PBMs, Vertical Integration, and State Reform: Why Dermatology Drug Costs Remain So High in 2026
At the 2026 Masterclasses in Dermatology Annual Meeting, Mark Kaufmann, MD, delivered a candid update on drug pricing reform and the evolving role of pharmacy benefit managers (PBMs).
Dr Kaufmann began by outlining the central function of PBMs in the prescription drug ecosystem. Most insurers rely on these “outside” companies to decide what drugs to cover, “which ones to force patients to pay a larger share for,” and to negotiate pharmaceutical pricing. For dermatologists prescribing biologics and specialty therapies, these decisions directly affect access and adherence.
Market concentration is striking. “Three pharmacy benefit managers—Express Scripts, CVS Caremark, and OptumRx—control 72% of the US market.” Over the past decade, vertical integration has intensified, with each of these PBMs now embedded within larger insurance conglomerates. This integration blurs the lines between insurer, PBM, specialty pharmacy, and provider, raising concerns about competition and transparency.
Dr Kaufmann reviewed familiar PBM revenue strategies: copay clawbacks, spread pricing, rebates, copay accumulator programs, and step edits or prior authorizations. These mechanisms, often framed as cost containment, can increase administrative burden and delay biologic initiation in dermatology practice.
A pivotal regulatory turning point traces back to the 1987 Medicare Anti-Kickback Safe Harbor, initially created for group purchasing organizations and extended in 2003 to PBMs. Reform efforts have stalled. As former US Health and Human Services Secretary Alex Azar stated, “At the end of the day, while we support the concept of getting rid of rebates… we’re not going to put seniors at risk of their premiums going up,” although he added that “rebates’ days are numbered.”
Despite a 2025 executive order promising to “cut out the middlemen and facilitate the direct sale of drugs at the most favored nation price,” comprehensive federal PBM transparency legislation did not pass in 2025. Instead, reform momentum has shifted to the state level.
Arkansas passed House Bill 1150 banning PBMs from owning pharmacies (although enforcement is paused). California enacted a “delinking” law prohibiting spread pricing and mandating rebate pass-through. Colorado, Utah, Indiana, and Massachusetts implemented additional transparency, reimbursement floors, and rebate requirements.
The takeaway for dermatologists? Drug pricing reform is fragmented, evolving, and increasingly state driven. With biologics, specialty medications, and prior authorization barriers central to dermatologic care, understanding PBM mechanics is no longer optional.
As Dr Kaufmann framed the discussion, the core issue is straightforward: “Understand how PBMs earn their money” and determine “what can be done to lower drug prices.”
For more meeting coverage, visit the Masterclasses in Dermatology newsroom.
Reference
Kaufmann M. Why drugs cost so much: 2026 update. Presented at: Masterclasses in Dermatology; February 19–22, 2026; Sarasota, FL.
