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Pharmacy benefit management involves developing and maintaining drug formularies, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers. PBM services help reduce the costs of prescription drugs for health plans, self-insured employers, labor unions, and government insurance programs. They leverage their large membership to negotiate lower drug prices from manufacturers and pass on the savings to clients. This allows payers to offer more affordable health plans to their members with prescription drug coverage. The rising healthcare costs are placing financial burdens on individuals, families, and employers. PBMs play an important role in mitigating some of these costs by negotiating discounts and rebates on high volume generic and branded prescription drugs.
The global Pharmacy Benefit Management Market is estimated to be valued at US$ 858.38 Bn in 2024 and is expected to exhibit a CAGR of 8.6% over the forecast period 2024 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
The pharmacy benefit management market is witnessing increasing adoption of big data analytics and artificial intelligence capabilities. PBMs are leveraging these technologies to better analyze prescription drug usage patterns and clinical outcomes. This helps in devising optimized formularies and lower costs through value-based contracting with drug manufacturers. Big data also allows personalized intervention and medication adherence programs which can help lower readmission rates and improve health outcomes. Furthermore, growing preference for specialty pharmacy services is a major trend in this market. Specialty drugs target complex conditions such as cancer, autoimmune diseases, hepatitis C, and rheumatoid arthritis. Their high costs require specialized management which is driving demand for PBM specialty pharmacy services.
Porter’s Analysis
Threat of new entrants: Low entry barriers such as licenses and capital requirements. However, established players have strong economies of scale and consumer loyalty which make it difficult for new entrants.
Bargaining power of buyers: Moderate as PBMs negotiate price discounts with pharmacies and drug manufacturers on behalf of insurance companies and employers. Large insurance firms can directly negotiate prices.
Bargaining power of suppliers: High influence of drug manufacturers as new drugs can dominate markets. Manufacturers can threaten to withdraw lucrative drugs if terms are not favorable.
Threat of new substitutes: Low as PBM services offer specialized and diverse solutions for payors and patients making substitutions difficult.
Competitive rivalry: Intense as top players compete on service quality, pharmacy networks, formulary management and price. Mergers are common to achieve synergies and scale.
Key Takeaways
The global Pharmacy Benefit Management Market is expected to witness high growth. The market size for 2024 is US$ 858.38 Bn forecasting growth at a CAGR of 8.6% until 2030.
Regional analysis comprises the United States represents the largest and fastest growing regional market. Regulations supporting adoption and patients’ growing medical costs are driving regional growth.
Key players operating in the Pharmacy Benefit Management market are CVS Health, Optum, SS&C Tecnologies, Inc., Elixir Rx Solutions, LLC, and Centene Corporation (Envolve Health), among others. CVS Health is the largest PBM in the U.S. while OptumRX is growing rapidly through acquisitions. Players compete on expanding pharmacy and drug formularies, technological capabilities and client relationships. Consolidation is witnessed as large players acquire regional players to enhance services portfolio
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
