Senators: The PBM industry just made our point

OPINION

For the last several weeks, we have been asking some simple questions about pharmacy benefit managers. Why should the company deciding which drugs patients can access also profit from those decisions? Why should a PBM be able to steer patients to a pharmacy owned by its parent company? Why can’t taxpayers see who’s profiting from the prescription drugs they buy? 

The PBM industry just answered. Johnny Garcia and Heather Cascone recently wrote to NJ Globe that policymakers like us are confusing pharmacy protection with prescription affordability. 

They’re right that those are different things. But their argument proves precisely why this debate is necessary, and why New Jersey should lead on PBM reform. 

Garcia and Cascone describe themselves as pharmacists approaching these issues from “different perspectives.” But readers should know what those perspectives are, or at least who’s paying for them. Both are executives of the Pharmaceutical Care Management Association (PCMA), the national trade association for PBMs. 

There’s nothing wrong with an industry defending itself. But let’s dispense with the suggestion that these are two independent perspectives on PBM reform. They are the PBM industry’s representatives making the PBM industry’s case. 

That’s not disqualifying. PBMs deserve a voice. But let’s call it what it is: the PBM industry’s defense of the PBM business model. And now that they’ve laid their cards on the table, let’s examine them. 

“Drug manufacturers set prices.” 

True. And beside the point. Manufacturers establish list prices. PBMs then negotiate rebates and concessions, determine formulary placement, establish pharmacy networks, set reimbursement terms and influence where patients fill their prescriptions. 

But in today’s vertically integrated healthcare conglomerates, their corporate relatives typically own the insurer, PBM, rebate aggregator, specialty pharmacy, mail-order pharmacy and even physician practices. So, the same corporate family can influence which drug gets preferred, what the plan pays, what the patient pays, what the pharmacy receives and where the prescription gets filled. Then, it charges fees, assesses costs, and makes money at multiple stops along the way. 

That isn’t a normal middleman. That’s a tollbooth operator that owns the road, dictates what route you take, owns the gas stations, and sets the price of the gas. 

“PBMs negotiate rebates that lower costs.” 

Sometimes they do. But a bigger rebate isn’t necessarily a lower price. Suppose one drug costs $500 with a $200 rebate while a competing drug costs $325 with a $25 rebate. Both net to $300 before other fees. But when the PBM gets paid based on the size of the rebate, the more expensive drug can make the PBM more money. Suddenly, higher prices aren’t the enemy, they’re the opportunity. 

That’s not a hypothetical concern. The Federal Trade Commission alleged that rebate practices by the largest PBMs encouraged manufacturers to compete for formulary placement by offering larger rebates connected to higher list prices. 

In February and July 2026, Express Scripts and CVS Caremark agreed to settlements requiring significant changes to the very business practices PCMA now defends. And New Jersey’s provider, OptumRx?  Its case is effectively stayed while the FTC considers its proposed settlement agreement. As of this writing, however, there is no published settlement available. 

So, when PCMA tells taxpayers rebates equal savings, the answer is, show us. Show the gross price. Show every rebate. Show every fee. Show what the plan paid. Show what the pharmacy received. Show what the patient paid. Show what every affiliated company kept. Then we’ll calculate the savings ourselves. 

We’re not writing articles or proposing laws to protect pharmacy profits. We’re writing out of genuine concern for New Jersey taxpayers who may be victims of a rigged system. 

“Independent pharmacies are actually paid more.” 

This is perhaps our favorite argument in their piece. Garcia and Cascone cite a Compass Lexecon study suggesting independent pharmacies receive higher reimbursements than unaffiliated chains. 

What they don’t tell you is who commissioned that study: CVS Caremark, Express Scripts, and OptumRx. The same three dominant PBMs who help fund the PCMA that employs Garcia and Cascone helped fund the study they rely on to make their point. 

Industry-funded research isn’t automatically wrong. But presenting a study commissioned by the three companies at the center of this debate as validation of their business model deserves context. More importantly, it dodges our questions. 

The FTC examined 51 specialty generic drugs and found that pharmacies affiliated with the three largest PBMs generated more than $7.3 billion in dispensing revenue above estimated acquisition costs from 2017 through 2022. The FTC also found PBM-affiliated pharmacies generally received higher reimbursement than unaffiliated pharmacies on nearly every specialty generic drug it examined. Then add the approximately $1.4 billion the FTC attributed to spread pricing on the drugs studied. You start to understand why the industry is so resistant to regulation and change. 

