PUTT Blog | The PBM and PBM-Owned Pharmacy Breakup: What Divestiture Really Means for Patients, Pharmacies, and the Economy

Pharmacy Benefit Managers (PBMs) sit at the center of America's prescription drug supply chain. The three largest — CVS Caremark, Express Scripts, and OptumRx — process roughly 80 percent of all U.S. prescriptions and are owned by the same parent companies that also own major health insurers and major pharmacy chains. Federal and state lawmakers from both parties have introduced legislation that would require these companies to divest their pharmacy operations.

As of this month Tennessee joins Arkansas in attempting “proof of concept” that disallowing PBMs to concurrently operate as pharmacy benefits managers and pharmacy providers will lower costs and slow the epidemic of pharmacy closures. But questions remain: Will divestiture raise drug prices? Will it overwhelm independent pharmacies? Will it put pharmacy workers out of jobs? Will it destabilize some of the country's largest publicly traded companies? This FAQ walks through each of those concerns based on the available evidence and the actual text of the leading reform bills.

Why does it matter who owns the pharmacy?

A PBM is supposed to be a neutral middleman that negotiates lower drug prices on behalf of health plans, employers, unions, and government programs like Medicare, Medicaid, and TRICARE. The problem is that the three largest PBMs are no longer neutral. Each one is owned by a parent company that also owns an insurance company and a chain of pharmacies:

• CVS Health owns Caremark (PBM), Aetna (insurer), and CVS Pharmacy (retail and specialty).

• Cigna owns Express Scripts (PBM), Cigna Healthcare (insurer), and Accredo and Express Scripts Pharmacy (specialty and mail order).

• UnitedHealth Group owns OptumRx (PBM), UnitedHealthcare (insurer), and Optum-owned pharmacies including specialty and infusion.

Because the PBM, the insurer, and the pharmacy are all under the same corporate roof, the company can effectively negotiate with itself, set prices that benefit one subsidiary at the expense of another, and steer patients to its own pharmacies regardless of cost or convenience. The Federal Trade Commission documented these patterns in detail in its 2024 and 2025 reports on PBM practices.

Won't divestiture make drug prices go up?

The evidence points the opposite direction. Numerous studies and state Medicaid audits have documented that vertical integration among health insurers is one of the primary drivers of high drug prices, not a force keeping them down.

When a PBM owns the pharmacy it claims to be negotiating with, it can reimburse its own pharmacy generously while reimbursing competitors below the cost of acquiring the drug. It can markup specialty generics by hundreds or even thousands of percent when those drugs are dispensed through its own pharmacy, and the plan sponsor — the employer, union, or government agency footing the bill — sees only a single aggregated number. The FTC's second interim report on PBMs found exactly this pattern across a wide range of specialty generics.

Divestiture removes the financial incentive to self-deal. It does not, by itself, guarantee lower prices — meaningful reform also requires transparency, delinking PBM compensation from drug prices, and fair pharmacy reimbursement standards such as NADAC plus a professional dispensing fee. But it eliminates one of the largest structural drivers of inflated pricing in the current system.

Today, the average American pays for PBM self-dealing through higher insurance premiums, higher copays at the pharmacy counter, and higher taxes that fund Medicare, Medicaid, and TRICARE. Those costs are not theoretical. PUTT’s AuditTricare.org investigation found inflated Express Scripts pricing inside the TRICARE program, prompting engagement from members of the House and Senate Judiciary Committees.

Won't independent pharmacies be overwhelmed by too many customers?

The pharmacy “footprint” is not fixed. In fact, under the current integrated system, pharmacies of every kind are closing.

Independent pharmacies have been closing at an estimated rate of roughly one per day for several years, driven largely by underwater PBM reimbursement that pays them less than the cost of the drug they dispense.

• CVS announced the closure of approximately 900 retail stores between 2022 and 2024 and has continued closing locations since.

• Walgreens announced approximately 1,200 store closures.

• Rite Aid filed for bankruptcy.

• Pharmacy deserts - neighborhoods, often rural or low-income, with no convenient access to a pharmacy - are growing, not shrinking, under the status quo.

Divestiture paired with fair reimbursement reform improves the underlying economics of dispensing. That means existing pharmacies can keep their doors open, hire additional staff, and new pharmacies can open in underserved areas. The pharmacies currently owned by PBMs do not vanish under divestiture; they continue operating as independent pharmacy companies. Patient volume gets distributed across a healthier, more competitive market rather than funneled into a single vertically integrated channel.

