EP288: The "Big Three" PBMs Spinning Up GPOs—What? With Mike Schneider, Principal at Avalere Health
Episode Description
In this Episode 288, Stacey Richter talks with Mike Schneider, principal at Avalere Health, about why the "Big Three" PBMs are spinning up their own GPOs.
WHAT YOU'LL LEARN
✅ Why Express Scripts, Optum, and CVS Caremark have each set up offshore group purchasing organizations (GPOs)
✅ How these new GPOs shift drug rebate negotiations away from the PBM and into a separate, less regulated entity
✅ Why an executive order requiring PBMs to pass rebates through to patients doesn't apply to these GPOs
✅ How the "Big Three" PBMs compete with each other despite structural similarities
✅ What a more transparent way to move money from Pharma to employers and plan sponsors could look like
WHY THIS MATTERS
Mike Schneider walks through why Express Scripts' Ascent, Optum's Ireland operation, and CVS Caremark's Zinc all exist: by moving rebate negotiations with pharma into offshore GPOs rather than PBMs themselves, these entities sidestep new rules meant to force rebate transparency and pass-through to patients. It's a structural workaround that keeps the PBM world opaque even as regulators try to shine a light on it — and it raises the question of who actually benefits from the rebate system as currently constructed, since Schneider argues the government may be one of the biggest beneficiaries.
MENTIONED IN THIS EPISODE
=== LINKS ===
🔗 Show Notes with all mentioned links: Episode Page
🔗 Healthcare Industry Acronyms and Terms
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00:00 Introduction.
02:30 What does a GPO add to a PBM?
05:05 Rebates vs driving more revenue.
10:20 PBMs vs safe harbors.
12:07 The net impact on the commercial side.
13:48 PBMs vs pharmaceutical manufacturers.
14:35 How the "Big Three" PBMs compete with each other, and how employers would choose between them.
15:37 What the net-net is here.
17:48 How PBMs are shifting their models.
20:23 How GPOs may be making things even less transparent.
21:11 "The PBM world as a whole is not very transparent."
24:40 "One of the biggest beneficiaries of this whole rebate [system] is the government."
25:25 "The question is, 'Who's paying those costs?'"
25:40 EP216 with Chris Sloan.
26:40 A better way to move money from Pharma to employers and plan sponsors.
27:43 "Put your money where your mouth is."
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