Cole Schmidtknecht was among the hundreds of workers employed by Kriete Truck Center in Green Bay, Wisconsin. The twenty-two-year-old, along with 54 percent of Americans, had health insurance through his job: Kriete Truck Center contracted with UnitedHealthcare and its pharmacy benefit manager, OptumRx. Like other PBMs, OptumRx works with insurers and large employers to manage their prescription drug benefits. This arrangement had worked well for Schmidtknecht up until January of last year. For no more than $66 a month, he was able to purchase a preventative inhaler, Advair Diskus, to manage his lifelong asthma. That changed when OptumRx switched up the drugs on its formulary, or the list of drugs covered by a given insurance plan, without informing its customers, according to a recent lawsuit. On a winter day in early 2024, Schmidtknecht went to his local Walgreens pharmacy, located near a tax preparation business and a Taco Bell, where he was told that the medication was no longer covered. Instead, he would have to pay $539.19 out of pocket. He opted to go without so he could pay his rent on time. Five days later, after relying on an old emergency inhaler, he died from an asthma attack.
Schmidtknecht is far from alone in choosing to forgo a prohibitively expensive prescription. In recent polling by the Kaiser Family Foundation, 30 percent of Americans reported that they had not taken their medications as prescribed in the previous year due to cost. Other studies have estimated that more than 1.1 million Medicare patients will die over the next decade for the same reason.
This year, on the anniversary of Schmidtknecht’s passing, his parents filed a wrongful death lawsuit and a negligence lawsuit against both Walgreens and OptumRx. When the case became public, many social media users said it was a shame the couple’s son hadn’t heard about medication coupons, which could have lowered the cost of his inhaler. This kind of commentary reflects a major shift in the pharmacy space over the past fifteen years: the rise of coupon aggregators and their widespread adoption, even among those with health insurance. While medication coupons have been around for decades, they used to exist mostly in the form of physical drug discount cards given to the uninsured as a discreet concession or act of charity. Now, bargain-hunting consumers with and without insurance look to coupon aggregators and other related startups as a health care savings hack.
The most well-known among these companies is GoodRx, which was launched in 2011 by Trevor Bezdek and former Facebook employees Doug Hirsch and Scott Marlette. (Marlette’s previous claim to fame was inventing the concept of photo tagging.) Hirsch, formerly the chief mission officer at GoodRx, often says that he was inspired to create the company after being charged $450 for a medication. “I took my prescription to different pharmacies in my area,” he told Business Insider in 2018, “and realized that the prices of prescription drugs varied widely from pharmacy to pharmacy.” Headquartered in Santa Monica, California, GoodRx works by collating two types of medication coupons: expensive brand name drug discounts, offered by manufacturers to compete with cheaper generics, and generic medication discounts, which are made possible by GoodRx’s intimate relationship with the PBMs employed by various insurance companies. Counterintuitively, generic medications often cost more when purchased with insurance. (“Hundreds of generic medications are available for $4, and some are even free, without insurance,” reads a section on the GoodRx website.) It’s a big business: generic medications, or unpatented drugs with similar ingredients to brand-name drugs, account for 90 percent of prescriptions in the United States.
I first heard about GoodRx from a CVS pharmacist in 2019, when I burst into tears at the prospect of a $300 copay for ear infection medication. At the time, I was on a marketplace health care plan that seemed allergic to covering anything. GoodRx reduced my copay to under $20. The website felt like a secret rather than a legitimate service. Its existence was particularly novel at the time of its creation because pharmacists were previously banned from telling patients about cheaper payment options unless they explicitly asked. (In 2018, President Donald Trump overturned this so-called “gag order” at the federal level, although at some pharmacies, like the one Schmidtknecht went to, the culture sticks.) With a GoodRx coupon loaded up on their phone, patients can now sidestep onerous prior authorization requests and just pay for a prescription out of pocket. This is great news for insurance companies who still reap the benefit of patients’ yearly premiums without having to enact the coverage they have been paid to provide.
At the end of 2020, GoodRx had 478 employees, according to SEC filings. Five years later, the company has more than 1,110 employees. And this February, they announced a 6 percent increase in yearly revenue, to the tune of nearly $800 million. The company now offers a gold membership plan, where users can pay a monthly fee for higher discounts on generic medications, as well as a home delivery option.
Today, GoodRx’s competitors include BlinkRx, founded in 2014; SingleCare, also founded in 2014; and, more recently, Cost Plus Drugs. The last, created in 2022, is the brainchild of radiologist Alex Oshmyansky and billionaire Shark Tank maven Mark Cuban. It works slightly differently than the coupon aggregators by purchasing generic medications in bulk at low prices and selling them at cost, plus a flat 15 percent markup and pharmacy labor and shipping fees. Last year, Cuban told the Daily Show’s Jon Stewart that he was on a mission to make health care more affordable. “I don’t want to be ninety-five and look back and say, ‘I was president, but I didn’t get to know my kids at all,’” he explained. “I’d rather say, ‘I fucked up health care, and everybody’s healthier and everybody’s got a better world to live in.’” It turns out there’s a lot of money to be made in fucking up health care. That’s where the mission of some of these companies starts to look a little less big-hearted.
