Warren and Hawley Want to Break Up Big Medicine. Here's What the Bill Actually Does.

On February 10, 2026, Sen. Elizabeth Warren (D-Mass.) and Sen. Josh Hawley (R-Mo.) introduced the Break Up Big Medicine Act, a bipartisan bill that would force the structural separation of healthcare conglomerates that simultaneously own insurance companies, pharmacy benefit managers (PBMs), pharmacies, physician practices, and drug wholesalers. The political pairing is unusual: a progressive Democrat and a populist Republican, finding common ground on the idea that a handful of corporate giants have rigged the healthcare supply chain in their own favor. The bill arrives as both parties scramble to address healthcare affordability ahead of the 2026 midterm elections, and just days after President Trump signed an appropriations package containing new PBM transparency rules and issued executive orders directing agencies to "reevaluate the role of middlemen" in prescription drug pricing. The political will to confront healthcare consolidation is clearly building. The question is whether this bill meets the moment.

What the Bill Does

The Break Up Big Medicine Act draws its inspiration from the Glass-Steagall Act of 1933, which separated commercial and investment banking after the financial system's collapse during the Great Depression. Applied to healthcare, the principle is the same: entities that are supposed to be bargaining competitively with one another should not be owned by the same parent company.

The bill establishes two core prohibitions. First, it bars any person or entity from simultaneously owning or controlling a medical provider or management services organization (MSO) and an insurance company or PBM. Second, it bars common ownership of a provider or MSO and a prescription drug or medical device wholesaler. Companies in violation would have one year to divest. Those who miss divestiture milestones would face automatic penalties, including 10% of profits transferred into escrow on a monthly basis and, eventually, a court-appointed divestiture trustee with authority to force asset sales. Revenue from seized profits would be deposited into a fund created by the Federal Trade Commission (FTC) and distributed to serve the healthcare needs of harmed communities.

An MSO is an entity that contracts with a medical provider to furnish administrative and business services such as payroll, payer contracting, billing and collection, coding, IT, and patient scheduling. While MSOs do not technically practice medicine, they have become the primary vehicle through which corporate entities, including insurers and private equity firms, exert operational control over physician practices without appearing on paper as the owner. The bill's explicit inclusion of MSOs is a recognition that corporate control of healthcare delivery does not require direct ownership; it can be achieved through the back office.

The enforcement architecture is broad. The FTC, the Department of Justice (DOJ) Antitrust Division, the Department of Health and Human Services (HHS) Inspector General, state attorneys general, and private citizens can all bring civil actions. The private right of action provision allows treble damages (a legal remedy where a court triples the amount of actual, compensatory damages awarded to a prevailing plaintiff), attorney's fees, and equitable relief. The FTC and DOJ would also retain forward-looking authority to review and block future transactions that would re-create the prohibited conflicts of interest.

The bill's definition of "provider" is notably expansive: it includes pharmacies (both in-patient and outpatient), physician practices, ambulatory surgery centers, urgent care centers, post-acute care facilities, home-health providers, and hospitals. This means the legislation reaches well beyond PBM-owned pharmacies to encompass the full range of insurer-owned care delivery.

The Problem It Targets

The scale of vertical integration in U.S. healthcare is difficult to overstate. Three PBMs, CVS Caremark, Express Scripts, and OptumRx, manage nearly 80% of prescription drug claims for roughly 270 million people. Each is owned by a company that also operates a health insurance plan, physician offices, and pharmacies. Three drug wholesalers control 98% of U.S. drug distribution. As of 2023, UnitedHealth Group, through its Optum subsidiary, controls approximately 10% of all American physicians, making it the single largest employer of doctors in the country. Nearly 80% of physicians now work for a corporate parent, and since 2019, nearly 4,000 independent pharmacies have closed.

