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Pharmacy benefit management (PBM) services help health plans and employers design and manage cost-effective prescription drug benefits. PBMs are third-party administrators of prescription drug programs who focus on improving clinical outcomes for individuals and containing overall healthcare costs. They help negotiate discounts and rebates from drug manufacturers, develop lists of preferred drug formularies for optimal therapy, and implement drug utilization review programs. The global PBM market has witnessed significant growth in recent years due to the rising need to manage rapidly increasing prescription drug costs and promote cost-effective standardized benefit design.
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.
Market Dynamics:
One of the key drivers fueling the pharmacy benefit management market growth is the growing demand for cost containment in the healthcare systems across the world. Prescription drug costs in the US have more than doubled over the past decade, rising faster than general inflation. This is putting immense pressure on public and private payers to rein in costs. PBMs help health plans and employers design customized pharmacy benefits and negotiate discounts from manufacturers and pharmacies to provide affordable access to medicines for individuals. PBMs also undertake medication therapy management programs and utilization management tools like prior authorizations and formulary restrictions to ensure only essential drugs are prescribed which positively impacts costs. The growing focus on promoting value-based healthcare models is expected to further propel the demand for specialized PBM services that can optimize clinical outcomes as well as reduce drug prices to curb the overall healthcare spending.
Segment Analysis
The pharmacy benefit management market can be segmented based on service type into commercial health plans, self-insured employers, Medicare part D plans, federal employees health benefits program and state government employee plans. Among all the sub segments, the commercial health plans segment dominates the market and accounts for more than 50% share of the overall market. This is due to the huge customer base covered under various commercial insurance plans offered by different insurance providers.
PEST Analysis
Political: The market is highly regulated by government policies around pricing, rebates, and formulary design. Any policy changes can have significant impact on the business models of PBMs.
Economic: The market performance is closely aligned to the economic growth of a country. During recession, PBM business might be impacted due to drop in sales of prescription drugs.
Social: Aging population and increasing lifestyle diseases have increased the demand for prescription drugs over the years. Social trends like preventive healthcare and wellness are influencing growth.
Technological: Digital technologies like telehealth, e-prescriptions, blockchain, and AI are transforming various functions of PBMs including claims processing, formulary management, payment integrity and customer engagement.
Key Takeaways
The global Pharmacy Benefit Management market is expected to witness high growth over the forecast period of 2023 to 2030. 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.
Regional analysis: North America dominates the global PBM market currently with a share of over 60% owing to well developed healthcare infrastructure and increasing per capita healthcare expenditure in the US. Asia Pacific is expected to emerge as the fastest growing region during the forecast period supported by expanding medical insurance penetration, rising urbanization and growing prevalence of chronic illnesses.
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 remains the dominant leader in the market with a market share of over 20% due to its well diversified service portfolio and massive pharmacy network of over 60,000 pharmacies.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. With an MBA in E-commerce, she has an expertise in SEO-optimized content that resonates with industry professionals.
