“The corruption started the moment the industry rebranded from Pharmacy Benefit Administrator (PBA) to Pharmacy Benefit Manager (PBM), the moment their role shifted from neutral claims processor to profit-driven gatekeeper of the entire drug benefit.”
By Josua R.
Most people point to DIR fees, spread pricing, or vertical integration as the origin of PBM dysfunction. They’re wrong.
The corruption started the moment the industry rebranded from Pharmacy Benefit Administrator (PBA) to Pharmacy Benefit Manager (PBM), the moment their role shifted from neutral claims processor to profit-driven gatekeeper of the entire drug benefit.
That single change misaligned incentives forever.
The PBA Era: When the System Worked
Pre-PBM, administrators simply:
• Processed claims accurately
• Maintained clean formularies
• Paid pharmacies fairly
• Served health plans
No rebates. No spread. No ownership of pharmacies. Zero financial incentive to manipulate access or pricing.
They were administrators, not profiteers.
The Birth of the PBM Model: Incentives Turned Toxic!
The mission flipped from “We process claims”
to
“We control access, capture rebates, and maximize revenue at every step.”
Suddenly PBMs could profit by:
• Excluding drugs unless manufacturers paid massive rebates (kept, not passed through)
• Spread pricing (charging payers far more than they pay pharmacies)
• Owning the very pharmacies they reimburse
• Steering patients to their own mail-order and specialty pharmacies
• Manipulating MAC pricing and slapping on DIR fees
The business model became: extract value everywhere possible.
The Timeline of Decay
1980s–1990s
→ Rebate contracts explode
→ Mail-order steering triggers first alarms
→ Early state AG and federal investigations
2000s–2010s
→ Spread pricing goes mainstream
→ Three giants acquire mail-order and specialty pharmacies
→ Independent pharmacy reimbursement collapses
→ Market consolidation hits 80%+ control
2020s
→ Bipartisan congressional fury
→ FTC 6(b) inquiry
→ 40+ states pass reform laws
→ Growing momentum for 100% pass-through and transparency
The Bottom Line
DIR fees and spread pricing aren’t the disease, they’re symptoms.
The disease began the day intermediaries were handed unchecked control over pricing, access, rebates, reimbursement, patient steering, and benefit design… with zero obligation to act in anyone else’s interest but their own.
PBMs didn’t just manage benefits.
They monetized them.
Patients, employers, taxpayers, and independent pharmacies have been paying the price ever since.
Time to return to a truly neutral, transparent, pass-through model.
Who’s with me?