The evidence on what this consolidation does to costs and quality is damning. RAND Corporation testimony to the U.S. House of Representatives found that vertical integration of hospitals or health systems with physician practices does not lower spending and does not improve quality of care. Instead, it shifts care to higher-cost settings and increases payment rates through greater negotiating power. Hospital-physician vertical integration has been associated with 10 to 14% price increases for physician services. A Commonwealth Fund analysis found vertical consolidation associated with 14% higher physician prices and 10-20% higher total spending per patient.

The FTC itself has found that vertically integrated PBMs have both the ability and incentive to steer business to their own affiliated pharmacies, reducing competition and increasing prescription drug costs. PBMs engage in spread pricing, charging health plans more for a drug than they reimburse pharmacies and keeping the difference, while simultaneously reducing reimbursements to independent pharmacies to drive them out of business.

The conflicts run deeper. As Wendell Potter detailed in Healthcare Uncovered, the joint ownership of insurance companies, PBMs, provider organizations, and pharmacies allows parent companies to game the Affordable Care Act's (ACA's) medical loss ratio (MLR) requirement. The ACA mandates that insurers spend 80-85% of premium dollars on medical care. When an insurer owns the PBM, the provider group, or the pharmacy, it can count internal payments to those entities as "medical care" for MLR purposes, even though those payments are self-dealing. This accounting maneuver converts premium dollars to profits at a rate Congress never intended.

Antitrust enforcement has proven inadequate to the task. From 2000 to 2020, only 13 mergers out of 1,164 were challenged by the FTC. As Erin Fuse Brown, professor at Brown University's School of Public Health, noted during a recent KFF Health Wonk Shop panel, antitrust enforcement has largely looked the other way on vertical consolidation, and even when agencies have attempted to bring cases, they have struggled to convince courts that vertical mergers pose a competitive risk.

The Promise for Patients and Providers

If enacted, the bill could address several of the structural conflicts of interest that drive up costs and limit patient choice. Forced separation of PBMs from their affiliated pharmacies could create a more level playing field for independent pharmacies, which currently compete against entities that also control their reimbursement rates. For people living with chronic conditions who rely on specialty medications, the current system means that the company deciding what drug is covered, how much the patient pays, and which pharmacy fills the prescription can be the same company. Breaking those links could open real competition in both pricing and access.

The bill would also force the divestiture of insurer-owned physician practices, a development that could restore meaningful clinical autonomy for physicians and potentially slow the trend of care being steered toward affiliated, higher-cost settings. Consolidation has already narrowed provider choice for patients across the country. Hospital consolidation from 1998 to 2021 resulted in 1,887 mergers and reduced the number of hospitals nationwide by about 25%. The GAO reported that rural hospital closures force residents to travel roughly 20 miles farther for common inpatient services and about 40 miles farther for less common services. When consolidated systems close facilities or eliminate services that rarely turn a profit, such as maternity wards, primary care clinics, and emergency departments, patients in underserved and rural communities face fewer doctors, longer wait times, and greater distances to travel for care. For low-income patients who may lack access to paid time off, reliable transportation, or affordable child care, those distances can mean the difference between receiving care and going without. Reducing the financial incentive for insurers to steer patients exclusively to affiliated providers could, over time, help preserve a broader range of care options in the communities that need them most.

The bill's expansive definition of "provider" and its inclusion of MSOs is significant: it closes the backdoor through which corporate entities use management services agreements to exert de facto control over physician practices without technically owning them. The private right of action with treble damages gives patients and affected parties a meaningful tool to hold companies accountable, something traditional antitrust enforcement has failed to do at scale.

The Pitfalls

The bill's ambition is also its vulnerability. A one-year divestiture timeline for restructuring trillion-dollar companies like UnitedHealth Group, CVS Health, and Cigna is aggressive by any measure. The logistics of unwinding these conglomerates, separating data systems, reassigning contracts, re-establishing independent management structures, present real operational risk. Corey Katz, a partner at Bates White Economic Consulting, cautioned during the KFF panel that policymakers should be careful of unintended consequences because the linkages in these systems are complex, and breaking them can produce adverse outcomes that were not anticipated. He pointed to the Haven joint venture between JP Morgan, Amazon, and Berkshire Hathaway, which sought to make healthcare more efficient and collapsed within five years, as evidence that restructuring healthcare delivery is harder than it appears.

