U.S. PHARMACY BENEFIT MANAGEMENT MARKET-INDUSTRY INSIGHTS
The U.S. pharmacy benefit management (PBM) market size is to reach USD 700 billion by 2025, growing at a CAGR of 7% during 2020-2025. The complexity of the American drug system and increasing awareness of consumers toward prescription drug and health plan purchases will drive the U.S pharmacy benefits market growth. The easy claiming process offered by the pharmacy benefit management companies has increased the volume of total pharmacy claims thereby driving the market growth. PBMS is working on maximizing clinical outcomes by depending on technology. For instance, Magellan Rx Management does this through patient rewards by partnering with AiCure and introducing an AI platform that records and identifies behavioral data, audio, and video.
Some of the segments in the market are witnessing a lot of dynamism and a faster trajectory. As drug prices used to treat complex or rare conditions become more demanding for payers, patients, and providers, it is driving the specialty pharmacy segment upward.
- The specialty pharmacy services segment is expected to witness an incremental growth of over $51 billion by 2025.
- The healthcare plan segment is projected to observe an incremental growth of over $81 billion on account of the growing adoption of employer-sponsored health insurance plans.
- With the annual healthcare waste accounts for $935 billion, PBMs, which are increasingly turning to data and evidence-based approaches, can go a long way to correct the wrong practices in the healthcare industry.
U.S. PHARMACY BENEFIT MANAGEMENT MARKET - INDUSTRY TRENDS
Consumers' inclination towards digital health tools and shifting to outcome-based contracts will remain an emerging trend in the market. In a bid to curb the rising costs of health care, much of the US healthcare system has been moving from focusing on volume via fee-for-service to value via value/outcome-based payments over the last decade, offering a huge opportunity in the market.
Growth in FDA approvals for orphan and specialty drugs, and shift towards individualized medicines are among the major growth enables of the market. FDA is approving drugs that have never received the approved designation or been used in clinical practice in the US for promoting patient care and are mostly specialty drugs that come with staggering costs. From the top-down, the focus is on encouraging advancements in healthcare and new therapies for patients. In addition, the number of biosimilars that are on the pipeline is growing, fostering cost-saving opportunities for players and payers alike and driving market growth. Orphan drugs are finding their moment in the spotlight. The number of manufacturers entering the market with competing products has risen.
U.S. PHARMACY BENEFIT MANAGEMENT MARKET SEGMENTATION
This research report includes a detailed segmentation by
- Health Plan
- Business Model
In 2019, the specialty and retail pharmacy services segment occupied more than 40% of the U.S. pharmacy benefit management market share. Specialty pharmacy is witnessing strong growth, driven by increased dynamism in payer access and data systems. Specialty drugs account for almost two-thirds of the revenues for specialty dispensing activities and is growing continuously. In 2019, Prime Therapeutics launched Specialty Monitor powered by Artemetrx, an integrated self-service data solution that provides specific pharmacy and medical benefits insights specific to specialty drugs. Overall, 73% of employers spend 15% or more of their healthcare budgets on pharmacy benefits, and this can go up to 28%, and specialty drugs are driving this segment. Specialty pharmacy services are thus a lucrative segment in the U.S. pharmacy benefit management market.
Approximately 266+ million US consumers are covered by health plans in the US. Premiums fund private health insurers, and taxes are used to fund current health insurance for government-sponsored health systems. Prescription benefits are a big part of most of these health plans, driving the need for a pharmacy benefit manager. Large employers are being driven to use PBM services. Healthcare costs for large employers are touted to rise by almost 7% in 2020. Drugs that treat auto-immune conditions are growing at the fastest rate in commercial health plans, driving demand for management services that deal with them. The pharmacy benefit management market in the US by commercial health plans is expected to reach USD 268 billion by 2025. The enrollment in Medicare Part D plans has grown 2X times over the last 15 years.
The U.S. pharmacy benefit management market by insurance companies and retail pharmacies is growing at a CAGR of 7% during the forecast period. In 2019, more than 52% of medium to large employers in the US had either carved out or intended to carve out pharmacy benefits by 2020 in a desperate attempt to stem rising costs. Self-funded products and direct contracts with PBMs are growing as plan sponsors look to discounts and rebates to pull them out of their expensive drug expenditures. This has proven advantageous for independent PBMs. Paired with client dissatisfaction with large PBMs, such factors have initiated a demand for independent PBMs.
U.S. PHARMACY BENEFIT MANAGEMENT MARKET SHARE INSIGHTS
The PBM industry is highly concentrated with CVS Caremark, Express Scripts, and OptumRX, accounting for more than 70% of claims volume. The U.S. pharmacy benefit management (PBM) market share has changed considerably in the last couple of years, where acquisitions led the market to where it is today, occupied mostly by a couple of giants. PBMs are expected to witness a more competitive and challenging atmosphere due to increased consumer pressure, political pressure, legal scrutiny, and the forces of new, innovative players in the health care space. Express Scripts is a leading vendor in the market. It serves more than 100 million customers and has around 3,000 clients. The Cigna and Express Scrips merger has resulted in expanded specialty services, integrated medical, pharmacy, and behavioral management capabilities, advanced analytics, and higher cost affordability and clinical quality.