Healthcare Insights

Pharmacy Benefit Management Market Size to Hit USD 1,453.8 Bn By 2033

Healthcare Insights

The global pharmacy benefit management market size was estimated at around USD 610.17 billion in 2023 and it is projected to hit around USD 1,453.8 billion by 2033, growing at a CAGR of 9.07% from 2024 to 2033. 

Key Pointers

Pharmacy Benefit Management Market Overview

The pharmacy benefit management (PBM) market is crucial in the healthcare sector, as it helps to enhance the use of medications, manage costs, and boost patient results. PBMs serve as go-betweens for health insurers, pharmaceutical firms, pharmacies, and patients, streamlining the acquisition, distribution, and oversight of prescription drugs.

Pharmacy Benefit Management Market Growth

The pharmacy benefit management (PBM) market is experiencing growth due to several key factors. Firstly, there’s a rising demand for cost-effective healthcare solutions amidst increasing prescription drug prices. This drives the adoption of PBMs by health insurers and employers. Additionally, the prevalence of chronic diseases is increasing, leading to a greater need for effective medication management strategies and further boosting demand for PBM services.

Moreover, advancements in technology and data analytics empower PBMs to improve medication adherence, optimize formulary management, and identify cost-saving opportunities. Regulatory initiatives aimed at promoting transparency and controlling pharmaceutical expenditures also contribute to the expansion of the PBM market. Lastly, the emphasis on value-based care models and population health management underscores the importance of pharmacy benefit management in enhancing patient outcomes and reducing overall healthcare costs.

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Pharmacy Benefit Management Market Trends:

  • There is a growing trend of PBMs integrating telehealth and digital health solutions into their services. This integration aims to improve access to care, enhance medication management, and engage patients in remote monitoring and support. Telepharmacy services and digital medication adherence tools are becoming essential parts of PBM strategies
  • There is a notable increase in the emphasis on specialty pharmacy services within PBMs. This trend is fueled by the rising prevalence of complex and expensive specialty medications. These services are centered around managing high-cost specialty drugs, offering patient support, and ensuring medication adherence for individuals with chronic and rare diseases.

Service Insights

In 2023, the specialty pharmacy segment emerged as the top revenue generator, capturing the largest share of 35% in the market. This dominance is mainly due to the increasing prevalence of rare and chronic diseases globally, leading to higher demand for specialty drugs. However, the high prices of these medications make them inaccessible to a significant portion of the population. As a result, there’s a growing demand for pharmacy benefit management (PBM) services to address the affordability issue. PBMs play a crucial role in negotiating lower prices for specialty drugs, making them more reachable for patients. Consequently, the specialty pharmacy segment has solidified its dominance in the global pharmacy benefit management market.

Furthermore, the benefit plan design and administration segment are expected to witness significant opportunities during the forecast period. This growth is driven by the increasing adoption of medical insurance claims worldwide. According to India Express, the percentage of individuals opting for medical insurance policies surged from 30% in March 2020 to 80% in March 2021. Consequently, the rising uptake of medical claims globally is expected to drive substantial growth in this segment throughout the forecast period.

Service Provider Insights

In 2023, the insurance companies segment emerged as the dominant player in the global pharmacy benefit management market. This dominance is primarily due to the increasing number of acquisitions and mergers between insurance companies and pharmacy benefit management service providers. Such collaborations have propelled the insurance companies segment to the forefront of the market. For instance, First Medical Health Plan, Inc. and Abarca Health LLC formed a partnership for pharmacy benefit management services over a three-year period. Additionally, the expanding presence of health insurance companies across developed and developing nations has further bolstered market growth.

On the other hand, the retail pharmacy segment is forecasted to experience the highest growth during the projection period. This growth is fueled by the proliferation of retail pharmacy outlets globally, alongside the increasing prevalence of online pharmacies. The rising availability of internet access, the widespread adoption of smartphones, and the growing popularity of e-commerce among consumers are key drivers behind the expansion of online retail pharmacies. According to the International Telecommunications Union, approximately 64% of the global population had internet access, with this figure expected to rise significantly. Online pharmacies offer rapid home delivery, convenient payment methods, substantial discounts, and hassle-free refund and replacement policies, driving consumer demand. Consequently, the escalating popularity of online retail pharmacies is poised to propel growth within the retail pharmacy segment of the global pharmacy benefit management market.

Regional Insights

In 2023, North America emerged as the dominant force in the global pharmacy benefit management market. The United States, in particular, boasted a PBM market valued at US$450 billion in 2022, up from US$426.5 billion in 2021. With its leading pharmaceutical manufacturers, insurance providers, pharmacy benefit management service providers, and retail pharmacy chains, the US stands as a hub of industry innovation and investment.

The widespread adoption of health insurance among the US population has been a key driver of market growth, especially considering that over half of the population suffers from one or more chronic diseases. This, coupled with high healthcare expenditures and increased insurance policy adoption, has propelled the North American pharmacy benefit management market forward. According to the Centers for Medicare and Medicaid Services, total healthcare expenditure in the US surged to US$4.1 trillion in 2020, marking a 9.7% increase from the previous year. Additionally, the extensive presence of health insurance providers in the region has further bolstered market expansion, as many patients rely on reimbursements for access to treatment. Favorable government reimbursement policies have also played a crucial role in fostering market growth in North America.

In contrast, Asia Pacific is poised to experience significant growth during the forecast period. This can be attributed to the rising adoption of healthcare insurance among the population, alongside an increasing prevalence of chronic diseases and escalating healthcare expenditures in the region. Furthermore, the expanding presence of pharmacy benefit management service providers in Asia Pacific is expected to further drive market growth in the coming years.

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Pharmacy Benefit Management Market Key Companies

Pharmacy Benefit Management Market Segmentations:

By Service

By Service Provider

By Business Model

By Region

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