Industry has already signaled opposition. CVS Health Group president David Joyner pushed back on the characterization of the system as market concentration at a House hearing in January, describing the integrated model as one that "works really well for the consumer." Evidence would seem to suggest otherwise, but Mr. Joyner is certainly welcome to his opinion.

The bill also has notable gaps. It does not address hospital-to-hospital horizontal mergers, which remain a primary driver of higher prices in local markets. It does not address private equity acquisitions of physician practices, which a GAO analysis found can lead to 4-16% increases in commercial insurance spending depending on the specialty. And it does not address the payment system incentives, particularly the persistent site-of-care payment differentials where Medicare pays two to four times more for identical outpatient procedures performed in a hospital setting versus a physician's office, that create the financial motivation for consolidation in the first place. Fuse Brown acknowledged that structural separation is a "blunt instrument" but argued that we have reached the point where antitrust tools have proven insufficient and bolder approaches are warranted.

What This Means for People Living with Chronic Conditions

For people living with HIV and other chronic conditions, pharmacy access is a persistent concern. The current vertically integrated system can dictate which pharmacy fills a prescription, what drugs appear on a formulary, and what a patient pays out of pocket. PBM-driven patient steering limits access to specialty pharmacies and 340B providers that play a critical role in serving people who are most affected by healthcare costs. Consolidation also disproportionately impacts communities of color, who, as the Commonwealth Fund noted, are more likely to face medical debt, are more vulnerable to increased costs, and are more likely to bear the brunt of the often cruel business practices that consolidation enables.

Separating PBMs from their captive pharmacies could expand real pharmacy choice for patients. But poorly managed divestiture could also temporarily destabilize specialty pharmacy networks or disrupt care coordination for people who depend on uninterrupted medication access. The details of how divestiture is structured and monitored will matter as much as the principle behind it.

Looking Forward

The Break Up Big Medicine Act faces long odds in a divided Congress. But its bipartisan sponsorship reflects a genuine shift in the political calculus around healthcare consolidation, one that cuts across party lines and ideological camps. Whether or not the bill advances, it establishes a policy framework that advocates, policymakers, and the public can build on.

We should watch closely for how recently enacted PBM transparency rules interact with these structural proposals, how state-level merger review and health equity impact assessments continue to evolve, and whether the FTC and DOJ use existing authority to pursue vertical consolidation cases more aggressively. We should also urge our elected representatives to support the bill and, critically, to demand that any restructuring of the healthcare system be evaluated for its impact on patient access, affordability, and health equity. Structural separation is a necessary conversation. Making sure the people most affected by consolidation are centered in that conversation is our responsibility.

FTC Exposes PBM Price Gouging of Specialty Generic Drugs

The Federal Trade Commission's (FTC) second interim staff report confirms what patient advocates have long suspected: the three largest pharmacy benefit managers (PBM)—CVS Caremark, Express Scripts, and OptumRx—are systematically price-gouging specialty generic drugs, putting profits over patient access to life-saving medications. The report documents how these PBMs abuse their market power to generate billions in excess revenue at the expense of people who rely on these medications to survive.

This comprehensive analysis examines 51 specialty generic drugs—a significant expansion from the two drugs analyzed in the FTC's July 2024 report. The findings are damning: PBM-affiliated pharmacies extracted over $7.3 billion in revenue above estimated acquisition costs for these medications between 2017-2022, with this excess revenue growing at a staggering 42% annual rate. This is not market efficiency—it's profiteering.

