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The pharmacy benefit management market involves the design and administration of prescription drug plans within health insurance programs. Pharmacy benefit managers negotiate discounts and rebates with drug manufacturers and pharmacies, manage drug formularies to determine which medications are covered, and process prescription drug claims. They work to control prescription drug costs for health plans while expanding access to medications for patients. As chronic diseases like diabetes, cancer, and cardiovascular disease continue rising globally due to aging populations and lifestyle changes, the need for prescription medications and specialized pharmacy care is growing significantly. This drives greater demand for pharmacy benefit management services to efficiently and cost-effectively facilitate drug treatments.
The global Pharmacy Benefit Management Market is estimated to be valued at US$ 858.38 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
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Market key trends:
One of the key trends in the pharmacy benefit management market is the increasing consolidation through mergers and acquisitions. Major players are acquiring PBMs as well as pharmacies to expand service offerings and strengthen their market presence. For example, CVS Health acquired Aetna in a cash-and-stock deal worth approximately $69 billion. This merger integrated CVS’ pharmacy benefit management and pharmacy services with Aetna’s health insurance plans. Such consolidation activities allow companies to provide more comprehensive healthcare and prescription drug services. Another trend is the rising adoption of specialty drug management programs. As expensive specialty drugs for complex conditions like cancer see higher utilization, PBMs are developing tailored programs and patient support services to efficiently manage these specialty medications and control rising costs. This specialty drug management is a major focus area for pharmacy benefit managers.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate. The pharmacy benefit management market requires high initial investments and compliance with strict regulations which limits new players from entering the market easily.
Bargaining power of buyers: The bargaining power of buyers is high. Buyers like pharmaceutical companies, healthcare providers and employers have significant influence over pharmacy benefit managers to negotiate lower costs and improve services.
Bargaining power of suppliers: The bargaining power of suppliers is moderate. Pharmacy benefit managers depend on pharmaceutical manufacturers and drug wholesalers as their primary suppliers who have some influence on setting drug prices.
Threat of new substitutes: The threat of new substitutes is low. There are no cost-effective substitutes available for the core services offered by pharmacy benefit managers.
Competitive rivalry: The competitive rivalry is high. The market comprises prominent players who compete based on service offering, product innovation, and pricing.
Key Takeaways
The global Pharmacy Benefit Management Market is expected to witness high growth. The market in North America region currently holds the largest share owing to aging population, increased healthcare expenditure and focus on lowering drug costs.
Regional analysis: North America region is expected to dominate the market during the forecast period. This is attributed to favorable reimbursement policies, developed healthcare infrastructure and presence of major pharmacy benefit management companies in the US. Asia Pacific region is projected to grow at fastest pace due to rising medical insurance penetration and increasing demand for cost efficient healthcare services.
Key players: 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 one of the largest pharmacy benefit managers in the US managing pharmacy benefits for more than 100 million plan members. Optum is a leading player providing end-to-end pharmacy care services globally.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
