The market for pharmacy benefit management services is in flux, with many different stakeholders working to alter the sector’s dynamics or exploring new options.

The ultimate outcome of the ongoing dispute between Express Scripts Inc. (ESI) and Walgreen Co., a standoff that has so far inconvenienced as many as 6 million pharmacy customers and disrupted countless patient-pharmacist relationships, will have a significant impact on the balance of power between PBMs and retailers. Walgreens ceased to be part of the ESI network in January after rejecting a contract renewal proposal that executives at the drug chain said included below-market rates and other terms that would have created too much operational uncertainty.

Walgreens rightly argues that if its stores and other retail pharmacies are to realize their full potential as community health care centers — thus easing the growing burden on primary care physicians and other parts of the health care system, and helping contain expenditures — adequate remuneration for the services they provide is essential. ESI counters that cutting costs for payers while maintaining adequate pharmacy access for patients should be the priority. Which of those competing visions prevails won’t be known, at the earliest, until the completion of the PBM selling season at the end of the year.

ESI is the protagonist in another pivotal battle whose resolution will affect the PBM market — the effort to convince the Federal Trade Commission to approve its $29 billion merger with Medco Health Solutions Inc. If the deal is allowed to go forward without substantial modifications, it will create a PBM of unprecedented scale, with market shares of some 40%, 50% and 60%, respectively, in the pharmacy benefits, speciality pharmacy and mail-order sectors. In addition, it is very likely to trigger further consolidation in the PBM field, which would stack the deck against retail pharmacies.

Beyond those two developments, there are indications that the current PBM model is under some pressure. A new report from Citigroup Global Markets makes the case: “We recently hosted a panel of three leading PBM industry consultants, where the idea of fatigue with the big three PBMs is resonating with customers. Whether it is channel conflict, restricted networks, formulary issues, service levels or uncertainties due to consolidation, clients are fed up.”

If the shift in attitude proves to be widespread and has staying power, the companies that now dominate the field will face new challenges. “Increasingly clients are more willing to look at a non–Big Three PBM, and all signs point to unusually high levels of market share change this selling season for 2013 business starts,” says the Citigroup report.

Smaller companies can be expected to get a chance to demonstrate what they can do. The challenge will be to create a meaningful point of difference in their offerings, one that recognizes the unique value that regular face-to-face interaction between patients and pharmacists creates.

PBMs perform essential services, and it’s doubtful that pharmacy operators would want them to disappear completely, despite the frustrations they cause. As Dr. Steve Miller, senior vice president and chief medical officer at ESI, pointed out in a recent article in the St. Louis Post-Dispatch, such companies facilitate the efficient adjudication of prescription claims, improve fill rates and help identify potentially dangerous drug interactions.

“This type of innovation is a hallmark of what we do currently and what we expect to do more of if our merger with Medco is completed,” he wrote. “Our combined company will help advance the delivery of health care, allowing us and our pharmacy partners to increase adherence rates, close more gaps in care and improve patient outcomes.”

All of those objectives are laudable and should, in theory at least, provide common ground for ESI, other PBMs and retail pharmacy operators. The cooperative paradigm breaks down, however, when financial incentives come into play. PBMs are rewarded for administering prescription coverage at the lowest possible cost over the life of a short-term contract; community pharmacies aim to build their business on long-term relationships between patients and pharmacists, relationships that lead to better health outcomes and lower overall expenditures.

Everyone would benefit if the current ferment in the PBM industry resulted in a closer alignment of interests between the parties.