The report's unanimous approval by FTC commissioners, including incoming Chair Andrew Ferguson, reflects the undeniable nature of these abusive practices. The evidence shows PBMs are deliberately inflating costs for medications that treat HIV, cancer, multiple sclerosis, and other serious conditions, creating unnecessary barriers to care while padding their own profits. For those of us fighting to protect access to care, this report provides irrefutable evidence that PBM reform cannot wait. The breadth and depth of documented abuses demand immediate action to stop practices that threaten both patient health outcomes and public health goals.

Key Findings: Systematic Price Gouging and Patient Steering

The FTC's analysis exposes a deliberate pattern of excessive markups on specialty generic medications that would be illegal in most other industries. A staggering 63% of specialty generic drugs dispensed by PBM-affiliated pharmacies for commercial health plan members were marked up more than 100% over acquisition costs between 2020 and 2022. Even more egregious, PBMs marked up 22% of these medications by more than 1,000%—an indefensible practice when dealing with life-saving medications.

These markups weren't random—they targeted critical medications across multiple therapeutic categories where patients have few alternatives:

• Cancer treatments: $3.3 billion in excess revenue (44% of total)

• Multiple sclerosis medications: $1.8 billion (25%)

• Transplant medications: $824 million (11%)

• HIV medications: $521 million (8%)

• Pulmonary hypertension treatments: $432 million (7%)

The investigation also uncovered clear evidence of patient steering. While PBM-affiliated pharmacies filled 44% of commercial specialty generic prescriptions overall during 2020-2022, they commandeered 72% of prescriptions for drugs marked up more than $1,000 per prescription. This disparity reveals how PBMs systematically funnel high-profit prescriptions to their own pharmacies.

Beyond these markup practices, PBMs extracted an additional $1.4 billion through spread pricing—billing plan sponsors more than they reimburse pharmacies for medications. Most of this spread pricing revenue (97%) came from commercial prescriptions filled at unaffiliated pharmacies—a clear demonstration of how PBMs exploit their market position to profit from competing pharmacies while simultaneously steering patients to their own dispensing operations. This dual strategy of profiting from independent pharmacies while actively working to put them out of business reveals the anti-competitive impact of vertical integration in the pharmacy sector.

These practices have become central to PBM business models. Operating income from PBM-affiliated pharmacy dispensing of these specialty generic drugs accounted for 12% of their parent healthcare conglomerates' relevant business segment operating income in 2021, up from less than 8% just two years earlier. The top 10 specialty generic drugs alone represented nearly 11% of this operating income.

This isn't a case of a few isolated pricing anomalies. The FTC's analysis reveals a systematic campaign to extract maximum profit from medications people need to survive. These practices have become a major profit center for vertically integrated PBMs, deliberately trading patient access for corporate profits.

The Human Cost: Exploiting HIV Care Access

The FTC's findings expose how PBMs are actively undermining decades of progress in HIV care and prevention. PBMs extracted $521 million in excess revenue from HIV medications alone—representing 8% of total excess revenue despite these drugs comprising a smaller portion of prescriptions. This targeted exploitation of HIV medications reveals a calculated strategy to profit from a vulnerable population.

The FTC report documents troubling markup patterns affecting every level of HIV treatment. Take lamivudine (generic Epivir) as an example - PBM-affiliated pharmacies marked up this essential medication by 168-197% compared to acquisition costs. This level of markup isn't unique to lamivudine but represents a systematic practice affecting the full spectrum of HIV medications, from single-drug therapies to combination treatments. For people living with HIV who often require multiple medications as part of their treatment regimen, these markups create compounding barriers to care access.

Beyond the pricing abuse, PBM steering practices actively disrupt HIV care by forcing people living with HIV away from specialized pharmacies that understand their needs. These community pharmacies provide essential services that PBM-owned pharmacies often fail to match:

• Experienced HIV medication counseling

• Critical adherence support

• Care coordination with HIV specialists

• Navigation of assistance programs

• Culturally competent care

For Medicare Part D beneficiaries living with HIV, the situation is particularly egregious. Despite "any willing pharmacy" protections meant to preserve patient choice, PBMs use discriminatory reimbursement practices to force independent pharmacies to either accept unsustainable payment rates or abandon their patients. This deliberately undermines pharmacies serving communities most impacted by HIV.

