OBJECTIVE: To test the hypothesis that the corporate structure of large health insurance companies affects formulary design. By choosing what is solely at the discretion of pharmacy benefit managers (PBMs), their national formularies, as the dependent variable, rather than the generic utilization rate, the need to factor out extraneous demand factors was minimized. METHODS: The 2004 published formularies of the following three groups were examined: a) the national formularies of four large independent PBMs; b) the formularies of six large insurance companies that have contracted with these large PBMs to managed their drug benefit plans; and c) the formularies of four large insurance companies that manage PBM functions internally. Three therapeutic classes -- proton pump inhibitors, COX-2 inhibitors, and second generation antihistamines – were selected on the basis of widespread claims of the existence of lower cost generics that are therapeutic equivalents. The number of brand name drugs selected for the “Tier 2” was tallied for each formulary across the three selected therapeutic classes. RESULTS: There was no significant difference in the number of “Tier 2” brand name drugs in the selected therapeutic classes of formularies of the large insurance companies with differing corporate structures. However, there was significant drop off in the number of brands included in the national formularies of the four large, independent PBMs and the number of brands in the “Tier 2” of final plan formularies chosen by their clients. CONCLUSION: Large insurance companies relying on independent PBMs for formulary management take an active role in the design process and neutralize the effect that corporate structure has on the starting point of the design process.