That’s the problem with examining a vertically integrated company one pocket at a time. Money moves between pockets. Call it a rebate. A fee. A spread. Pharmacy revenue. Administrative compensation. Rebate-aggregator revenue. Taxpayers don’t care which subsidiary books the profit and neither do we. We care what the prescription actually costs, who actually profits in the end, and by how much. 

“PBMs will save New Jersey $37 billion.” 

That’s an impressive number. It’s also a PCMA-promoted projection based on their own, industry-sponsored economic analysis. In other words, it’s the number they paid their analysts to give them. 

Maybe it’s right. We don’t know. So, let’s audit it. That’s been our position from the start. 

We’re not arguing that PBMs provide no value. Negotiating against pharmaceutical manufacturers can save money. Generic substitutions can save money. Utilization management can save money. But none of those functions require the PBM to own the pharmacy where you are forced to buy your medicine. 

Negotiating discounts doesn’t require steering patients to your corporate affiliate. Processing claims doesn’t require spread pricing. Managing a formulary doesn’t require opaque rebate arrangements. Most importantly, saving taxpayers money doesn’t require preventing taxpayers from seeing the transaction. 

PBM services and PBM vertical integration are not the same thing. PCMA’s argument repeatedly treats them like they are. 

“Restricting pharmacy networks will increase costs.” 

Maybe. Maybe not. We say, prove that too. 

New Jersey currently requires most public employees to get certain of their prescriptions through mail order. OptumRx administers the benefit, while patients are forced to buy their prescriptions from Optum-affiliated pharmacies. 

Think about that structure. One corporate family gets to make the rules governing where the prescription goes and then potentially profit when the prescription arrives at its own door. 

PCMA calls that efficiency. We call it a conflict of interest that deserves independent scrutiny. 

If an Optum-affiliated pharmacy truly offers taxpayers the lowest net price, it should win the business in an open competition. That’s how New Jersey taxpayers win. 

But patient steering isn’t competition. It’s the opposite. And that brings us to the argument PCMA doesn’t answer. 

The PBM industry wants this debate to be PBMs versus independent pharmacists. It’s a classic misdirection, and we reject the premise outright. 

We aren’t paid by CVS. We aren’t paid by Optum. We aren’t paid by Express Scripts. And we aren’t paid to represent independent pharmacies either in this debate. We represent New Jersey taxpayers and patients. Period. Full stop. 

If an independent pharmacy can’t compete, the government shouldn’t protect it from competition. But the government shouldn’t protect a vertically integrated Fortune 50 company from competition either. 

That’s why we want fiduciary duties, transaction-level audits, rebate transparency, an end to spread pricing in public plans, meaningful patient choice, competitive rebidding and serious examination of vertical integration. And, if these conflicts can’t be regulated effectively, then we need to discuss structural separation. Those are the five pillars we proposed in our August 12, 2026, opinion editorial. It’s not hostility to businesses. It’s protecting our residents. 

PCMA’s representatives conclude by asking policymakers to focus on “who wins.” We couldn’t agree more. 

So, open the books. If PBMs are producing the savings they claim, prove it. If their pharmacies offer the lowest prices, let them compete and prove it. If their formularies select drugs based on the lowest true net cost, disclose the transactions and prove it. If steering patients to affiliated pharmacies saves taxpayers money, submit that proposition to independent analysis and prove it. But don’t ask taxpayers to accept self-serving economic projections at the same time that industry controls the data on which those projections are based. 

For years, PBMs operated in a system almost nobody outside it understood. Now, we’re asking questions. 

Their answer appears to be, trust us. We’re saving you money. 

That’s not good enough. Not when the referee can own the team. Not when the gatekeeper can own the gate. And certainly not when New Jersey taxpayers are paying the bill. 

If the PBM industry’s model is truly built on lower prices and better competition, transparency shouldn’t threaten it. Competition should prove it.

Vin Gopal, a Democrat, represents Monmouth County in the State Senate; Doug Steinhardt, a Republican, represents parts of Hunterdon, Somerset, and Warren counties.