PrEP Profiteering

The FTC report reveals perhaps the most cynical PBM practice yet: marking up generic PrEP by over 1,000% above acquisition costs. This price gouging of HIV prevention medication directly sabotages public health efforts to end the HIV epidemic. In an era when expanding PrEP access is critical to preventing HIV transmission, PBMs are creating artificial barriers to a medication that should be becoming more affordable through generic availability.

While the Affordable Care Act requires most private insurance plans to cover PrEP without cost-sharing (for now), PBM markup practices drive up overall healthcare costs through inflated plan sponsor payments. This leads to higher premiums that can make insurance itself unaffordable for many people who need PrEP coverage.

The forced migration to PBM-owned pharmacies compounds the damage by separating people from community pharmacies that have developed comprehensive PrEP care programs. These specialized pharmacies don't just dispense medication - they provide an integrated set of essential services including regular HIV testing, STI screening coordination, adherence support and counseling, benefits navigation, and ongoing coordination with healthcare providers. PBM-owned pharmacies typically lack these specialized services, creating gaps in PrEP care that can affect both initiation and adherence. By disrupting these established care relationships, PBM steering practices threaten the comprehensive support system that helps keep people engaged in PrEP care. The FTC's findings prove that PBM practices are actively working against HIV prevention goals by creating unnecessary barriers to PrEP access and fragmenting PrEP care delivery.

Political Landscape: Reform Momentum Meets Industry Resistance

The unanimous FTC commissioner support for the second interim report, including incoming FTC Chair Andrew Ferguson's concurring statement, reflects the undeniable nature of PBM abuses. President Trump's rhetoric about "knocking out the middleman" suggests potential executive branch support for reform, but previous promises of action on drug pricing require skeptical assessment.

The December 2024 failure of comprehensive PBM reform legislation reveals the industry's continued influence over the legislative process. Despite bipartisan support, PBMs and their allies successfully stripped crucial reforms from the federal funding bill that would have:

• Required pass-through of all rebates to Medicare sponsors and group health plans

• Prohibited excessive billing of Medicaid programs

• Mandated transparency in drug spending practices

• Protected patient choice in pharmacy selection

Current legislative proposals like the PBM Act, introduced by Senators Warren and Hawley, target the fundamental problem of vertical integration by prohibiting joint ownership of PBMs and pharmacies. This structural approach directly addresses the conflicts of interest documented in the FTC report.

While narrow Republican majorities in Congress create opportunities for bipartisan action, the PBM industry's demonstrated ability to derail reform efforts demands sustained advocacy pressure. The challenge isn't finding solutions—it's overcoming industry resistance to implementing them.

State-Level Response: Why Price Controls Miss the Mark

The FTC's detailed analysis of PBM practices provides compelling evidence for why Prescription Drug Affordability Boards (PDABs) are fundamentally misaligned with addressing drug affordability issues. The report documents that PBM-affiliated pharmacies generated over $7.3 billion in revenue above estimated acquisition costs on specialty generic drugs—a problem that stems from markup practices and vertical integration rather than base drug prices.

Take, for example, the pulmonary hypertension drug tadalafil (generic Adcirca). The FTC found that in 2022, while pharmacies purchased the drug at an average cost of $27, PBMs marked it up by $2,079, resulting in a reimbursement rate of $2,106 for a 30-day supply—a markup exceeding 7,700%. A PDAB focusing on upper payment limits would fail to address these markup practices or the steering mechanisms that drive prescriptions to PBM-affiliated pharmacies where such markups occur.

