Discussing the Lack of Transparency in GPOs of 'Big 3' PBMs

Greg Baker, CEO of AffirmedRx, gave a presentation at the 2024 PBMI Annual National Conference in Orlando titled, "Unveiling the Shadows: Exploring Detrimental PBM Trends and Their Impact on Employers." In this interview recorded prior to the meeting, Baker discussed what he views as the lack of transparency in the group purchasing organizations (GPOs) that the large PBMs have set up to manage rebates and ongoing vertical integration in the healthcare industry.

READ MORE: Discussing the Current Landscape of PBM Reform Legislation

Managed Healthcare Executive: What are a few takeaways from your presentation on PBM trends and their impact on employers at the PBMI annual conference?

Greg Baker: We're excited to be part of the PBMI conference again this year. Part of our presentation as we continue to think about unveiling the shadows of the PBM industry is going to center around 1, the rebate models and how each of the large big 3 PBMs have started what they call a GPO to manage these rebates. Several of the GPOs, to include zinc and Emisar, you can't find anything about them. So, it's interesting that tens of billions of dollars are going to roll through companies that they're not even willing to discuss with their clients or expose publicly.

The concept of vertical integration also, I think, continues to fall apart. Because over the last 6 years, since we've really seen the deep, vertical and horizontal integration in the healthcare industry, costs have gone up, quality is going down. It is not working. We need to think about something different. And then last, we're going to talk about these kind of GPOs also leading to a cost plus model, as CVS talks about cost advantage, and Express Scripts has their cost plus model, and Optum now is probably coming out with their next cost plus model. They're doing it in the vein, and some people talk about it like Mark Cuban has done his cost plus model, but we're seeing fundamental differences in the fact that Cuban puts his invoice out there so you know exactly what he pays for the drug and they have 1 price.

We continue to see where the PBMs are going to say, “Well, I have a cost model and it's within a range.” Well, what's the range? Are we talking a buck to $100,000 and therefore, because you're in the range, that's still within your cost? The lack of transparency associated with what is considered a cost plus model is still concerning to us, and we would just like to talk through those types of industry practices as well.

Managed Healthcare Executive: Anything you’re looking most forward to at the meeting?

Baker: We're always excited. This is the main event that just focuses on what's happening within the PBM industry. Always amazing sessions. But the thing that I always value most is being able to catch up with people in the industry, at different organizations, hear exactly what they're doing, how they're doing, the things that they're doing, and it's just a great thought leadership opportunity for us to get into organic conversations with people to make sure we keep driving this industry forward in a positive impact.

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