Key Takeaways
- The US pharmaceutical market is the largest globally, with high drug spending and profitability, influenced by market competition rather than government pricing controls.
- The 340B program's effectiveness is questioned, with states enacting laws to ensure discounted drug sales to contract pharmacies, amid unclear financial benefits for patient care.
- Legal actions against PBMs target anticompetitive practices, aiming to reduce drug prices and improve transparency, prompting a shift towards more transparent PBM models.
- Biosimilars and transparent pricing models, like Mark Cuban's Cost Plus Drug Company, are disrupting traditional drug pricing, enhancing affordability and accessibility for patients.
This article was originally published on AJMC.com®. This version has been lightly edited.
As National Pharmacist Day approaches on January 12, the nation will celebrate the invaluable contributions of these dedicated professionals who play a vital role in our health care system.1 The industry braces for a transformative year as 2025 promises a landscape reshaped by political shifts, legal battles, and innovative models, all while grappling with the ever-rising cost of prescription drugs.2
While the industry faces scrutiny over drug pricing and distribution models, innovative approaches like the rise of biosimilars and the emergence of transparent pricing models offer hope for a more affordable and accessible future for patients.
Current Pharmacy Landscape
Over the past year, CMS predicted prescription drug spending in the US would reach around $460 billion, not including nonretail drugs.3 Compared with other countries, the US has the highest drug spending and the greatest per capita pharmaceutical spending among developed countries. While other countries allow the government to control drug pricing, the US leaves the drug pricing up to market competition. As a result, the US market is the most profitable among pharmaceutical companies.
The US accounts for 30% to 40% of the global market, 45% of global pharmaceutical sales, and 22% of global production.4 The Affordable Care Act (ACA) has increased the industries’ profitability largely since its implementation. The ACA ensures specific small businesses, often persuaded through eligible tax credits, are offering a form of health insurance to their employees.5
The 340B drug discount program is a part of the ACA that urges pharmaceutical companies that participate in Medicaid to sell outpatient drugs at discounted prices to clinics, community health centers, and hospitals that primarily serve low-income patients.6 The initiative was intended so that providers would use the money saved to expand their services, but instead it is believed they are pocketing the profits instead of investing. Most facilities did not have in-house pharmacies, leaving “contract” pharmacies to dispense the drugs eligible for patients on behalf of their health centers and hospitals.
In 2020, several major pharmaceutical manufacturers announced they would restrict 340B drug sales to contract pharmacies only. However, this past year, various states have enacted laws that require drug manufacturers to participate in selling discounted drugs to contract pharmacies. Due to the relaxed expectations of the 340B reporting requirements, it is unclear if the money is being used to improve patient care.
Predictions for 2025
Pharmacy regulation under a second term of President-elect Donald Trump, a Republican Congress, and state-level pharmacy policies based on Republican public policy momentum may have longstanding impacts on the industry.7 During Trump’s first term, Congress established the Know the Lowest Price Act and the Patients’ Right to Know Drug Prices Act, looking to increase transparency and reduce patient out-of-pocket costs. Aside from these achievements, the Trump administration was unable to fulfill the American Patients First blueprint by the conclusion of the first term. The second Trump term is expected to lean on conservative right-wing think tanks like the America First Policy Institute, the Heritage Foundation, and the Paragon Health Institute.
Additional changes from the Federal Trade Commission (FTC) set out to reform pharmacy benefit manager (PBM) practices.8 The FTC filed a lawsuit against PBMs for anticompetitive practices and artificially raising prices. The suit claims Optum Rx, Express Scripts, and CVS Caremark—all integrated with UnitedHealth Group—made patients pay more for their medications and engaged in supply chain competition.
Claims have been made that PBMs favor high rebates from manufacturers and intentionally exclude lower list price drugs because it leads to higher profits for companies. The FTC alleges that rebates are used to attract payers, employers, unions, and other insurers. The lawsuit aims to reduce list prices of certain drugs, eradicate central formulary design and rebate practices, while lowering health premiums for beneficiaries.
