A new report finds that the pharmacy benefit management market is likely to grow at a compound annual growth rate of more than 7% over the next five years.

The report, "Pharmacy Benefit Management Market in US – Industry Outlook and Forecast 2020-2025," discusses several factors likely to contribute to the growth of the PBM market during the years forecast. Those factors include a growth in FDA approvals for orphan and specialty drugs, digital health solutions, increased engagement in high-touch care management, and a shift to value/outcomes-based contracts.

The PBM market is well-backed, states the report, and ensures future growth by continued investment in technology R&D and data analytics capabilities. As a consequence of acquisitions, the market is also occupied by some heavy-hitters, including OptumRx, Humana Pharmacy Solutions, and CVS Caremark. The report suggests, however, that because insurers are building their presence in the market by severing existing relationships with PBMs and launching or acquiring their own, that concentration is likely to change.

Enrollment in Medicare Part D plans has skyrocketed over the past 15 years. Medicare depends heavily on PBMs, designed as it is to absorb risk.

Drugs that treat autoimmune conditions are growing at the fastest rate in commercial health plans, according to the report. Many of these emerging therapies come at a high cost, and there is a sharper focus among commercial health plan providers to keep those costs in check.

Specialty pharmacy, a segment of the PBM market, is recording significant growth. Specialty drugs have become the leading element in health care costs, the report states. There are worries about conflicts of interest when it comes to how PBMs tag specific drugs as "specialty."

Eric Levin, CEO of health care IT solution Scripta Insights, says, "Pharmacy benefits costs keep going up partially for the reasons listed in this report, but the bigger issue is actually the asymmetry of the market. We see an oligopoly of PBMs with an army of experts selling to a disparate group of employers who have almost no expertise on staff to help them understand and analyze what they are buying.

"Technology should be at the heart of shifting the balance of power in this market and giving buyers more power to be better buyers," Levin adds. "High-deductible plans have an impact on this market by pushing off higher cost burdens to employees (as a way to lower costs for a corporation), rather than investing in technology and expertise at the enterprise level to better manage the PBM vendor when it comes to value and cost-containment."

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