How Private Equity Is Consolidating the Pharmacy Benefit Manager Industry

Episode notes

Episode 32 of The Buyout Show dives into one of the most opaque corners of American healthcare: pharmacy benefit managers, or PBMs. Lucas and Luna unpack the recent roll-up of mid-tier PBMs by private equity firms, focusing on the 2025 acquisition of EmpiRx Health by a consortium led by New Mountain Capital. They walk through how PBMs sit between insurers, drug manufacturers, and patients, and why PE sees massive margin potential in aggregating these middlemen. With the three largest PBMs (Caremark, Express Scripts, OptumRx) controlling nearly 80% of the market, the playbook has shifted to buying regional players and consolidating claims-processing technology. Lucas cites data showing that the average PBM margin on a generic prescription is roughly $1.20, while branded margins can exceed 15% - creating a lucrative spread for firms that can scale procurement. They also discuss regulatory headwinds, including the FTC's ongoing probe into PBM rebate practices, and how PE-owned PBMs are structuring contracts to avoid disclosure. The episode closes with a question: if these roll-ups continue, will the savings ever reach the patient?

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