You probably have no idea who your pharmacy benefits manager (PBM) is. But you almost definitely have one.
A pharmacy benefits manager is what it sounds like: PBMs manage prescription drug benefits, which involves coordinating across a laundry list of stakeholders—that includes health insurers, employers, pharmacies, customers, and more. Roughly 275 million Americans have a PBM, more than 80% of the U.S. population.
Those basic facts in place, I don’t know what I expected, but it wasn’t this: In 2023, about 80% of all prescription drug claims in the U.S. were processed by only three companies. Those three companies are all attached to healthcare monoliths: Cigna’s Express Scripts, UnitedHealth’s OptumRx, and CVS Caremark. CVS made headlines earlier this week, as the giant is reportedly exploring a potentially sprawling breakup.
Jordan Feldman, CEO and cofounder of VC-backed PBM Rightway, believes the news could have downstream effects for millions. And he didn’t mince words.
“CVS is a failed healthcare vertical integration,” he said via email. “Across the board, whether it be Medicare advantage or pharmacy benefits, they are ineffective. So all they can do at this point is try and extract maximum profitability on PBM, to try and appease shareholders. This will come at the expense of employers and employees.”
Then again, Feldman isn’t a words-mincing-kinda-guy. He cofounded Rightway in 2017, expressly looking to reimagine the space. The PBM portion of Rightway’s business was incubated with Thrive Capital in 2019, looking to build a serious competitor to the largest PBMs. Today, two million people have access to Rightway through their employers. Feldman says the timing is starting to look right for an industry shake-up.
“Pharmacy benefits has arrived,” he told Fortune. “It’s come onto the radar. It’s become a meaningful part of overall healthcare spend, and as we pull back the curtain on it, there are some enormous flaws, misaligned incentives, and challenges with the current ecosystem.”
Few topics generate as much heat as pricing in healthcare, and prescription drug prices are no exception—between 2006 and 2020, prices for hundreds of the most common prescriptions increased fast enough to outpace general inflation, according to an AARP report from this year. In that time, pharmacy benefits have gained importance, growing from “a single-digit [and] small-percent of total healthcare…
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