In 2023, the United States experienced the most significant increase in prescription drug spending (13.6%), totaling $89 billion.1 This was driven by higher utilization and the introduction of new, expensive specialty and biotech drugs. In 2024, other factors continue to drive costs and disrupt the pharmacy landscape, including the implementation of new business models, pharmacy benefit manager (PBM) practices, the rebate system, regulatory changes, advancements in provider status, and potential Federal Trade Commission (FTC) interventions.2,3
Disrupters in Payment in 2024
Amazon expanded its health care services and developed relationships with insurance organizations with PBM RxAdvance. Amazon also continues to expand expedited drug shipping with its last-mile delivery system RxPass subscription and drone delivery service, Prime Air. Licensed in all 50 states and with a Whole Foods retail presence, Amazon’s move into retail pharmacy seems imminent.4
Walmart is retreating from the primary care business, closing 51 clinics and its telehealth service despite previously expanding into new markets. Walmart attributed the closures to the tight labor market and increasing labor costs. Walmart, known for driving costs down, indicated that it failed to see a sustainable business model in this sector due to health care costs going up, high competition, and, in many cases, reduced reimbursement.5
CVS Health’s $10.6 billion acquisition of Oak Street Health allows it to expand further into the primary care market, adding a multi-state chain of clinics for older adults.6
The Mark Cuban Cost Plus Drug Company continued its growth. CEO Mark Cuban has continued to be very vocal against PBM practices, advocating for his business model, which aims to reduce costs in the system, providing consumers with fair prescription drug pricing and bypassing traditional PBMs. This model helps consumers avoid high drug prices by charging wholesale prices plus a flat 15% markup and pharmacist fee. Cost Plus developed its own PBM, does not accept other health insurance, and works directly with health insurers, drugmakers, and pharmacies to lower prices. It offers more than 100 generic drugs to treat various illnesses, including diabetes, asthma, and heart conditions.7,8
Biosimilars continue their growth after the launch of a biosimilar for adalimumab in 2024. Until the emergence of glucagon-like peptide-1 receptor agonists, adalimumab was the No. 1 US drug expenditure. To promote competition in drug pricing and reduce red tape surrounding drug access, the Affordable Prescriptions for Patients Act of 2023 (S 150) and the Biosimilar Red Tape Elimination Act (S 2305) are pending in Congress. As biosimilars increase in numbers and use, they are poised to lower drug costs for self-administered biologic therapies.9
GoodRx, known for its price comparison tool and effective marketing, now offers additional services like GoodRx Gold with a membership discount, GoodRx Care telehealth services, and data collection services for drug companies and PBMs. These services are estimated to earn over $100 million annually from PBM administrative fees, advertising, and data sales.
Opportunities and Challenges in Payment in 2024
FTC Investigation of PBMs
In July 2024, the FTC released an interim report highlighting how large, vertically integrated PBMs create unfair advantages, increase consumer costs, limit drug availability, restrict consumer choices with closed networks, and reduce access to care. PBMs impose harmful contractual terms on community pharmacies, affecting their ability to operate and serve communities. This ongoing inquiry, launched by the FTC in 2022, may lead to additional regulation.10,11
