The Monopoly Hiding in Plain Sight

Every week I get a ton of great responses from readers that inspire what I write. Over the past few weeks, one question keeps coming up again and again — and I think it’s time to address it.

It’s a fair question — and a logical one.

For a long time, I thought the same thing. PBMs (Pharmacy Benefit Managers) make money every time a pharmacy fills a prescription. Surely they’d want independent pharmacies to survive. The more the merrier, right?

But here’s the harsh truth: they may need pharmacies, but they don’t need our pharmacies.

Because they have their own.

In any other industry, this would never be allowed. It’s the entire purpose of antitrust laws.

But this is the Wild West of U.S. Healthcare.

So grab your boots — let’s take a ride and get to the bottom of it.

There’s a term for what’s happening — vertical integration.

In plain English, that means one company owns every step of the process.

In pharmacy, that process looks like this:

Drug Manufacturer → Wholesaler → PBM → Insurer → Pharmacy → Patient

In a healthy market, those layers are separated and act independently as checks and balances.

The PBM negotiates prices.
The insurer pays claims.
The pharmacy dispenses the medicine.

Everyone plays a part in delivering care.

But when one company starts owning all the roles — the insurer, the wholesaler, the PBM, and the pharmacy — patients wake up one day and realize that instead of multiple different people having their back, nobody does.

That’s a monopoly.

Think about it this way:

It’s like if your electric company also made your appliances, decided which ones you were allowed to plug in (and when), and charged you a different rate depending on which toaster they owned. You can’t just turn off the lights — you have to live in their grid.

I’ve done a deep dive on PBMs before, so I won’t rehash all of it here. But as a reminder, three companies now control nearly 80% of all U.S. prescription volume.

And while we often talk about them as “PBMs,” they’re actually much more — they’re vertically integrated pharmacy networks:

They’ve built the entire drug supply chain inside their own walls.

And here’s the best part, courtesy of Drug Channels:

In other words — these companies aren’t just doing business with us.

They’re doing business with themselves.

And not a small amount! Those internal payments between CVS subsidiaries equal roughly the entire global revenue of Nike in a full year.

So when readers ask, “Why would PBMs want pharmacies to fail?” the answer is simple:

Because when we fail, they win.

When an independent pharmacy closes, the prescriptions it filled don’t vanish into thin air.

Those patients still need care — they just migrate.

And more often than not, they migrate directly to a PBM-owned mail order pharmacy or a chain pharmacy under the same parent company.

Every closure becomes a customer acquisition.

Every lost refill becomes a data point they own.

The fewer independents there are, the easier it is for PBMs to steer patients toward their own systems — mail order, preferred networks, specialty fulfillment centers — where they control both sides of the transaction.

There’s a reason Rite Aid is gone while CVS and Walgreens remain.

The two left are part of a larger puzzle. Rite Aid wasn’t. Notice how you don’t see them anywhere on that vertical integration chart above.

If you’ve been reading Drugstore Cowboy for a while, you’ve seen this pattern before.

In “My Pharmacy’s $2 Million Ozempic Problem,” I explained step-by-step how PBMs reimburse pharmacies below cost even on the most in-demand drugs in America.

Last week, in “The Cost of Caring,” I told you about a loyal, longtime patient I lose money on every time I fill his meds.

That’s not my bad math or poor management — it’s deliberate pressure.

Undercut your competitors, and you push them out. I assure you if that same patient changed his meds over to a pharmacy owned by his PBM — Cigna — that pharmacy’s margins would be nice and fat.

The PBMs have perfected the game.

And they can turn a big loss for me into a big win for them.

You can’t compete with that. You can only participate in it — on their terms.

Here’s where it gets surreal.

The FTC fights consolidation every day. Just in the past few weeks, it nearly blocked Dick’s Sporting Goods from merging with Foot Locker, arguing that would reduce competition and raise prices for sports apparel.

It seems like every other month, Google, Meta, or Apple gets told they’ve become too powerful to be allowed to grow.

But CVS Health — which owns the pharmacy where you fill your prescription, the PBM that sets your copay, and the insurance company that approves it — is totally fine.

In any other industry, this would be called a monopoly.
In healthcare, it’s called “vertical efficiency.”

The FTC’s own report literally states in extremely clear verbiage that PBMs give better reimbursement and preferential access to their own pharmacies.

That’s textbook anti-competitive behavior.

But enforcement in healthcare lags decades behind reality. The public can’t see it because it’s buried under layers of “network design” and “rebate structure.” Politicians are greased by lobbyists to look the other way.

And that’s exactly what I’m trying to break down for you here — because the more you understand, the better chance we have to fix what’s broken and rebuild it the right way.

The USC Schaeffer Center’s “Flow of Money Through the Pharmaceutical Distribution System” analysis puts this into perspective.

For every $100 spent on prescription drugs, roughly half stays within the distribution chain — PBMs, insurers, wholesalers, and pharmacies.

But in vertically integrated systems, that money doesn’t flow between companies; it circulates internally.

If you’ve ever seen the chart below, it looks like a snake eating its own tail — because that’s exactly what it is.

When OptumRx reimburses UnitedHealthcare’s mail-order pharmacy, the dollar never even leaves the building.

That’s how profits look “stable” while independent pharmacies collapse.
It’s not a free market — it’s a closed loop.

I see it firsthand.

Every week, another independent pharmacy announces it’s closing.

I’ve lost count of how many friends have handed over their keys, their files, their staff.

Those patients don’t stop taking medicine. They just stop having a pharmacist who knows their name.

They start getting phone calls from mail-order warehouses. They wait on hold for half an hour to ask a question about their insulin. They talk to chatbots instead of people.

When you remove the human layer, you lose something you can’t automate — trust and care.

Vertical integration is how the middlemen stopped being middlemen.

And honestly, it would be brilliant — if it weren’t so heartless.

But these companies aren’t selling televisions. They’re selling us life-saving care.
And we can’t just sit by and accept the unacceptable.

So the next time you hear that another pharmacy has closed, don’t assume it’s bad management or changing times.

Call it what it is: a transfer — from a Main Street counter to a corporate spreadsheet.

Because in America’s drug game, the house always wins.

And now you know the answer to the question that started it all:

Why do PBMs want my pharmacy out of business?

Because we’re not their customers anymore.

We’re their competition.

Alec Wade Ginsberg, PharmD, RPh
4th-Gen Pharmacist | Owner & COO, C.O. Bigelow
Founder, Drugstore Cowboy