EP288: The "Big Three" PBMs Spinning Up GPOs—What? With Mike Schneider, Principal at Avalere Health

Disclaimer before we get started here: This show is probably a 300-level class in pharmaceutical/PBM relations. If you are tuning in for the first time and you aren’t pretty familiar with the role of PBMs, I would go back and listen to, say, episode 241 with Vinay Patel or episode 166 with Tim Thomas from Crystal Clear Rx. 

OK, now that that’s out of the way, if you’re still with me, this episode is like a ride on a roller coaster. In this health care podcast, I talk with Mike Schneider, who’s a principal over at Avalere Health. And we get into, you know, kinda deeply, the what and the why behind the "Big Three" traditional PBMs deciding that now might be a fantastic time to set up GPOs. PBMs are pharmacy benefit managers—there’s three huge ones. GPO stands for group purchasing organization. Traditionally, these GPOs have purchased drugs and supplies for hospitals and other providers at, according to their marketing materials, volume discounts.

So, the unfolding story here, in a nutshell, is that ESI (Express Scripts) set up a GPO called Ascent in Switzerland. Optum has had an Ireland operation going in full swing for a while. And now we have CVS Caremark setting up a GPO called Zinc. These GPOs are not like normal GPOs working with hospitals, but instead, these GPOs are the entity which is now going to negotiate with pharma companies. In the past, it was the PBM that was negotiating with the pharma company to get rebates. Now it’s this GPO entity.

“But wait,” you may say. “Wasn’t there an executive order the other day requiring PBMs to, for example, pass through all of the rebates that they’re collecting to patients?” Indeed, there was. And that rule doesn’t say anything about GPOs having to do the same, especially GPOs in, let’s just say, Switzerland. It’s a tangled web we weave.

You can learn more at avalere.com. You can also connect with Mike on LinkedIn. 

Mike Schneider is an experienced health care executive with over 20 years of experience in the pharmaceutical manufacturer, pharmacy benefit manager, and payer side of health care. He previously spent 9 years at CVS Caremark, where he was a director of industry relations with responsibility for trade strategy development, rebate negotiations, and contract execution for CVS Caremark’s own Medicare Part D plans and that of its clients. He held a similar position at Universal American (UA) before it was acquired by CVS Health, where he also negotiated UA’s commercial business. Mike has held various sales and market access roles with pharmaceutical manufacturers with increasing responsibility. Before entering health care, Mike began his career as a researcher at the Procter & Gamble Company in Cincinnati, where he worked on hair care product formulation development focusing on the key markets of China and Japan, and then moved on to work in drug development. Mike holds a BS degree from the University of Illinois and an MBA from the University of Akron.

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.”

You can learn more at avalere.com. You can also connect with Mike on LinkedIn. 

Check out our newest #healthcarepodcast with Mike Schneider of @avalerehealth as he discusses #PBMs and #GPOs. #healthcare #podcast #digitalhealth #healthcarefinance #pharma

What does a GPO add to a PBM? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

Rebates vs driving more revenue. Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

PBMs vs safe harbors. Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

What is the net impact on the commercial side? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

PBMs vs pharmaceutical manufacturers. Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

How do the "Big Three" PBMs compete with each other? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

How do #employers choose between the "Big Three" PBMs? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

What’s the net-net here? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

How are PBMs shifting their revenue models? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

How are GPOs making things even less transparent? Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

“The PBM world as a whole is not very transparent.” Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

“One of the biggest beneficiaries of this whole rebate [system] is the government.” Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

“The question is, ‘Who’s paying those costs?’” Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

A better way to move money from Pharma to employers and plan sponsors. Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma

“Put your money where your mouth is.” Mike Schneider of @avalerehealth discusses #PBMs and #GPOs. #healthcarepodcast #healthcare #podcast #digitalhealth #healthcarefinance #pharma