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A tough pill to swallow

Pharmacy Benefit Managers must adopt a new model before time runs out.


Prescription drug costs make up nearly 10 percent of US healthcare spending. Much of that spending is allocated to Pharmacy Benefit Managers (PBMs)—the behind-the-scenes companies that administer prescription drug benefits for 266 million consumers.

While PBMs have played a critical—and profitable—role in the healthcare industry for decades, their relevance is now at risk. That’s because most PBMs haven’t kept pace with the changing healthcare ecosystem of which they are a part. If they don’t change their operating models, they won’t be positioned to claim their share of what will soon be a $283 billion market.



Despite the changes that have taken place in the US healthcare market in recent years, PBMs have retained a status quo approach to service delivery. Their failure to adapt to industry trends raises the likelihood of their disintermediation.

Two market shifts pose a significant risk:

  • Growing demand for digital experiences. Insurers rely on personalized technologies to monitor drug adherence and improve patient health. The use of personalized health apps and wearables has doubled in just the past two years. Seventy percent of health executives are investing more in embedded artificial intelligence solutions. Yet, for PBMs, it is largely “business as usual.”

  • The industry’s focus on quality outcomes. PBM constituents want more than a cost-focused intermediary. They want a partner to help them deliver better outcomes. Yet, PBMs aren’t meeting expectations. Patient satisfaction across the PBM experience ranges from 65 to 75 percent. That’s hardly a ringing endorsement.


To survive, PBMs must establish a differentiated operating model that will enable them to deliver services in a differentiated way. To that end, PBMs should embrace five imperatives.

  • Become outcome champions by building capabilities that allow them to contribute to positive patient outcomes.

  • Redefine their worth by launching value-based reimbursement strategies.

  • Be disruptive by getting closer to employees and consumers. Loyalty programs may help.

  • Architect more valuable experiences by embracing digital opportunities to deliver experiences that their constituents want and expect.

  • Form unconventional partnerships with others in “ecosystems” to drive operational efficiencies and provide more or differentiated constituent experiences.


Milind Pawar

Milind Pawar
Managing Director – Accenture Strategy, Health

Milind works closely with payer, provider and pharmacy benefit manager (PBM) organizations to design and implement large-scale performance improvement strategies. For more than a decade, Milind has served as a value architect for a number of operational improvement initiatives that, collectively, produce more than $1 billion in annual value for his clients. Milind is based in San Francisco.

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