New TAPP Cartoon: PBMs Benefit Insurance Companies on the Backs of Patients, Employers, Unions, and Taxpayers

For years, Americans have been told that high prescription drug prices are simply the unavoidable cost of innovation. But a growing body of evidence suggests something else is driving costs higher: a deeply opaque system dominated by pharmacy benefit managers (PBMs), insurance companies, and pharmacy chains that increasingly operate under the same corporate umbrella. The Trade Alliance to Promote Prosperity has created a new cartoon to illustrate the burden that the vertically integrated system has placed on patients, employers, unions, and taxpayers.

What was once intended to be a middleman service designed to negotiate lower prices has evolved into one of the most powerful and least transparent sectors in healthcare.

Today, just a handful of vertically integrated conglomerates control enormous portions of the prescription drug supply chain. In many cases, the same parent company owns the insurer, the PBM, and the pharmacy dispensing the medication. That consolidation has created dangerous incentives that too often prioritize corporate profits over patient affordability.

At the center of the problem is the way PBMs are compensated.

Under the current system, PBMs frequently make more money when drug prices rise. Rather than being rewarded for lowering costs, they can benefit from higher list prices because their fees and rebates are often tied to the price of the drug itself. The result is a backwards incentive structure in which the entities supposedly negotiating savings can profit from inflation in drug prices.

That is why increased transparency within the prescription drug market, especially in PBM transactions, is so urgently needed. Patients, employers, and policymakers deserve to know how rebates are negotiated, where discounts are flowing, and whether savings are actually reaching consumers at the pharmacy counter.

Reforming PBM compensation would be a major step in the right direction. Instead of allowing PBMs to earn more when prices climb, compensation should be tied to the actual services they provide, such as negotiating discounts, processing claims, and managing formularies efficiently. Aligning fees with performance and cost savings would help realign incentives around patients instead of profits.

Congress and regulators must also confront the anti-competitive effects of vertical integration.

When insurers, PBMs, and pharmacies are owned by the same corporations, patients can be steered toward affiliated pharmacies or higher-cost drugs that generate larger profits for the parent company. Independent pharmacies struggle to compete, while consumers lose meaningful choice and transparency. In some cases, patients are pushed into “preferred” pharmacy networks that may not actually offer the lowest out-of-pocket costs.

This consolidation distorts the marketplace and weakens competition—the very force that is supposed to keep healthcare affordable.

Another major concern involves cost-sharing assistance programs. Many drug manufacturers offer copay assistance intended to reduce the financial burden on patients, particularly those with chronic illnesses or expensive specialty medications. Yet PBM practices often prevent those savings from fully benefiting consumers.

Instead, loopholes and accumulator adjustment programs can allow insurers and PBMs to pocket the value of copay assistance while patients continue facing significant out-of-pocket costs. That undermines the purpose of these programs and leaves families paying more even when assistance is available.

Closing these loopholes should be a bipartisan priority.

The good news is that reform is possible. Policymakers across the political spectrum increasingly recognize that transparency, accountability, and competition are essential to lowering drug costs without undermining medical innovation.

As Congress considers PBM reform legislation, lawmakers and the Trump administration have an opportunity to restore balance to a system that has become far too concentrated and opaque. Patients should not be trapped in a healthcare system where corporate middlemen profit more from higher prices and reduced competition.

Real reform means demanding transparency in PBM transactions, ending anti-competitive steering practices, restructuring incentives so savings actually reach patients, and ensuring cost-sharing assistance works the way consumers expect it to.

Americans deserve a prescription drug market that rewards affordability, competition, and patient care, not one that rewards consolidation and secrecy.

This is the number one place that Congress should look to address the issue of prescription drug affordability.