In the pharmaceutical industry, pharmacy benefit managers (PBMs) serve as the “middle men” of the industry, facilitating price negotiation, network development, and delivery for health plans. For decades, PBMs have operated in this role with little regulatory or legislative oversight from the federal level. In recent years, however, the conversation and criticisms surrounding PBMs and their influence on prescription drug pricing has intensified, particularly within the increasingly key segment of generic specialty drugs. While generic specialty drugs are feted as potential cost-saving alternatives to their corresponding branded therapies, these drugs have become a flashpoint in the debate over PBM transparency, market concentration, and pricing practices.
Two landmark reports released in 2024 and 2025 — one by the Congressional Budget Office (CBO1) and the other by the Federal Trade Commission (FTC2) — arrived at sharply contrasting conclusions. The CBO framed PBMs’ role in generic specialty pricing as economically modest, while the FTC exposed detailed evidence of substantial markups, internal profit transfers, and potential steering behavior within vertically integrated PBM systems. Together, these analyses illuminate the tension between system level cost neutrality and firm-level profit optimization, raising critical questions about whether current PBM businesses serve the broader goals of affordability, transparency, and fair competition in the U.S. drug market.