How many jobs would be lost?

Divestiture does not automatically mean store closures. Divestiture changes who owns a pharmacy or pharmacy chain, not whether it operates.

A divested CVS Pharmacy chain — separated from Caremark and Aetna — would still need pharmacists, technicians, store managers, delivery drivers, IT staff, and corporate support. The roughly 200,000 people who work in CVS retail pharmacy operations would, under divestiture, work for the spun-off pharmacy company rather than for the integrated conglomerate. Same stores, same staff, different ownership.

The far greater job-loss risk is happening right now under the integrated model, as chains close stores and independents go out of business. A reformed market with viable dispensing economics would, by most analyses, support more pharmacy jobs over time, not fewer.

There is real short-term transition cost to any spinoff, but the headline number used by industry opponents — hundreds of thousands of pharmacy jobs at risk — conflates ownership change with shutdown.

Could a PBM just sell its pharmacies to its own corporate parent?

If the law were to allow Express Scripts to sell its pharmacies to Cigna, the insurance parent, or allow Caremark to move its pharmacy operations under a different subsidiary inside CVS Health, it would not be divesture but a corporate shuffling. The integrated entity simply rearranges its org chart.

The Patients Before Monopolies Act introduced by Senators Warren and Hawley and Representatives Auchincloss and Harshbarger prohibits common ownership across PBM, insurer, and pharmacy lines of business. Under PBMA, a company that owns a PBM or an insurer would be required to divest pharmacy operations to a genuinely independent third party. Cigna could not keep the Express Scripts pharmacies by moving them under the Cigna insurance umbrella. UnitedHealth Group could not park OptumRx pharmacies under UnitedHealthcare.

The bill provides roughly two to three years to complete the divestiture, would be enforced by the FTC and the Department of Justice, and includes disgorgement provisions to discourage gaming the sale process.

A significant share of current advocacy is focused on shaping the divestiture process so that it favors community and employee-owned outcomes rather than simply transferring ownership from one conglomerate to another.

Will divestiture crash the stock market?

Almost certainly not. Several factors are worth understanding.

First, the owned-pharmacy segment is a relatively small share of the total enterprise value of UnitedHealth Group, CVS Health, and Cigna. UnitedHealth's value is overwhelmingly concentrated in UnitedHealthcare and Optum Health (care delivery and analytics); OptumRx's owned pharmacy operations are a “slice of a slice.” Express Scripts' pharmacy operations are similar within Cigna. CVS Health is the most pharmacy-exposed of the three, but Caremark and Aetna are still the larger profit drivers, and CVS has already been reducing its retail pharmacy footprint by its own choice.

Second, divestitures historically create shareholder value rather than destroy it. The breakups of AT&T and Standard Oil, and many more recent corporate spinoffs, generally produced higher combined market capitalization, not lower. Investors often pay a "conglomerate discount" for sprawling, complex businesses that are hard to evaluate. Separating cleanly defined business lines often allows each one to be valued more accurately.

Third, divestiture under the leading bills would be phased over two to three years, giving markets time to absorb the change. It is not an overnight shock.

Finally, the “Fortune 15” status of these companies is itself partly a function of the conflicts of interest that divestiture would eliminate. The argument "this would hurt the stock price of companies that grew large by extracting value from patients and pharmacies" is not really a relevant argument.

Why should the average American care?

The throughline theme of every concern raised against divestiture is that “average Americans are better off, have more choices and lower costs” but the evidence does not support that. Under the status quo, the average American is:

• Paying more for prescriptions at the counter

• Paying higher insurance premiums

• Paying higher taxes to fund Medicare, Medicaid, and TRICARE drug spending

• Losing access to neighborhood pharmacies as both independents and chains close

• Being steered to mail-order or PBM-owned pharmacies, often under duress or without their consent

All because the “Big 3” PBMs serve as the negotiator, the insurer, and the pharmacy in every prescription drug transaction. 

Divestiture is one of the few structural reforms that addresses the root cause of these problems. It is not a silver bullet solution, but it removes the conflict of interest without the catastrophic consequences industry opponents have warned about. 

And that is why, though controversial and painfully slow-moving, the time for PBM-pharmacy divestiture has come, and why we must see it through to fulfillment.

Monique Whitney

Executive Director