From other sources, it appears that pharmacies actually lose money when accepting GoodRX discounts, and yet are unable or unwilling to lower their prices.
Very bizarre!
So you have to create all these rebates and introduce caveats to make the price obfuscated.
They can't get away with directly price gouging the consumer, so they transfer the price gouge to different parts of the supply chain so the pharmacy can eventually complain they're losing money. If anyone was actually losing money at the end of the day they wouldn't be involved.
It’s why you see so many grocery stores and Target offloading their pharmacy operations, and others closing down. They have no control over how much they will be reimbursed for the medicine they dispense, so basically it’s going to be CVS/Walgreens/Walmart/Costco left standing, but CVS saw the writing on the wall and merged with an insurer since going vertical is the only long term solution.
And yes you might think it’s the pharmacy getting the short end of the stick, but you’ll see cases where insurance, Pharmacy benefits manager and the pharmacy are all owned by the same group anyway. So really it’s just the consumers. But it’s hard to notice since this all unfolds into higher insurance premiums, co-pays etc, which get compared to list prices, which keep rising, but are disconnected from then producers net take-home.
Everyone else is just middlemen that I don't see wielding much power. All the PBM and rebate nonsense is just price obfuscation, but I don't see it changing anything even if it was all removed. It would just be rebranded some other way, as the goal is price discrimination, and to get richer entities (or those lacking in time/money to negotiate or hire someone to negotiate aka pay insurance premiums) to pay for more medicine since they can afford to pay.
By pharmacy getting crushed, I mean the retail operations. I imagine independent pharmacies won't be around longer, or if they are, they'll be making whatever scraps the insurance companies offer to throw them. There's lots of independent pharmacy owners who complain about not even knowing if the medicine they are selling is earning them money or losing them money due to the ability for insurance companies (and governments) to take back money for various reasons after the sale.
This is all part of the squeezing of margins due to automation and pharmacy retail services becoming a low margin commodity. Or forced to become a low margin commodity.
CVS went vertical with their insurance company/in person retail business, but I'm not sure if that will be as profitable in the long run as they hope. I've never seen in person retail work out well for profit margins on a large scale, except for Apple stores.
The PBM represents many insurance plans, but is independent of the insurance companies and is basically a hired entity to negotiate prices with pharmacies on behalf of the insurance plans. The PBM says to a pharmacy: we will give you access to the pool of end customers from the plans we represent as long as you are willing to sell at these listed prices, and with these terms and conditions. The pharmacy wants access to the customers, so they will usually agree.
The prices vary, and a few of them may actually be lower than the pharmacies costs, but many are well above, so overall the deal is usually OK for the pharmacy.
But be aware of a few of the terms and conditions. There are three important terms. The first important term is that if your cash price is less than the normal cash price, you must sell for that. So obviously the pharmacy will always want to sets is cash price higher than they think any PBM will offer. And possibly even higher than that if any PBMs have a term like you will sell to our plans for our price or 80% of your cash price.
The second important term is that the PBM gets a kickback on many transactions as sort of a "finders fee" (and is one of the ways the PBM makes money). These kickbacks and the like are also a mechanism for the PBM to allow negotiating with individual pharmacy chains while providing uniform pricing to the insurance plans. Remember each pharmacy chain has its own negotiated wholesale costs for the medications, so they can negotiate larger PBM kickbacks on some of those they have lower than normal costs, in order to get smaller kickbacks on products where they have higher than normal costs, etc.
The third important term is a term that these prices must be available to the PBM's partners.
Now we have GoodRX. GoodRX partners with many different PBMs, and basically lets its members get the cheapest price from any of them. The PBMs give GoodRX a cut of their kickback. The PBMs agree because they would rather get part of a kickback for non-members through GoodRX, than get none of a normal cash sale to the pharmacy.
The problem is that each of the PBMs have some really good deals (possibly money losing for the pharmacy) on different medications, and GoodRX can basically just use whichever deal of its partners is best. Thus GoodRX effective overall deal with the pharmacies is too good, and pharmacies only accept it because they agreed to partner price sharing with the PBM.