Based on these legal threats, some large employers have switched from traditional PBMs to newer upstarts.9 Over the course of 2025, more employers are expected to move to more transparent PBM models. With many employers communicating their dissatisfaction and the FTC’s lawsuit at hand, the future trends look to resolve areas that do not reflect client or patient needs.10
Biosimilars
Biosimilars will also continue to disrupt the drug market as they offer more affordable alternatives to high-cost biologics. For the past 5 years, the American biologics market grew by an average of 12.5% annually, with 46% of total spending accounting for biologics. When adalimumab (Humira) biosimilars launched onto the market, significant cost savings were a direct result. However, the traditional PBM model and the nation’s 3 largest PBMs interrupted adoption rates. Once CVS Caremark removed Humira from its formulary in April, adoption of biosimilars grew.
Mark Cuban’s Cost Plus Drug Company is positioned for impact in 2025 as it works directly with drug manufacturers to bypass middlemen and lower medication prices.11 Cuban’s plan aims for transparency and disrupts generic drug pricing to sell about 2500 medications with a growing partnership of health systems. The company currently works with Rightway, EmsanaRx, RxPreferred Benefits, and PCA Rx. Most recently, Cuban’s company partnered with Coherus BioSciences to sell a biosimilar version of AbbVie’s Humira.
Blue Shield of California and Capital Blue partnered with the Cost Plus Drug Company along with Amazon Pharmacy, Abarca, and Prime Therapeutics. Cuban’s approach seems to be impacting pharmacy giants like CVS and Walgreens, who are now following Cost Plus’ blueprint to offer transparent drug pricing.
As 2025 unfolds, the pharmaceutical industry must navigate a complex landscape to ensure that patients have access to affordable and effective medications, while addressing pricing pressures, regulatory changes, and the rise of new care delivery models.
References
- National pharmacist day. NASPA. 2024. Accessed January 6, 2025. https://naspa.us/event/national-pharmacist-day-2/
- Littrell A. How different sectors of the health care industry can overcome challenges in 2025. Medical Economics®. December 10, 2024. Accessed January 6, 2025. https://www.medicaleconomics.com/view/how-different-sectors-of-the-health-care-industry-can-overcome-challenges-in-2025
- Mikulic M. Prescription drug expenditure in the US from 1960 to 2024. Statista. December 12, 2024. Accessed January 3, 2025. https://www.statista.com/statistics/184914/prescription-drug-expenditures-in-the-us-since-1960/
- US pharmaceutical market size to reach USD 1,093. 79 billion by 2033. BioSpace. July 12, 2024. Accessed January 3, 2025. https://www.biospace.com/u-s-pharmaceutical-market-size-to-reach-usd-1-093-79-billion-by-2033
- How the patient protection and affordable care act affects pharmacies. Brown and Fortunato PC. January 20, 2017. Accessed January 3, 2025. https://www.bf-law.com/blog/patient-protection-affordable-care-act-affects-pharmacies/
- Chatlani S. States force drugmakers to keep selling cheaper meds under federal program. Stateline. August 28, 2024. Accessed January 3, 2025. https://stateline.org/2024/08/28/340b/
- Schnelle SJ, Hyun J. Post-election outlook: issues to watch for pharmacy industry stakeholders. NatLawReview. December 10, 2024. Accessed January 3, 2025. https://natlawreview.com/article/post-election-outlook-issues-watch-pharmacy-industry-stakeholders
- Tong N. FTC formally sues PBMs over insulin prices and warns manufacturers. Fierce Healthcare. September 20, 2024. Accessed January 3, 2025. https://www.fiercehealthcare.com/payers/ftc-formally-sues-pbms-over-insulin-prices-and-warns-manufacturers
- Tong N. 2025 outlook: alternative PBMs look to heap pressure on industry titans. Fierce Healthcare. December 16, 2024. Accessed January 3, 2025. https://www.fiercehealthcare.com/payers/2025-outlook-alternative-pbms-look-heap-pressure-industry-titans
- Garduno S. Top 4 PBM trends to watch in 2025 and beyond. Xevant. December 11, 2024. Accessed January 3, 2025. https://www.xevant.com/blog/updated-pbm-trends/
- Landi H. Mark Cuban wants to keep shaking up healthcare. Fierce Healthcare. August 15, 2024. Accessed January 3, 2025. https://www.fiercehealthcare.com/health-tech/mark-cuban-wants-keep-shaking-healthcare-heres-cost-plus-drugs-next-move
