Pharmacy Benefit Management in the US - Market Research Report (2014-2029)
New York, United States
Last Updated: July 2024
NAICS OD4620Revenue
$557.5bn
Past 5-Year Growth
Profit
$XX.Xbn
Employees
597k
Businesses
87
Wages
$XX.Xbn
Pharmacy Benefit Management in the US industry analysis
Since its inception in the 1960s, the Pharmacy Benefit Management (PBM) industry has evolved into one of the most central players in the pharmaceutical supply chain in the US. Responsible for administering prescription drug benefits, PBM providers have grown parallel with the leading drug manufacturers and health insurers in recent years as patients' use of pharmaceuticals has grown. Alongside this growth has come massive consolidation activity; horizontal integration over decades brought the number of PBMs down to 30 in 2016, with a spike in vertical integration activity in 2018 completely restructuring the industry. Today, the three leading PBMs are vertically integrated behemoths responsible for over 80.0% of all prescription claims in the US, on average. However, this vertical integration has captured the attention of regulators and policymakers concerned about anticompetitive practices and misaligned incentives. In all, revenue has been expanding at a CAGR of 1.3% to an estimated $557.5 billion over the past five years, including expected growth of 1.4% in 2024.
Trends and Insights
- Vertical integration has reshaped the structure of pharmacy benefit management providers. In just a few years, the industry has transformed from a handful of independent PBMs to massive, vertically integrated organizations combining insurers, PBMs, specialty pharmacies and healthcare providers.
- The bulk of healthcare plans in the US are employer-based. Corporations and businesses depend on PBMs to manage their employees’ drug benefits, but concerns about soaring drug prices are moving some businesses toward smaller PBMs over the most prominent providers.
- Leveraging technology makes location less influential. The leading PBMs are massive organizations whose investments in advanced technologies allow them to perform various aspects of prescription management virtually.
- The scale and scope of the leading PBMs draw anticompetitive concerns. Regulators and health stakeholders cite that vertical integration in the largest PBMs prevents healthy competition.
Industry Overview
Market size and recent performance (2014-2029)
Industry revenue has grown at a CAGR of 1.3 % over the past five years, to reach an estimated $557.5bn in 2024.
Trends and Insights
Consolidation transforms the pharmacy benefit management landscape
- Vertical integration has been the defining trend characterizing pharmacy benefit management (PBM) in recent years. While the trend of vertical integration isn’t foreign to this industry, its scale and scope have left the industry’s structure unrecognizable today from just five years ago.
- Additional trends and insights available with purchase
Industry outlook (2024-2029)
Market size is projected to grow over the next five years.
Trends and Insights
Looming regulatory changes have the potential to reshape the PBM industry
- Increasing pressure from regulators and health stakeholders toward pharmacy benefit management (PBM) providers won’t settle moving forward. While it’s unclear how legislative proposals or a Federal Trade Commission (FTC) probe will pan out, it will undoubtedly impact the industry.
Biggest companies in the Pharmacy Benefit Management in the US
| Company | Market Share (%)
2024 | Revenue ($m)
2024 | Profit ($m)
2024 | Profit Margin (%)
2024 |
|---|---|---|---|---|
Cvs Health Corporation | 148,833.7 | 5,962.4 | 4.0 | |
Cigna Corp | 118,555.1 | 6,077.0 | 5.1 | |
Unitedhealth Group Incorporated | 94,135.9 | 4,685.7 | 5.0 |
To view the market share and analysis for all 4 top companies in this industry, view purchase options.
Products & Services Segmentation
Pharmacy Benefit Management in the US
Products & Services
Industry revenue is measured across several distinct product and services lines, including Retail pharmacy services, Specialty pharmacy services and Other services. Retail pharmacy services is the largest segment of the Pharmacy Benefit Management in the US.
Trends and Insights
Retail pharmacy services have been a stable source of revenue
- The retail pharmacy segment includes face-to-face retail pharmacy services, which are performed through a company's retail pharmacy network (i.e. a group of external pharmacies that have contracted a pharmacy benefit manager (PBM) to manage their pharmacy operations) and includes revenue from co-payments.
- More insights available in the full report
Widen you competitive advantage with related industries
Competitors
- There are no industries to display.
