Design and deploy a robust portfolio of pharmacy solutions that optimize affordability and outcomes within one of the highest growing areas of innovation and costs within healthcare
For the past several decades, stakeholders managing pharmacy distribution, coverage, and access have largely used the same strategies to mitigate drug costs: carving out the pharmacy benefit from medical, using formulary and utilization management controls, maximizing rebates and discounts, and optimizing retail networks and drug delivery channels.
There is movement to disrupt the status quo in pharmacy. Pay for performance models are much more prevalent, the linkage between medical and pharmacy is better understood and addressed, and there is greater support for regulatory changes to break rebate-driven business models and drive greater transparency. Additionally, new models for manufacturing and delivering drugs into the hands of consumers are proliferating.
Pharmacy is ripe for change over the next decade, fueled in large part by the trajectory of pharmacy spend and the nature of drugs coming to market.
Common issues we help our clients solve
What should my speciality pharmacy strategy be and how can I better manage these growing costs?
With pharmacy margins under significant pressure, how can I sustainably grow my business?
How can I continue to capture additional value throughout the pharmacy value chain?
How can I incorporate pharmacy into my value-based reimbursement strategy?
How can I better integrate and optimize pharmacy management with my medical, behavioral, and SDOH programs?
Massive changes to the definition of the Pharmacy product
Spend Trajectory. Prescription drug spend is growing exponentially and is projected to reach $1 Trillion by 2030, fueled by specialty and the evolving pharmacy “population pyramid” (e.g., in the commercial segment, 3% of the consumers drive 70% of spend).
Nature of Drugs. New drugs are emerging with very different profiles–curative solutions, personalized medicines, alternative solutions, and digital therapies carry incredible promise, but also bring with them different economics and management challenges.
Changing Business Models. Incumbents are consolidating and traditional profit pools are shifting, driving innovation and new more integrated pharmacy business models.
Evolving integrated payer-PBM business model: The top 5 PBMs, accounting for ~90% prescriptions and ~70% pharmacy revenue, are now fully or partially owned by payers.
Shifting PBM profit pools: Lower rebates, emerging competitive threats, and regulatory pressure are leading to changes in PBM profit pools.
Emergence of new retail models: New business models are evolving where, how and when consumers receive medications.
The specialty (including gene therapy) tsunami of drug costs increases: Specialty drug spend has outpaced traditional Rx, putting more pressure on medical benefit costs, and requires innovative management and payment models.
Technology integration: Stakeholders are using new technologies to change the way medications are developed, dispensed, paid for, and managed.
Oliver Wyman has experience with every sector shaping role in Pharmacy, including specialty pharmacies, retailer sand pharmacies, national payers and Blue plans, major health systems, and capital markets.
Developed a pharmacy services strategy for a health plan focused on adapting to a rapidly evolving market and responding to increased competition. Read more
Quantified the ROI of pharmacy UM programs, identified ~$5M of admin cost benefit, and redesigned the sales operating model to drive greater uptake of pharmacy benefit and reduce carve-outs. Read more
Developed a value-based contracting strategy and pay for performance optimization approach, resulting in tactical actions to enhance current programs and design of new interventions, segment client stores and geographies to provide a path to improved performance, and deliver a toolkit to analyze payer stars. Read more
Performed a due diligence assessment of a target specialty pharmacy firm, focused on a few specialty areas driving 90% of the target’s profit. Read more
Worked with a health plan to evaluate the landscape for pharmacy services-assessing opportunities for impact and growth potential, disruption, outcomes improvement, and development of services to sell to other organizations. Read more
Conducted analysis of DIR contract performance, tiering, level of effort, and upside potential to determine which PBM DIR programs warranted additional focus. Read more
Assessed pharmacy costs and operating model to address a large growth in medication and labor spend, resulting in ~$5M of direct margin impact from cost savings and growth initiatives. Read more
Contact Us
Additional Perspectives
Do you have additional questions about our Affordability and Quality Impact practice? Get in touch
Aditional Perspectives
Do you want to know more about Oliver Wyman’s Health and Life Sciences perspectives? Visit our Blog