Similarly, the report's findings on multiple sclerosis medications illustrate the inadequacy of the PDAB approach. For dimethyl fumarate (generic Tecfidera), PBMs marked up the drug by $3,753 over its $177 acquisition cost—a 2,100% increase. This markup occurred through PBM practices that PDABs have no authority to regulate or control.

The FTC's analysis of spread pricing further undermines the PDAB model. PBMs generated approximately $1.4 billion through spread pricing on these specialty generic drugs, with 97% coming from commercial claims. PDABs, focused on manufacturer prices rather than PBM practices, would do nothing to address this significant source of cost inflation.

Moreover, PDABs could exacerbate existing market distortions. The report documents that PBM-affiliated pharmacies already handle 72% of prescriptions for drugs marked up more than $1,000 per prescription, despite filling only 44% of commercial specialty generic prescriptions overall. Adding PDAB-imposed price controls could result in pharmacy under-reimbursement. This would be financially detrimental, disproportionately so for independent pharmacies, resulting in pharmacy closures. Pharmacy closures would only increase the market concentration of PBM-affiliated pharmacies. Additionally, a PDAB-imposed Upper Payment Limit (UPL) could lead a PBM to enforce utilization management policies which would increase practitioners' administrative burden.

The evidence demands solutions that directly address PBM pricing practices, vertical integration, and market consolidation—not ineffective state-level price control boards that may actually strengthen PBMs' market position while failing to protect patient interests.

The Path Forward: Ending PBM Abuse

The FTC's comprehensive report demands immediate legislative action to dismantle PBM practices that systematically undermine patient care and inflate healthcare costs. Based on the documented evidence, reform must target three critical areas:

Dismantling Anti-Patient Practices

• Prohibit PBMs from forcing patients into proprietary pharmacy networks

• Ban exclusionary network designs that restrict patient choice

• Eliminate spread pricing mechanisms

• Terminate retroactive pharmacy reimbursement clawbacks

• Prevent prescription steering practices that disrupt established care relationships

Establishing Real Accountability

• Create federal oversight with clear investigative and enforcement powers

• Mandate comprehensive transparency in PBM revenue streams

• Implement rigorous contract review processes for health plans

• Develop meaningful penalties for violations that harm patient care

Protecting Specialized Care

• Guarantee patient pharmacy selection autonomy

• Preserve continuity of care for chronic condition management

• Safeguard community pharmacies providing specialized services

• Ensure access to providers with deep therapeutic expertise

• Protect pharmacies serving vulnerable and marginalized communities

The FTC's findings provide irrefutable evidence of systematic abuse. Ineffective approaches like Prescription Drug Affordability Boards (PDABs) and industry self-regulation have failed. Federal legislation with clear enforcement mechanisms is the only path to stopping these harmful practices and protecting patient access to care.

Healthcare advocates must sustain pressure on Congress and the new administration to implement comprehensive reforms. The time for incremental compromises has passed. We need decisive action to end PBM practices that prioritize corporate profits over patient health.

Proposed Cigna-Humana Merger Raises Stakes for Healthcare Access Amid Election Uncertainty

Cigna Group and Humana are once again discussing a merger that could create a $140 billion insurance giant, further consolidating the U.S. healthcare system. The talks are in preliminary stages after collapsing last December over disagreements about financial terms. FierceHealthcare notes that while discussions have resumed, no formal agreements have been made yet.

The stakes of this merger extend far beyond corporate boardrooms; it directly impacts millions of people's access to essential healthcare services and affordable medications. With Cigna’s Express Scripts commanding 24% of the PBM market and Humana operating the fourth-largest PBM with 8%, the merger raises serious questions about market concentration and its impact on healthcare affordability and accessibility.

Election Outcome Could Determine Merger’s Fate

The timing of the renewed merger talks between Cigna and Humana is no coincidence, occurring just weeks before a presidential election that could heavily influence the merger’s prospects. Bloomberg reports, Wall Street analysts believe that the deal's future hinges on the election outcome, with talks likely "only tangibly moving forward if Trump wins."