Complementors
- Health & Medical Insurance in the US
- Health Stores in the US
- Health & Welfare Funds in the US
- Mail Order in the US
International industries
- Loan Administration, Cheque Cashing & Other Services in Canada
Table of Contents
About this industry
Industry definition
Pharmacy benefit management (PBM) providers act as intermediaries between insurers, pharmacies and patients in managing prescription drug benefits. They negotiate pricing, process claims, develop formularies and offer clinical programs. PBMs aim to control medication costs, ensure access and improve patient adherence and health outcomes.
What's included in this industry?
Processing network revenue prescriptionsProcessing home delivery and specialty prescriptionsPrescription drug plan design and administrationCompanies
Cvs Health CorporationCigna CorpUnitedhealth Group IncorporatedPurchase this report to view all 4 major companies in this industry.
Related Terms
FORMULARYSPREAD PRICINGTIERED PRICINGPRIOR AUTHORIZATIONGENERIC SUBSTITUTIONUSUAL AND CUSTOMARY RATESIndustry Code
NAICS 52411 - Pharmacy Benefit Management in the US
Performance
Get an indication of the industry's health through historical, current and forward-looking trends in the performance indicators that make or break businesses.
Analyst insights
Vertical integration has reshaped the structure of pharmacy benefit management providers. In just a few years, the industry has transformed from a handful of independent PBMs...
In this chapter (4)
- Current Performance
- Outlook
- Volatility
- Life Cycle
Key metrics
- Annual Revenue, Recent Growth, Forecast, Revenue Volatility
- Number of Employees, Recent Growth, Forecast, Employees per Business, Revenue per Employee
- Number of Businesses, Recent Growth, Forecast, Employees per Business, Revenue per Business
- Total Profit, Profit Margin, Profit per Business
Charts
- Revenue, including historical (2014-2023) and forecast (2024-2029)
- Employees, including historical (2014-2023) and forecast (2024-2029)
- Businesses, including historical (2014-2023) and forecast (2024-2029)
- Profit, including historical (2014-2024)
- Industry Volatility vs. Revenue Growth
- Industry Life Cycle
Detailed analysis
- Trends in supply, demand and current events that are driving current industry performance
- Expected trends, economic factors and ongoing events that drive the industry's outlook
- Key success factors for businesses to overcome volatility
- How contribution to GDP, industry saturation, innovation, consolidation, and technology and systems influence the industry's life cycle phase.
Products and Markets
Learn about an industry's products and services, markets and trends in international trade.
Analyst insight
The bulk of healthcare plans in the US are employer-based. Corporations and businesses depend on PBMs to manage their employees’ drug benefits, but concerns about soaring dru...
In this chapter
- Products & Services
- Major Markets
Key metrics
- Largest market segment and value in 2024
- Product innovation level
Charts
- Products & services segmentation in 2024
- Major market segmentation in 2024
Detailed analysis
- Trends impacting the recent performance of the industry's various segments
- Innovations in the industry's product or service offering, specialization or delivery method
- Key factors that successful businesses consider in their offerings
- Buying segments and key trends influencing demand for industry products and services
Geographic Breakdown
Discover where business activity is most concentrated in an industry and the factors driving these trends to find opportunities and conduct regional benchmarking.
Analyst insights
Leveraging technology makes location less influential. The leading PBMs are massive organizations whose investments in advanced technologies allow them to perform various asp...
In this chapter (1)
- Business Locations
Charts
- Share of revenue, establishment, wages and employment in each state
- Share of population compared to establishments in each region in 2024
Tables
- Number and share of establishments in each state in 2024
- Number and share of revenue each state accounts for in 2024
- Number and share of wages each state accounts for in 2024
- Number and share of employees in each state in 2024
Detailed analysis
- Geographic spread of the industry across North America, and trends associated with changes in the business landscape
- Key success factors for businesses to use location to their advantage
Competitive Forces
Get data and insights on what's driving competition in an industry and the challenges industry operators and new entrants may face, with analysis built around Porter's Five Forces framework.
Analyst insights
The scale and scope of the leading PBMs draw anticompetitive concerns. Regulators and health stakeholders cite that vertical integration in the largest PBMs prevents healthy ...
In this chapter (4)
- Concentration
- Barriers to Entry
- Substitutes
- Buyer & Supplier Analysis
Key metrics
- Industry concentration level
- Industry competition level and trend
- Barriers to entry level and trend
- Substitutes level and trend
- Buyer power level and trend
- Supplier power level and trend
Charts
- Market share concentration among the top 4 suppliers from 2019-2024
- Supply chain including upstream supplying industries and downstream buying industries, flow chart
Detailed analysis
- Factors impacting the industry’s level of concentration, such as business distribution, new entrants, or merger and acquisition activity.
