EP306: A Deep Dive Into Amazon's Pharmacy and the Amazon Pharmacy Model Some Employers Are Running With, With Ge Bai, PhD, CPA

In Episode 306, Stacey Richter talks with Ge Bai, PhD, CPA, associate professor at Johns Hopkins, about Amazon's pharmacy business — and a mind-blowing PBM contracting term that keeps cash-pay prices tethered to third-party payer rates.

WHAT YOU'LL LEARN

✅ Why Amazon's pharmacy model is best understood as a combination of GoodRx and mail-order pharmacy

✅ Why a PBM contracting term keeps pharmacies from selling drugs to cash-pay patients for less than what payers pay

✅ What options self-insured employers now have with Amazon Pharmacy

✅ Whether Amazon is likely to disrupt the traditional pharmacy rebate system

✅ Why cutting out the PBM entirely is harder than it sounds in a third-party payer system

WHY THIS MATTERS

Ge Bai, an accounting researcher turned health care pricing expert, walks through why Amazon needs a PBM at all for cash-pay patients and unpacks a little-known contracting term: pharmacies generally can't sell a drug to a cash-pay patient for less than the price a PBM pays for it, with coupons like GoodRx as the one workaround. That detail shapes how self-insured employers should think about Amazon Pharmacy, what it might mean for rebates, and why real change in drug pricing requires more than one new market entrant.

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

🔗 Healthcare Industry Acronyms and Terms

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00:00 Introduction.

03:27 Why is Amazon in the pharmacy space a big deal?

04:03 "I view Amazon Pharmacy as a combination of GoodRx and mail-order pharmacy."

05:07 What's the difference between Amazon and other pharmacies?

06:14 Why does the third-party payer health care system keep Amazon from cutting out the PBM?

07:49 "We don't have insurance companies, we don't have PBMs."

09:21 "Who's really using prescription drugs? The majority is Medicare patients."

11:46 Is Amazon doing anything innovative in the pharmacy space?

12:37 What options do self-insured employers have now with Amazon?

14:42 Why employees and employers might choose to use Amazon Pharmacy over other mail-order pharmacies.

21:27 Will Amazon affect pharmacy rebates?

25:28 "Fundamentally, employers want to have more power in the whole process."

27:41 What should you be doing as a self-insured employer?

28:58 "If we do not put out effort to make the private market work, then the next option would be single payer."