Largest PBMs by Claims Processed

5 Responses to “Largest PBMs by Claims Processed”

1. 

   Adam J. Fein Reply January 12, 2011 at 3:07 pm

   John,

   The PBM has more bargaining power.

   I address this topic directly in my recent report on the pharmacy industry, especially the section titled “Relationships with Pharmacy Benefit Managers.” You can obtain the report here:
   http://www.pembrokeconsulting.com/pharmacy.html.

   Regards,
   Adam

2. 

   John Reply January 12, 2011 at 3:01 pm

   Thanks George.

   I am sort of new to the pharmaceutical industry and I am trying to gain an understanding of how market players interact.

   With regards to the PBM-pharmacy relationship, who generally has more bargaining power?

   John

3. 

   Adam J. Fein Reply January 12, 2011 at 8:32 am

   John,

   George is correct. My stats represent adjusted scripts, which is more accurate than covered lives.

   The total number of covered lives in the AIS table is 626 million people–more than twice the total U.S. population! It’s makes no sense that Medco’s 90 million lives in the AIS table translate into less than 14% market share.

   In 2009, Medco processed 591M retail scripts and 103M mail scripts, which equals 900M adjusted scripts (=591+103*3). Total adjusted scripts in the U.S. were 4.083B. Thus, Medco had 22% share of adjusted scripts. As I note in an Investor’s Business Daily article yesterday, their share will be slightly higher in 2010. See http://www.investors.com/NewsAndAnalysis/Article/559316/201101101707/Pharmacy-Benefits-Manager-Discovers-Size-Really-Does-Matter.htm

   Adam

4. 

   John Reply January 11, 2011 at 4:01 pm

   How come these market share numbers seem to be inconsistent across different sources?

   Medco Health, Express Scripts and CVS account for about 60 percent of the PBM market, according to Adam Fein, president of Pembroke Consulting Inc., a pharmacy-industry consultant in Philadelphia.

   from –> http://www.businessweek.com/news/2010-10-25/walgreen-said-to-seek-sale-of-pharmacy-benefits-unit.html

   Also see the chart located at this link:

   http://www.pbmi.com/PBMmarketshare1.asp

   I’m aware that they aren’t exactly the same time, but they still seem a little off.

   • 

     George Van Antwerp January 12, 2011 at 6:19 am

     John –

     You ask a good question. Marketshare is often looked at very different ways.

     The PBMI example you source is by lives covered which is always misleading (but the traditional scale metric) since one PBM may cover the lives for retail and another PBM cover the lives for mail order.

     The AIS example in my post is based on claims processed. This is usually a pretty good indicator, but it depends on whether the claims are “adjusted” to account for 30-day versus 90-day fills. If you only count claims, someone with a high mail order or 90-day utilization would seems smaller than they really are.

     I’ll reach out to Adam on his comment to understand the metric he’s using. The other one I typically see used is revenue. If you look at CVS, Medco, and ESI revenue, they represent about 34% of the market.

     I hope that helps.

     George