Under a Trump Administration, a more favorable regulatory environment might be expected given the GOP's general preference for deregulation. However, skepticism about large corporate mergers from Trump's base and running mate JD Vance complicates this picture. Vance has even praised current FTC Chair Lina Khan, saying she is "one of the few people in the Biden Administration who I think is doing a pretty good job," indicating a potentially less favorable view of healthcare consolidation than the GOP has historically maintained. On the other hand, a Harris Administration would likely continue the Biden Administration's stricter stance on healthcare consolidation, focusing particularly on protecting underserved and rural communities.

TD Cowen analyst Ryan Langston suggests that any formal merger announcement before the election is unlikely, further underscoring the centrality of the election to the deal’s future. Meanwhile, federal scrutiny of pharmacy benefit managers (PBMs) remains high, with the Federal Trade Commission (FTC) accusing the largest PBMs of using negotiation tactics that inflate drug costs, adding another layer of complexity to the regulatory landscape.

Understanding the Scale and Implications of the Proposed Merger

The proposed Cigna-Humana merger would unite two companies with largely complementary business models. Modern Healthcare reports that Cigna dominates in commercial coverage with 16.1 million members, while maintaining a smaller Medicare presence. In contrast, Humana has fewer than 600,000 commercial customers and is withdrawing from employer-sponsored insurance, while standing as the second-largest Medicare insurer with 8.8 million members.

This complementary structure could ease some antitrust concerns, but the combined PBM operations present a more complex challenge. The American Medical Association's (AMA) position on the CVS-Aetna merger highlighted similar concerns, noting that such consolidation can limit competition and reduce patient access to specialty drugs, which may parallel the challenges presented by this merger. Healthcare Huddle's analysis suggests that a merger would create a PBM entity large enough to rival market leader CVS Caremark, potentially controlling 32% of the market. Such concentration in the PBM space has already drawn scrutiny from regulators and policymakers.

To address regulatory hurdles, Cigna is planning to finalize the sale of its Medicare Advantage business to Health Care Service Corporation for $3.3 billion, a move that Modern Healthcare suggests could ease antitrust concerns by eliminating overlapping services. Meanwhile, Humana has faced challenges, with its value dropping nearly 40% this year due to declining Medicare plan enrollments and performance shortfalls resulting in the Centers for Medicare and Medicaid Services (CMS) downgrading their Medicare Advantage (MA) plans’ star ratings.

The combined entity would have a market capitalization of around $121 billion based on October 2024 valuations. While still smaller than UnitedHealth Group's $528 billion market cap, the merger would establish a stronger competitor across both the insurance and PBM markets, potentially reshaping competitive dynamics in the healthcare sector.

PBM Consolidation: Increased Scrutiny as FTC Takes a Stand

The potential merger's impact on pharmacy benefit management deserves particular attention, especially given recent FTC actions against PBMs. Currently, three PBMs control approximately 80% of the market, with Cigna's Express Scripts commanding about 24% and Humana's pharmacy division holding 8% market share, according to Bloomberg Law analysis.

The timing is particularly sensitive given the FTC's September 2024 administrative complaint against major PBMs. As previously reported by CANN, the FTC alleges these companies engaged in anticompetitive rebating practices that artificially inflated drug prices. The FTC investigation has revealed troubling practices, with PBMs frequently prioritizing higher rebates over lower net prices, leading to the exclusion of lower-cost alternatives and driving up drug prices. A combined Cigna-Humana PBM would control 32% of the market, potentially creating an entity large enough to rival market leader CVS Caremark.

This level of concentration raises serious concerns about negotiating power and drug pricing. Bloomberg Law notes that employer groups are particularly wary of the merger, fearing it could make an already complicated market even more opaque for health plans and potentially lead to higher costs for company health plans.

