Updated November 2026. A pharmacy benefit manager (PBM) runs the prescription drug side of a health plan. It decides which drugs the plan covers, negotiates rebates with drugmakers, builds the pharmacy network and processes every prescription claim. Three PBMs handle about 80% of U.S. prescription claims, and each is owned by a company that also runs a major health insurer.
That concentration is why PBMs have become a target for Congress, the Federal Trade Commission (FTC) and state legislatures. This guide explains what PBMs do, who the big three are, how they make money and what changed in 2026.
The Big Three PBMs
| PBM | Parent company | Insurer owned by the same parent | Share of prescription claims, 2025 |
|---|---|---|---|
| Express Scripts | Cigna Group (Evernorth) | Cigna Healthcare | 31% |
| CVS Caremark | CVS Health | Aetna | 26% |
| Optum Rx | UnitedHealth Group (Optum) | UnitedHealthcare | 23% |
Source: Drug Channels Institute. The FTC estimated the top three’s combined share at 79% for 2023. Each also owns a mail-order and specialty pharmacy, and CVS Health owns the largest retail chain; see our coverage of the CVS Health split.
What a PBM Does
- Builds the formulary, the list of covered drugs and their cost tiers.
- Negotiates rebates from drugmakers in exchange for favorable formulary placement.
- Contracts with pharmacies and sets what each is paid per prescription.
- Processes claims at the pharmacy counter in real time.
- Runs utilization management, such as prior authorization and step therapy for drugs.
How PBMs Make Money
PBMs earn administrative fees from health plans and employers, but critics focus on three other sources. Rebates from drugmakers, which a PBM may keep in part. Spread pricing, in which the PBM charges the plan more for a drug than it pays the pharmacy. And steering patients to PBM-owned pharmacies.
The FTC’s second interim report, in January 2025, found the big three marked up specialty generic drugs dispensed at their own pharmacies by about $7.3 billion from 2017 to 2022. PBMs respond that they lower net drug costs for employers and that rebates reduce premiums.
What Changed in 2026
Federal law. The Consolidated Appropriations Act, 2026, signed in February, included the first major federal PBM reforms:
- Medicare Part D PBM compensation must be separated from drug list prices beginning in 2028.
- PBMs must pass drug rebates through to employer health plans.
- PBMs must give employer plans detailed reports on drug spending and rebates.
A ban on spread pricing in Medicaid did not make the final law.
FTC insulin case. The FTC sued the big three in 2024 over insulin rebating practices. Express Scripts settled in February 2026 and Caremark in July 2026; the FTC said the Caremark settlement could save patients billions over a decade. Optum Rx reached a proposed settlement in June 2026 that is pending.
States. Arkansas passed the first law barring PBM owners from also owning pharmacies in the state; a federal court blocked it, and the appeal is pending at the Eighth Circuit. Tennessee passed a similar ban in May 2026 that faces lawsuits.
What This Means for Your Prescriptions
- Your insurer’s formulary is usually the PBM’s formulary; check it before you pick a plan.
- If a drug is denied, ask about a formulary exception or prior authorization appeal.
- Compare the plan price with a cash discount price; sometimes cash is cheaper.
- If your plan pushes you to mail order, ask whether a local pharmacy can fill it at the same cost.
Employers that self-fund coverage have the most leverage over PBM contracts; see our guide to self-funded and level-funded plans. Follow our Prescription Drugs hub for PBM news.
Sources
Drug Channels Institute, top PBMs of 2025 (March 2026); FTC interim staff reports (July 2024 and January 2025); FTC press releases on the insulin case (2026); Consolidated Appropriations Act, 2026; KFF, “What to Know About Pharmacy Benefit Managers.”