For several decades, key actors managing pharmacy distribution, coverage, and access have largely played the same game to mitigate drug costs: carving out the pharmacy benefit from medical, using formulary and utilization management controls, maximizing rebates and discounts, and shifting the burden of pharmacy costs to consumers.
There is movement to improve the status quo. Pay-for-performance models (like those around drug adherence) are much more prevalent. There are clearer linkages between medical and pharmacy service stacks. And multiple constituents support regulatory changes to break rebate-driven business models and drive greater price transparency. However, from a macro view, the traditional pharmacy management value chain and respective roles of health plans, pharmacy benefit managers, and retail pharmacies have persisted – and costs keep rising dramatically. So, what’s next?
Over the next decade, pharmacy is ripe to change significantly, fueled in large part by the trajectory of pharmacy spend and the nature of drugs coming to market. An increase in specialty drug approvals is breaking the cost curve. In fact, 2019 was the first year that specialty costs surpassed that of traditional drugs. By 2030, overall pharmacy spend will exceed $1 trillion. This phenomenon is fundamentally changing “pyramid math”, as three percent of consumers astonishingly drive 70 percent of pharmacy spend in the commercial funding segment. This begs for new pharmacy management models. Moreover, new drugs are emerging with very different profiles – these now curative solutions, personalized medicines, alternative solutions, and digital therapies carry incredible promise, but also fundamentally different economics and management challenges.
Here's How Pharmacy Management Might Look Different in the Decade Ahead:
Josh Michelson Former Partner, Health & Life Sciences, Oliver Wyman
Chris Schrader Partner, Health & Life Sciences, Oliver Wyman
Kimberly C. Babbin, PharmD Senior Advisor, Oliver Wyman