EP356: PBMs React to GoodRx, Mark Cuban, and Amazon Pharmacy, With Ge Bai, PhD, CPA

How PBMs Are Reacting to GoodRx, Cuban, and Amazon Pharmacy, With Ge Bai, PhD, CPA. Why the Big Three PBMs Are Suddenly Nervous About GoodRx and Mark Cuban. Episode 356.

Stacey Richter talks with Ge Bai, PhD, CPA, professor at Johns Hopkins, about how the "Big Three" PBMs—Express Scripts, OptumRx, and CVS—are reacting now that GoodRx, Amazon Pharmacy, and Mark Cuban's cost-plus model are giving cash-pay patients a real alternative to the spread-pricing status quo.

WHAT YOU'LL LEARN

✅ How PBM spread pricing works: patients and plans pay a marked-up price for generics while the PBM pockets the difference between that price and its own acquisition cost

✅ Why GoodRx's cash prices for generics are so often lower than what patients pay using their own insurance

✅ Why PBMs originally welcomed GoodRx as a way to reach uninsured patients, before it started pulling insured patients away from using their benefits

✅ Why 67% of patients are unaware they might get a better price by not using their insurance at all for generic drugs

✅ How Express Scripts' new automatic-discount benefit reads as a defensive response to GoodRx and Amazon

✅ How cost-plus pharmacy models are forcing a "potential sea change" in how PBMs have to compete on generic drug pricing

WHY THIS MATTERS

The PBM spread-pricing model depends on patients not shopping around—and now that GoodRx, Amazon, and cost-plus pharmacies are giving a growing share of consumers a reason to bypass their insurance for generics, PBMs are being forced to give some of that margin back. Bai's analysis suggests plan sponsors who understand this dynamic have real leverage to negotiate better generic drug pricing rather than accepting PBM spread as a cost of doing business.

MENTIONED IN THIS EPISODE

EP344 with Steven Quimby, MD: Apple Podcasts | Spotify | Other Apps

EP334 with Sunita Desai, PhD: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

08:45 What is ESI doing by automatically applying discounts to generic drugs?

10:00 Why are PBMs losing money when consumers don't use their benefit?

10:46 "GoodRx disrupted the ongoing game."

11:04 How are PBMs using the Amazon discount card to discourage their patients from moving away from using their benefits?

12:13 Amazon pricing versus GoodRx pricing.

12:50 How much money is a PBM really making?

14:43 How is future fear playing into the PBM business model?

16:55 Is there a negative consequence to subtracting from the bottom line in a PBM model?

17:50 "I think to have strong PBMs does not mean necessarily bad things for patients."

19:39 What happens if everyone uses Amazon for drugs?

22:40 If every PBM gets their own discount cards, what will happen?

25:38 "We are actually witnessing a potential sea change."

26:25 How do cost-plus pharmacies factor into the current market?

29:16 Is a profit shortfall inevitable?

29:35 "PBMs have to give a slice of their profit back to consumers. That's just reality."

30:11 Can anything be done on the PBM side to generate a higher margin in the generic space?

31:41 "Naive plan sponsors are a big problem."