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Sustainable Growth and Innovation for Pharmacy Benefit Managers

Strategies for a shifting landscape


Pharmacy Benefit Managers (PBMs) are facing virtually unprecedented market disruption. The passage of the Affordable Care Act and other market forces are intensifying the effects of existing health care industry trends and accelerating the pace of change for PBMs. Health care providers are facing declining reimbursements and increasing revenue constraints and are beginning to identify and eliminate inefficiencies from their organizations in order to maintain margins. Health plans are also feeling the pinch as they seek to comply with complex regulations while controlling administrative costs. Pharmaceutical companies too are being challenged to differentiate themselves while simultaneously proving the effectiveness of drugs. Amid this shifting landscape, PBM leaders will likely need to re-consider their business models and determine if they still offer potential paths to success.

In evaluating their options, PBM leaders may find it helpful to consider the pros and cons of four potential business strategies: defend the core, demonstrate value through innovations in care, enable provider and supplier collaboration and acquire or develop diverse capabilities. These potential business strategies are only the beginning. The pressures of compressed margins and increased transparency will likely continue to intensify, thus forcing PBMs to continue to evolve and innovate beyond their traditional realm of outpatient pharmacy cost management in order to achieve sustainable growth.

Players may choose different paths. Some may become lean, efficient core-processing engines. Others may seek to diversify revenue streams through a broader portfolio of products and services. But regardless of the path they choose, PBMs will likely need to change in order to remain strategically sound and fiscally fit in this rapidly transforming health care environment.

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