Rising drug costs and increased consumer bases have bolstered demand.
New York, NY (PRWEB) September 08, 2014
Pharmacy benefit managers (PBMs) play a crucial part in the US healthcare system by influencing not only which prescription drugs Americans can get, but also from whom and for how much consumers can get them. IBISWorld estimates that rising drug costs, higher consumer spending on healthcare and increasing prescription drug use drove up revenue for the Pharmacy Benefit Management industry at an annualized rate of 5.3% to $263.4 billion over the five years to 2014. “Rising drug costs caused health plan sponsors to increasingly turn to PBMs for cost management services,” according to IBISWorld Industry Analyst Leah Goddard. In turn, this trend drove industry operators to consolidate to better leverage larger retail pharmacies, customer networks and drug use data to negotiate better cost savings with drug manufacturers. As a result, major merger and acquisition activity has continued to increase the market share of the largest PBMs in the industry; two of the largest participants, Medco Health Solutions and Express Scripts Inc., merged in 2012 to form industry leader Express Scripts Holding Company.
The aging of the population and higher rates of chronic disease also propelled health expenditure and prescription drug use upward over the period. “Declining unemployment and rising disposable income levels, combined with expanded private health insurance coverage, have allowed consumers to increase spending on medical care since the recession,” says Goddard. However, many consumers still opted for lower-priced generics and over-the-counter medications instead of higher-priced brand name drugs, which has moderated revenue growth over the period. Nonetheless, IBISWorld anticipates that further growth in drug manufacturing costs, consumer health expenditure, prescription drug use and expanded prescription drug plan enrollment will increase industry revenue 3.9% in 2014.
Growth prospects for PBMs are strong. The 2010 Patient Protection and Affordable Care Act will expand prescription drug coverage over the next five years, which will help bolster prescription drug use and industry revenue as a result. Industry consolidation will continue to increase the size and clout of PBMs who promote drug therapies as preventative measures and less expensive alternatives to more costly forms of medical care like hospitalizations, thereby boosting prescription medication use and industry revenue.
For more information, visit IBISWorld’s Pharmacy Benefit Management in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes firms that provide pharmacy benefit management services. Industry firms are third-party administrators of government and employer-sponsored prescription drug programs. They are primarily responsible for processing and paying prescription drug claims.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.