Global Pharmacy Benefits Management Market to Grow At 6-7 percent CAGR in 2021-26
Source: PR Newswire
With the rise in prescription drug costs and demand for costly specialty drugs, PBM companies are projected to play a significant role in optimizing healthcare spending.
Raleigh, North Carolina, Dec 13: Rise in prescription drug prices and increased demand for specialty drugs have led to higher demand for Pharmacy Benefits Managers (PBM). The price hike, change in quantity demand and usage trend together makes up for more than 50 percent of the total increase in pharmacy spending.
Prescription drug prices in 2021 saw a 16 percent hike (compared to the year previous). PBM companies claim to save cost 30 percent by reducing procurement costs and obtaining rebates among other cost containment strategies that they provide.
“With the rise in overall prescription drug expenditure, PBMs are the hot topic in the pharma market, expected to grow at 6-7 percent CAGR in 2021-26. PBMs influence the price setting for prescription drugs, playing an essential role in the health spending sector. Adopting transparency along with digital health solutions and technology, PBMs will not only reduce health benefit costs borne by employers but also play a big role in setting quality and efficiency of prescription drugs,” said Ria Abraham, Research Analyst at Beroe.
PBMs negotiate directly with drug manufacturers/suppliers to procure prescription drugs and health plans at the lowest possible cost. Their relationship with drug manufacturers, health payers, and pharmacies combined with their buying power favor price negotiation. PBMs' expanding role in the healthcare market include:
- Health claims management and costs contingency
- PBM formularies maintenance
- Prescription reimbursement to PBM pharmacies
- Retail and mail order services
- Pharmacy Benefits Managers companies support employee health plan administrators in clinical management.
- Step therapy, disease management, and drug utilization reviews in collaboration with insurers and specialty pharmacies.
- Strategic partners for design plan; help track regulatory changes.
- Evidence-based methods for informed decision making.
PBMs have been criticized for lack of transparency. Nevertheless, the shift from PBM spread pricing to pass through pricing brought a better cost model in the market like the Guaranteed Net Cost model, giving 100 percent rebates to clients. Express Script PBM pricing model passes 95 percent discounts to the clients. Different payment mechanisms are being explored for costly therapies and programs like ‘pay for performance’ models wherein the cost depends on therapy results.
The largest PBMs are acquiring specialty pharmacy chains to provide better access to high-cost specialty drugs. Promoting cost-saving, top PBMs are excluding several branded drugs from their formularies, using biosimilar versions instead. PBMs are investing in technology such as drone delivery, digital formulary, telehealth/telemedicine services, patient engagement tools, etc.
Pharmacy Benefit Optimizer (PBO) model helps employers avoid overpaying for their pharmacies. PBMs are now focusing on providing integrated healthcare systems – medical, clinical, and pharmacy benefits. They are exploring various services like drug delivery support, compliance, nutrition/wellness programs, data tracking, and analytics to enhance PBM healthcare and effectuate the use of prescription drugs.
“The role of Pharmacy Benefits Managers no longer remains only in affecting healthcare spending in terms of cost reduction. PBMs are now a major driving force in ensuring better quality as well as accessibility to prescription drugs; which in effect affects every player in the pharmaceutical and healthcare market,” said Ria Abraham, Research Analyst at Beroe. “The use of technology and integration of players in the healthcare system with insurers have ensured a better system where all stakeholders are benefitted. PBM players are working towards bringing about efficient programs which are cost and health-effective”.
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