The Middleman Marked Up the Medicine $7.3 Billion. The Corner Pharmacy Is Closing Anyway.

A pharmacy benefit manager doesn't make medicine, store medicine, or see a patient.▸ It sits between the drug manufacturer and everyone who pays for the drug — negotiating the price, deciding which pharmacy fills the prescription, and, increasingly, owning that pharmacy itself. Three companies now run this machine: CVS Caremark, Express Scripts (owned by Cigna), and OptumRx (owned by UnitedHealth Group). Between them they process nearly 80% of all prescriptions filled in the United States, per the FTC's first interim staff report. The system was sold as a cost control. The government's own investigation says it became something else.

In January 2025 the FTC published a second interim staff report tracing exactly what the Big 3 PBMs' own affiliated specialty pharmacies charged for 51 specialty generic drugs — cheap-to-make copies of expensive biologics — against NADAC, the government's benchmark for what those drugs actually cost to acquire.▸ The pharmacies collected $10.0 billion in dispensing revenue on those drugs and their estimated acquisition cost was $2.7 billion. The difference — $7.3 billion — is markup, and it grew at a compound annual rate of 42% from $522 million in 2017 to $2.1 billion in 2021 alone.

Most of it — 81%, or $5.9 billion — came out of commercial health plans; the rest, $1.4 billion, came out of Medicare Part D, meaning taxpayers and seniors' premiums covered part of the markup too.▸ And it wasn't spread evenly: of the specialty generics the FTC sampled, 63% were reimbursed at more than double their acquisition cost, and 22% were marked up by more than 1,000%. The drugs carrying the biggest markups treat the sickest patients — cancer accounts for $3.3 billion of the total, multiple sclerosis $1.8 billion, transplant drugs $824 million, with HIV and pulmonary hypertension drugs making up most of the rest. A PBM decides which pharmacy fills a given prescription, and the FTC found that when a specialty drug carried a markup over $1,000 per prescription, the Big 3's own affiliated pharmacies filled 72% of it — steering the most profitable business to themselves.

The other side of the ledger is who doesn't get that money: the independent pharmacy down the street, competing against PBM-affiliated chains for reimbursement rates the PBM itself sets.

Over that same 2013–2022 stretch the FTC studied, CVS's own retail pharmacy count grew 28%, from about 7,600 locations to over 9,700.▸ Every other retail pharmacy in the country — chains and independents combined — shrank by 7%, from about 55,200 to 51,400. In rural America, where a pharmacy is often the only healthcare access point in town, the decline was steeper: 10%, from about 11,100 locations to 10,000.

The National Community Pharmacists Association's 2024 Digest report — drawn from independent pharmacy owners' own financial data — put a rate on the more recent damage: 19,432 independent pharmacies in June 2023 fell to 18,984 by June 2024, a loss of 448 stores, "more than one each day."▸ Those stores did more business than ever — a $103 billion marketplace in 2024, up from $94.9 billion the year before — while gross profit margins fell to their lowest point in the report's ten-year lookback window. More revenue, less profit, is exactly what you'd expect from a store that doesn't set its own prices for what it sells. By July 2025 the store count had nearly stabilized at 18,960, still employing more than 235,000 people at over 18,900 locations nationwide, per NCPA's 2025 Digest — a workforce whose job security now rides on reimbursement rates set by the same three companies that also own their biggest competitors.

Dollar and percentage figures from the two FTC reports cover different, overlapping study windows (2013–2022 for market structure; 2017 through part of 2022 for the drug-markup analysis) and are independently rounded by the source reports, so components won't sum exactly to their stated totals. Pharmacy location and employment counts come from three different survey vintages, noted inline.