part of The Columbus Dispatch Side Effects investigative team that exposed pharmacy benefit managers. Ohio State graduate. Girl Dad.