- Key success factors for businesses to manage the competitive environment of the industry.
- Challenges that potential industry entrants face such as legal, start-up costs, differentiation, labor/capital intensity and capital expenses.
- Key success factors for potential entrants to overcome barriers to entry.
- Competitive threats from potential substitutes for the industry’s own products and services.
- Key success factors for how successful businesses can compete with substitutes.
- Advantages that buyers have to keep favorable purchasing conditions.
- Advantages that suppliers have to maintain favorable selling conditions.
- Key success factors for how businesses can navigate buyer and supplier power.
Companies
Learn about the performance of the top companies in the industry.
Analyst insights
The top three PBMs control around 80.0% of all prescription claims in the US. CVS Caremark, Cigna and UnitedHealth are vertically integrated PBMs whose annual revenue exceeds...
In this chapter
- Market Share Concentration
- Companies
- Company Spotlights
Charts
- Industry market share by company in 2020 through 2024
- Major companies in the industry, including market share, revenue, profit and profit margin in 2024
- Overview of Cvs Health Corporation's performance by revenue, market share and profit margin from 2018 through 2024
- Overview of Cigna Corp's performance by revenue, market share and profit margin from 2018 through 2024
- Overview of Unitedhealth Group Incorporated's performance by revenue, market share and profit margin from 2018 through 2024
- Overview of revenue, market share and profit margin trend for one additional company
Detailed analysis
- Description and key data for Cvs Health Corporation, and factors influencing its performance in the industry
- Description and key data for Cigna Corp, and factors influencing its performance in the industry
- Description and key data for Unitedhealth Group Incorporated, and factors influencing its performance in the industry
- Description, key data and performance trends for one additional company
External Environment
Understand the demographic, economic and regulatory factors that shape how businesses in an industry perform.
Analyst insights
Regulators are scrutinizing PBMs' role and incentives in the pharmaceutical supply chain. Pending legislation and FTC inquiries are anticipated to restrict common practices i...
In this chapter
- External Drivers
- Regulation & Policy
- Assistance
Key metrics
- Regulation & policy level and trend
- Assistance level and trend
Charts
- Regulation & Policy historical data and forecast (2014-2029)
- Assistance historical data and forecast (2014-2029)
Detailed analysis
- Demographic and macroeconomic factors influencing the industry, including Regulation & Policy and Assistance
- Major types of regulations, regulatory bodies, industry standards or specific regulations impacting requirements for industry operators
- Key governmental and non-governmental groups or policies that may provide some relief for industry operators.
Financial Benchmarks
View average costs for industry operators and compare financial data against an industry's financial benchmarks over time.
Analyst insights
PBMs leverage advanced technology platforms for various aspects of benefit management. Steep investments in IT infrastructure, software development and data security measures...
In this chapter
- Cost Structure
- Financial Ratios
- Key Ratios
Key metrics
- Profit margin, and how it compares to the sector-wide margin
- Average wages, and how it compares to the sector-wide average wage
- Largest cost component as a percentage of revenue
- Industry average ratios for days' receivables, industry coverage and debt-to-net-worth ratio
Charts
- Average industry operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Average sector operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Investment vs. share of economy
Data tables
- Industry Multiples (2017-2022)
- Industry Tax Structure (2017-2022)
- Income Statement (2017-2022)
- Balance Sheet (2017-2022)
- Liquidity Ratios (2017-2022)
- Coverage Ratios (2017-2022)
- Leverage Ratios (2017-2022)
- Operating Ratios (2017-2022)
- Cash Flow & Debt Service Ratios (2014-2029)
- Revenue per Employee (2014-2029)
- Revenue per Enterprise (2014-2029)
- Employees per Establishment (2014-2029)
- Employees per Enterprise (2014-2029)
- Average Wage (2014-2029)
- Wages/Revenue (2014-2029)
- Establishments per Enterprise (2014-2029)
- IVA/Revenue (2014-2029)
- Imports/Demand (2014-2029)
- Exports/Revenue (2014-2029)
Detailed analysis
- Trends in the cost component for industry operators and their impact on industry costs and profitability
Key Statistics
Industry Data
Data Tables
Including values and annual change:
- Revenue (2014-2029)
- IVA (2014-2029)
- Establishments (2014-2029)
- Enterprises (2014-2029)
- Employment (2014-2029)
- Exports (2014-2029)
- Imports (2014-2029)
- Wages (2014-2029)
Methodology
How are IBISWorld reports created?
