One Split Doesn’t Fit All: What CVS’ Breakup Really Says About PBM Reform

Jeffrey E. Depp November 9, 2026

Truth on the Market View Original Source

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CVS Health plans to split in two, but its pharmacy benefit manager would still own a pharmacy business. That complicates any attempt to cast the breakup as an endorsement of laws banning such ownership. CVS wants to separate some services and keep others together. Should lawmakers let companies and their customers test those choices—or make the decision for them?

The details of CVS’ Nov. 4 plan illustrate that distinction. Retail and mail-order pharmacy would move to a separate, publicly traded company called CVS Pharmacy. Caremark—its pharmacy benefit manager (PBM), which administers prescription-drug benefits and negotiates with drugmakers and pharmacies—would remain within CVS Health alongside CVS Specialty, its specialty-drug pharmacy business, and other operations. CVS expects to complete the split in the first half of 2028, subject to final board approval and other conditions.

Keeping some operations together while separating others reflects a judgment about where common ownership adds value. Whether CVS has judged correctly remains to be seen. The announcement establishes no savings for patients, and purchasers will need to compare the resulting prices and services with competing offers.

Making those comparisons requires information. The U.S. Department of Labor’s new PBM disclosure rule could help by showing employers and others responsible for managing health plans what drugmakers pay PBMs and their affiliates. That information could strengthen purchasers’ bargaining position. But disclosure costs money, and even well-informed purchasers must navigate the government rules that helped shape this market.

Ownership bans leave those underlying rules intact, too, as I argued in a recent National Law Review article. Arkansas banned PBMs from owning pharmacies, and Tennessee adopted its own common-ownership restrictions. These measures narrow purchasers’ options while preserving public financing rules, mandatory discounts, and barriers to developing competing treatments. CVS’ decision to try a different structure hardly makes it a prescription for every competitor.

Assessing these policies therefore requires looking beyond corporate boundaries to the incentives on either side of them. Applied Austrian economics asks how government rules shape business decisions and which useful arrangements further restrictions might prevent firms from discovering. Public choice—the study of incentives in politics—asks who benefits when government restricts a rival’s business. Both approaches help assess CVS’ restructuring and the policies surrounding it. Neither PBM conduct nor the latest regulatory fix deserves a free pass.

Read the full piece here.