Trends in Pharmacy Benefit Manager Market Dynamics, 2016-2025

Using data on formulary tiering structures, enrollment, and community pharmacies, we measured changes in pharmacy benefit manager (PBM) market concentration alongside 2 measures related to patient access across states from 2016 to 2025. We found concurrent growth in PBM market concentration, the share of enrollment in formularies exceeding 3 tiers, and the share of the population in counties with net pharmacy closures. Both access measures were also worse in states with more concentrated PBM markets. These findings can inform ongoing federal and state policy efforts and support future research examining the relationship between PBM consolidation and patient access.

Am J Manag Care. 2027;33(3):In Press

Takeaway Points

Pharmacy benefit manager (PBM) business practices have drawn federal and state scrutiny; this study measured changes in PBM market concentration and 2 measures associated with patient access across states from 2016 to 2025.

• Market concentration among PBMs grew substantially, accompanied by increases in the share of enrollees with formularies exceeding 3 tiers and in the share of the population in counties facing net pharmacy closures.
• States with higher PBM market concentration performed worse on measures associated with patient access.
• These findings can inform ongoing federal and state efforts to address potential unintended consequences of PBM market concentration on patient access.

Pharmacy benefit managers (PBMs) manage formularies, pharmacy networks, and drug reimbursement. A combination of consumer complaints and high PBM market concentration has drawn federal and state scrutiny of PBM business practices.¹

Although the effects of market concentration are context specific and involve trade-offs, understanding the extent and implications of PBM market concentration has become a policy priority. Existing work has documented high levels of PBM market concentration,² growth in patient cost sharing,³ and effects of PBM pharmacy networks on the likelihood of pharmacy closure.⁴ To build on this work, we measured changes in PBM market concentration across payer types and 2 measures associated with patient access—tiering requirements and pharmacy closures—across states and over time.

METHODS

Using the DRG Fingertip Foundations formulary tool (Clarivate) and the PitchBook Platform (PitchBook Data, Inc), we measured market concentration and tiering requirements across states from 2016 to 2025. We identified the parent company of each PBM using PitchBook and public data, accounting for changes in ownership over time. We used the US Bureau of Labor Statistics’ Quarterly Census of Employment and Wages to measure annual county-level pharmacy counts. We examined 3 measures, as follows:

Market concentration: We measured market concentration at the state level using the Herfindahl-Hirschman Index (HHI), based on each parent company’s share of total enrollment, with enrollment aggregated across payer types. Markets were categorized as unconcentrated (< 1000), moderately concentrated (1000-1800), and highly concentrated (> 1800), based on federal merger guidelines.⁵

Tiering requirements: Formularies with more than 3 tiers may include a specialty tier, which typically imposes higher cost sharing on patients, creating financial barriers to prescription drug access.³ We calculated the share of enrollees in each state with formularies exceeding 3 tiers.

Pharmacy closures: Because pharmacy closures can disrupt care patterns and affect medication adherence,⁶ we calculated the share of the population in each state exposed to net county-level pharmacy closures.

The formulary tiers measure was enrollment weighted, and the community pharmacy closure measure was population weighted. We compared the formulary tiers measure and the pharmacy closure measure across HHI categories by calculating weighted-average means. This cross-sectional study followed the Strengthening the Reporting of Observational Studies in Epidemiology reporting guidelines. Institutional review board review was not sought because all data were aggregated at the state-year level and contained no individual-level or identifiable information. Further descriptions of methods are provided in eAppendix (eAppendix available at ajmc.com).

RESULTS

Our sample included 267 million enrollees in 2025. The average state-level HHI rose from 1235 in 2016 to 3002 in 2025. By 2020, the average enrollee was in a state with a highly concentrated PBM market. Concurrently, the share of enrollees in formularies with more than 3 tiers increased from 29.8% to 40.3%, and the population share in counties facing net community pharmacy closures grew from 27.6% to 60.5%, although it fluctuated from year to year (Figure 1).

Across state-years from 2016 to 2025, measures associated with access were worse in states with higher degrees of PBM market concentration. The share of enrollees in formularies with more than 3 tiers was 23.1% in unconcentrated markets (HHI < 1000) and 37.9% in highly concentrated markets (HHI > 1800). Similarly, the share of the population exposed to net community pharmacy losses was 18.2% in unconcentrated markets and 46.3% in highly concentrated markets (Figure 2). These differences were similar when HHI was lagged by 1 year (eAppendix Figure).

DISCUSSION

We found increasing PBM market concentration, consistent with prior work,² alongside growth in community pharmacy closures and in formularies with more than 3 tiers. Our work builds on existing evidence in 3 ways: by accounting for cross-payer–type PBM market concentration, by showing that these measures all grew concurrently over time, and by showing that measures associated with patient access were worse in states with higher degrees of PBM market concentration, including when HHI was lagged.

Community pharmacy closures reduce the number of locations where patients can fill prescriptions.⁴Formularies with more than 3 tiers typically impose higher cost sharing on patients taking specialty medications.³ The growth of both measures alongside market concentration raises questions about the relationship between PBM consolidation and patient access.

Limitations include the observational study design, which precludes causal interpretation, and no data on utilization management, product tier changes, prescription utilization, and contractual arrangements. These findings can nonetheless inform ongoing federal and state efforts to address potential unintended consequences of PBM market concentration and the design of targeted, well-controlled studies.

Author Affiliations: National Pharmaceutical Council (YF, TDW, JDC), Washington, DC.

Source of Funding: None

Author Disclosures: All authors reported employment by the National Pharmaceutical Council, which conducted this research.

Authorship Information: Concept and design (YF, TDW, JDC); analysis and interpretation of data (YF, TDW, JDC); drafting of the manuscript (YF, TDW, JDC); critical revision of the manuscript for important intellectual content (YF, TDW, JDC); statistical analysis (YF); administrative, technical, or logistic support (YF, TDW, JDC); and supervision (JDC).

Address Correspondence to: Yevgeniy Feyman, PhD, National Pharmaceutical Council, 1717 Pennsylvania Ave NW, Suite 800, Washington, DC 20006. Email: yfeyman@npcnow.org.

REFERENCES

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2. Qato DM, Chen Y, Van Nuys K. Pharmacy benefit manager market concentration for prescriptions filled at retail pharmacies by state and payer type. JAMA Health Forum. 2026;7(2):e256546. doi:10.1001/jamahealthforum.2025.6546

3. Doshi JA, Li P, Ladage VP, Pettit AR, Taylor EA. Impact of cost sharing on specialty drug utilization and outcomes: a review of the evidence and future directions. Am J Manag Care. 2016;22(3):188-197.

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5. US Department of Justice; Federal Trade Commission. Merger guidelines. December 18, 2023. Accessed April 21, 2026. https://www.ftc.gov/system/files/ftc_gov/pdf/2023_merger_guidelines_final_12.18.2023.pdf

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