Drug Formulary Management Market Size is predicted to grow at a 5.9% CAGR during the forecast period for 2024-2031.
Drug formulary management is a system used in healthcare to ensure that patients are prescribed the safest, most effective, and most affordable medications. It's essentially a list of approved medications that a healthcare organization, like a hospital or insurance plan, recommends for use by doctors. This list is based on scientific evidence, expert opinions, and cost considerations. A committee of healthcare professionals, typically pharmacists and physicians, oversee the formulary. A group of healthcare professionals, including physicians, pharmacists, and other experts, reviews and evaluates clinical data to make informed decisions on which drugs should be included in the formulary.
This committee, known as the Pharmacy and Therapeutics (P&T) committee, ensures that the formulary reflects current best practices and clinical guidelines. By carefully assessing the safety, efficacy, and cost-effectiveness of medications, they maintain a formulary that supports optimal patient care while promoting consistency and standardization in prescribing practices within the healthcare organization. By promoting the use of safe and effective medications, drug formulary management helps ensure patients receive the best possible treatment. By focusing on cost-effective options, it can help control healthcare spending, making high-quality care more accessible and sustainable. Additionally, formulary management ensures consistency in prescribing practices within a healthcare organization, leading to standardized care that aligns with the latest clinical guidelines and evidence-based practices.
The increasing cost of healthcare services and medications drives the need for efficient formulary management to control expenses and ensure affordability for patients and healthcare systems. There is a growing emphasis on cost-effective treatment options. Formulary management helps in identifying and promoting the use of generic and biosimilar drugs, which are often less expensive alternatives to brand-name medications.
Based on the by type, the market divided into open formulary, closed formulary, and controlled formulary. Among these, the controlled formulary segment dominates the market. A controlled formulary strikes a balance between open and closed formularies. It includes a tiered structure where certain drugs are preferred and covered at different levels, incorporating utilization management tools like prior authorization and step therapy. Controlled formularies tend to be dominant in the market overall, as they offer a compromise between cost containment and flexibility. They are widely used by private insurers, large health systems, and pharmacy benefit managers (PBMs) to manage costs while maintaining a degree of flexibility for physicians and patients.
The by application type categorized into hospital formulary management and managed care organization (MCO) formulary management. Among these, the managed care organization (MCO) formulary management segment is expected to have the highest growth rate during the forecast period. MCOs cover a wide array of settings, including outpatient, inpatient, and pharmacy services, leading to broader adoption and integration of formulary management practices. This comprehensive coverage across various aspects of healthcare has driven a significant rise in enrollment in managed care plans, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), fueled by both government programs (Medicare and Medicaid) and private insurers.
North America has a large and diverse pharmaceutical market, with extensive research and development activities, leading to a wide range of medications available for inclusion in formularies. Moreover, stringent regulatory frameworks and guidelines ensure the safety, efficacy, and cost-effectiveness of drugs included in formularies, enhancing confidence in their utilization. The region's focus on cost containment, coupled with a growing emphasis on value-based care models, further drives the adoption of formulary management strategies to optimize healthcare spending while ensuring quality patient care.
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Report Attribute |
Specifications |
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Growth Rate CAGR |
CAGR of 5.9% from 2024 to 2031 |
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Quantitative Units |
Representation of revenue in US$ Bn and CAGR from 2024 to 2031 |
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Historic Year |
2019 to 2023 |
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Forecast Year |
2024-2031 |
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Report Coverage |
The forecast of revenue, the position of the company, the competitive market structure, growth prospects, and trends |
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Segments Covered |
By Type, By Application Type |
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Regional Scope |
North America; Europe; Asia Pacific; Latin America; Middle East & Africa |
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Country Scope |
U.S.; Canada; U.K.; Germany; China; India; Japan; Brazil; Mexico; The UK; France; Italy; Spain; China; Japan; India; South Korea; Southeast Asia; South Korea; South East Asia |
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Competitive Landscape |
FDB (First Databank), Evernorth Health, Inc., Wolters Kluwer Medi-Span, Academy of Managed Care Pharmacy, McKesson, Salesforce Pharmacy Purchasing & Products, VativoRx, Nuwae, MedReb8, Other Companies |
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Customization Scope |
Free customization report with the procurement of the report, Modifications to the regional and segment scope. Particular Geographic competitive landscape. |
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Pricing and Available Payment Methods |
Explore pricing alternatives that are customized to your particular study requirements. |
Global Drug Formulary Management Market – By Type
Global Drug Formulary Management Market – By Application
Global Drug Formulary Management Market – By Region
North America-
Europe-
Asia-Pacific-
Latin America-
Middle East & Africa-
InsightAce Analytic follows a standard and comprehensive market research methodology focused on offering the most accurate and precise market insights. The methods followed for all our market research studies include three significant steps – primary research, secondary research, and data modeling and analysis - to derive the current market size and forecast it over the forecast period. In this study, these three steps were used iteratively to generate valid data points (minimum deviation), which were cross-validated through multiple approaches mentioned below in the data modeling section.
Through secondary research methods, information on the market under study, its peer, and the parent market was collected. This information was then entered into data models. The resulted data points and insights were then validated by primary participants.
Based on additional insights from these primary participants, more directional efforts were put into doing secondary research and optimize data models. This process was repeated till all data models used in the study produced similar results (with minimum deviation). This way, this iterative process was able to generate the most accurate market numbers and qualitative insights.
Secondary research
The secondary research sources that are typically mentioned to include, but are not limited to:
The paid sources for secondary research like Factiva, OneSource, Hoovers, and Statista
Primary Research:
Primary research involves telephonic interviews, e-mail interactions, as well as face-to-face interviews for each market, category, segment, and subsegment across geographies
The contributors who typically take part in such a course include, but are not limited to:
Data Modeling and Analysis:
In the iterative process (mentioned above), data models received inputs from primary as well as secondary sources. But analysts working on these models were the key. They used their extensive knowledge and experience about industry and topic to make changes and fine-tuning these models as per the product/service under study.
The standard data models used while studying this market were the top-down and bottom-up approaches and the company shares analysis model. However, other methods were also used along with these – which were specific to the industry and product/service under study.
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