IBISWorld has been a leading provider of trusted industry research for over 50 years to the most successful companies worldwide. With offices in Australia, the United States, the United Kingdom, Germany and China, we are proud to have local teams of analysts that conduct research, data analysis and forecasting to produce data-driven industry reports.
Our analysts start with official, verified and publicly available sources of data to build the most accurate picture of each industry. Analysts then leverage their expertise and knowledge of the local markets to synthesize trends into digestible content for IBISWorld readers. Finally, each report is reviewed by one of IBISWorld’s editors, who provide quality assurance to ensure accuracy and readability.
IBISWorld relies on human-verified data and human-written analysis to compile each standard industry report. We do not use generative AI tools to write insights, although members can choose to leverage AI-based tools within the platform to generate additional analysis formats.
What data sources do IBISWorld analysts use?
Each industry report incorporates data and research from government databases, industry-specific sources, industry contacts, and our own proprietary database of statistics and analysis to provide balanced, independent and accurate insights.
Key data sources in the US include:
- US Census Bureau
- US Bureau of Labor Statistics
- US International Trade Commission
Analysts also use industry specific sources to complement catch-all sources, although their perspective may focus on a particular organization or representative body, rather than a clear overview of all industry operations. However, when balanced against other perspectives, industry-specific sources provide insights into industry trends.
These sources include:
- Industry and trade associations
- Industry federations or regulators
- Major industry players annual or quarterly filings
Finally, IBISWorld’s global data scientists maintain a proprietary database of macroeconomic and demand drivers, which our analysts use to help inform industry data and trends. They also maintain a database of statistics and analysis on thousands of industries, which has been built over our more than 50-year history and offers comprehensive insights into long-term trends.
How does IBISWorld forecast its data?
IBISWorld’s analysts and data scientists use the sources above to create forecasts for our proprietary datasets and industry statistics. Depending on the dataset, they may use regression analysis, multivariate analysis, time-series analysis or exponential smoothing techniques to project future data for the industry or driver. Additionally, analysts will leverage their local knowledge of industry operating and regulatory conditions to impart their best judgment on the forecast model.
IBISWorld prides itself on being a trusted, independent source of data, with over 50 years of experience building and maintaining rich datasets and forecasting tools. We are proud to be the keystone source of industry information for thousands of companies across the world.
Learn more about our methodology and data sourcing on the Help Center.
Frequently Asked Questions
Unlock comprehensive answers and precise data upon purchase. View purchase options.
What is the market size of the Pharmacy Benefit Management in the US industry in United States in 2024?
The market size of the Pharmacy Benefit Management in the US industry in United States is $557.5bn in 2024.
How many businesses are there in the Pharmacy Benefit Management in the US industry in 2024?
There are 87 businesses in the Pharmacy Benefit Management in the US industry in United States, which has grown at a CAGR of 5.7 % between 2019 and 2024.
Has the Pharmacy Benefit Management in the US industry in United States grown or declined over the past 5 years?
The market size of the Pharmacy Benefit Management in the US industry in United States has been growing at a CAGR of 1.3 % between 2019 and 2024.
What is the forecast growth of the Pharmacy Benefit Management in the US industry in United States over the next 5 years?
Over the next five years, the Pharmacy Benefit Management in the US industry in United States is expected to grow.
What are the biggest companies in the Pharmacy Benefit Management in the US market in United States?
The biggest companies operating in the Pharmacy Benefit Management market in United States are Cvs Health Corporation, Cigna Corp and Unitedhealth Group Incorporated
What does the Pharmacy Benefit Management in the US in United States include?
Processing network revenue prescriptions and Processing home delivery and specialty prescriptions are part of the Pharmacy Benefit Management in the US industry.
Which companies have the highest market share in the Pharmacy Benefit Management in the US in United States?
The company holding the most market share in United States is Cvs Health Corporation.
How competitive is the Pharmacy Benefit Management in the US industry in United States?
The level of competition is moderate and increasing in the Pharmacy Benefit Management in the US industry in United States.