Impact on Healthcare Access and Specialty Care

Healthcare consolidation has long presented significant barriers for patients who rely on specialized care, including those living with chronic conditions like HIV. For example, patients often face more restrictive formularies, meaning fewer options for necessary medications, and increased prior authorization requirements, which can delay access to critical treatments. This is especially problematic for patients with chronic conditions like HIV, where timely and consistent access to specific medications is critical for maintaining health. Research published by Tufts Center for the Evaluation of Value and Risk in Health shows that consolidation often leads to restricted specialty care access, which can be particularly detrimental to people requiring ongoing care management. For instance, patients with cancer may find it harder to access specialized oncologists or newer, targeted therapies due to narrower provider networks and limited formularies. These barriers do more than inconvenience patients—they delay treatments, ultimately impacting patient outcomes.

The National Academy for State Health Policy (NASHP) reports that consolidated health systems frequently use their market power to implement restrictive contracts that can limit patient choice. These contracts often include clauses that prevent insurers from steering patients to higher-value care providers or limit the ability to negotiate better prices, ultimately restricting patient options and driving up healthcare costs. This can particularly impact people relying on specialty medications and services, like those living with HIV who need consistent access to specialists and specific drug regimens.

Consolidated systems often impose more stringent prior authorization requirements and narrower specialty pharmacy networks, as noted in the BMC Health Services Research study. The AMA highlights that merged entities often use their power to make access to specialty drugs more restrictive, which further limits patient options and exacerbates challenges for those needing specialized care. For people living with HIV, disruptions or delays in accessing antiretroviral medications could have serious health implications.

The combined entity's negotiating power could lead to more restricted provider networks. NASHP's research shows that consolidated entities often leverage market power to demand higher reimbursement rates, resulting in narrower networks that limit access to specialists, including HIV care providers.

Navigating Complex Regulatory Hurdles

The proposed Cigna-Humana merger faces significant regulatory scrutiny at both federal and state levels. The merger is likely to undergo a 12- to 24-month regulatory review, particularly given the current antitrust enforcement environment. Regulatory challenges are expected to include a detailed examination of the potential impact on competition, particularly in the PBM market, and whether the merger could lead to increased healthcare costs for consumers. The recent FTC crackdowns on healthcare companies, which could provide additional insights into the type of scrutiny expected during the review, particularly regarding anti-competitive practices and market concentration. Both the FTC and the U.S. Department of Justice are likely to scrutinize any potential overlap in services and demand divestitures to ensure that competition remains intact. Additionally, state-level reviews could require concessions to protect local markets from becoming overly concentrated.

Kaiser Family Foundation's analysis highlights how the FTC and Department of Justice have increased their focus on both horizontal and vertical integration effects. They now examine broader implications for healthcare costs and access, beyond direct market overlap.

State-level review adds another layer of complexity. KFF notes that 34 states and DC require notification of health insurance mergers, with 13 states requiring explicit approval. This multi-state review process could extend the timeline and require concessions to address state-level concerns.

Looking Ahead: Implications for Healthcare Access and Affordability

The proposed Cigna-Humana merger represents more than a business combination—it embodies the tension between market consolidation and healthcare accessibility. While the companies argue that their complementary business models could improve efficiency, the merger's impact on PBM market concentration and healthcare access demands careful scrutiny.

The immediate path forward hinges significantly on the November 5th election outcome, with analysts suggesting meaningful progress is unlikely before then. Beyond the election, the regulatory review process could extend into 2026, as federal and state regulators examine the merger’s implications for competition, drug pricing, and healthcare access.

For healthcare stakeholders, especially those relying on specialty care and medications, the merger’s outcome could significantly impact their care access and costs. The combined entity's expanded market power in both insurance and PBM sectors could reshape provider networks, prior authorization processes, and drug formulary designs.

Advocacy organizations and policymakers must carefully monitor and engage in the regulatory review process to ensure that any approved merger includes meaningful protections for healthcare access and affordability. The FTC’s current focus on PBM practices provides an important opportunity to address long-standing concerns about drug pricing and access in any merger approval conditions.