America's drug middlemen are now a $557 billion industry. Can Trump and his allies 'knock out' PBMs?

IN LATE DECEMBER, President-elect Donald Trump put pharmacy benefit managers, or PBMs, on notice.

- ERIKA FRY

Denouncing the $557 billion industry as “horrible middlemen,” responsible for—and “rich as hell” from—America’s incomparably high prescription drug prices, Trump vowed to get rid of them. “We’re going to knock out the middlemen,” he said at a press conference at Mar-a-Lago.

Trump is hardly the first to go after PBMs. They make up an industry whose stated purpose is to help employers and other health care purchasers lower the cost of drugs, but for decades they’ve been accused of doing the opposite—and driving up spending through opaque, profit-driven pricing tactics.

Indeed, condemnation of PBMs is one of the rare points where Trump can find common cause with progressive lawmakers like Elizabeth Warren and activist regulators at Joe Biden’s Federal Trade Commission, which dropped a report just days before Trump’s inauguration accusing the biggest PBMs of price gouging. At a time when consumers’ frustration with the health care system has reached new peaks, taking on these little-understood players could give the government a bipartisan win with huge potential impact.

It’s little wonder that discontent with PBMs is so widespread. Americans spend more on medications than other countries—roughly twice as much per capita. By every measure, that spending is on the rise; by drug “list price,” the increase is astronomical—from $636 billion in 2018 to $917 billion in 2023. What exactly are PBMs saving us from, you might ask.

Employers and other health care payers despise PBMs' lack of transparency; pharmacies complain their high jinks are driving them out of business. Consumers may not know PBMs by name, but the drug-access and cost issues that frustrate and frighten them often stem from PBMs' decisions. More than half of U.S. adults worry about being able to afford prescription drugs; 30% couldn't afford them at some point last year.