In its time as the leader in the medication coupon world, GoodRx has formed some eyebrow-raising partnerships. They received a hefty investment from Silver Lake in 2018, which earned the private equity firm a 35 percent stake in the company. Private equity’s recent foray into health care has mainly been about squeezing out as much profit as possible at the expense of patient health, which seems at odds with GoodRx’s mission of helping Americans access affordable medication. More recently, the company has faced legal scrutiny over the nature of its collaboration with PBMs, crucial players in the health insurance industry that are largely responsible for the inflated price of prescription drugs in the first place. While GoodRx helps individual patients save money, it benefits from an unsustainable status quo—and contributes to a bleak future for independent pharmacies.
The House Always Wins
PBMs act as intermediaries in the health insurance industry. They oversee which prescriptions an insurer covers, negotiate with drug companies, and reimburse pharmacies for dispensing drugs—all without having to share negotiation details with the insured. In theory, they are supposed to help keep costs down: drug makers compete to get onto a PBM’s formulary by offering substantial discounts. But the opacity of these dealings means that patients often don’t see any savings. “They have these proprietary contracts, so people don’t know what other people are buying and paying for. As long as that total black box exists, [PBMs] are going to find ways to make money,” says Geoffrey Joyce, director of health policy at the USC Schaeffer Center for Health Policy and Economics. “The PBM will bill the client more than they reimburse the pharmacy.” This is called “the spread”: “It’s the difference between what the PBM is paying the pharmacy to dispense that drug and what they are billing the ultimate payer, the client.” Joyce compares the process to the book (and movie) The Big Short. “You talk to employers, you talk to manufacturers, everybody knows the PBMs are ripping them off. They just don’t know how.”
“PBMs don’t view GoodRx as a threat,” explains Joyce, “because they are filling a part of the market that PBMs don’t have access to.”
Today, there are three main players in the PBM network who control some 80 percent of prescriptions in the United States: CVS Caremark, owned by major pharmacy chain CVS, which also owns Aetna health insurance; Express Scripts, owned by Cigna Insurance; and OptumRx, owned by insurance monolith UnitedHealthcare. Over the past five years, these three PBMs made an estimated $1.4 billion in spread pricing from fifty-one generic drugs alone. Overall, their profits increased by more than 400 percent between 2012 and 2022, from $6.3 billion to $27.6 billion.
The industry has become an oligopoly through mergers and acquisitions: an insurance company, PBM, and pharmacy may now fall under the same umbrella. This arrangement means that medication reimbursements are easily manipulated. And, according to patient advocacy groups, there is a clear correlation between increasing PBM consolidation and rising patient costs. PBMs can also steer patients toward the pharmacies they own, whether brick-and-mortar or mail order. Last July, the Federal Trade Commission released a blockbuster interim report that found PBMs often reimburse their own affiliated pharmacies at higher rates than they do independent ones. Damningly titled Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies, it paints a picture of a business that lacks transparency and is causing the death of small pharmacies. The effects are devastating: “In some rural and medically underserved areas, local community pharmacies are the main healthcare option for Americans, who depend on them to get a flu shot, an EpiPen, or other lifesaving medicines.”
PBMs have also been accused of deadly negligence. In May 2022, a thirty-nine-year-old California man named Craig Vanausdal was arrested at an airport in the U.S. Virgin Islands when local officials discovered an outstanding 2004 arrest warrant from Pennsylvania, related to an old marijuana charge. He was remanded to custody in the St. Thomas jail, where he died twelve days later. In a lawsuit brought by Vanausdal’s estate, the death was characterized as the result of multiple failures of care; it names several defendants, including the PBM Express Scripts and Accredo, a specialty pharmacy Express Scripts owns. Specialty pharmacies have become another source of income for PBMs in recent years. “More than half of drug spend now is on what is called ‘specialty’ or high-cost drugs—cancer drugs, biologics. What the big PBMs have done is developed their own specialty pharmacies, and then say, ‘You have to fill these expensive drugs in our pharmacies,’” explains Joyce.
The lawsuit outlines a frustrating series of events. Vanausdal, who had a condition called hemophilia A that kept his blood from clotting properly, relied on a medication that the jail’s staff allegedly threw out because it had expired. After he complained of a swollen ankle, jail doctors called their local pharmacy to get a refill of the drug, but they were informed it was only available via Accredo, who said they wouldn’t send the medication because they had already mailed a twelve-dose prescription to Vanausdal’s California home. As his symptoms worsened, a jail employee asked Vanausdal’s girlfriend if she could ship the medication, but the fee was too high: $500, according to the lawsuit. Finally, one desperate jail doctor told Accredo to just invoice them for the cost, and the company relented and mailed the medication to St. Thomas. A day later, Vanausdal complained of an increased heart rate and was bleeding at various sites of his body. Two days after that, he was dead. Accredo’s failure to ship the lifesaving medication in a timely manner, the lawsuit alleges, likely contributed to his death. (Express Scripts did not respond to a request for comment.) Vanausdal’s case may be extreme, but it illustrates the risks of PBM-mandated mail-order medication, which has led in recent years to delays, temperature-control hazards, and increased costs.
In the current system, patients are left with patchwork solutions to challenge the power of PBMs, such as filing lawsuits or banding together to form advocacy groups. One such group is the Infusion Access Foundation, a collective of patients who are dedicated to protecting access to medication infusions and injections for people with chronic illness. Executive director Alicia Barron told me that the foundation had seen firsthand how PBMs impede patients from receiving lifesaving treatments by creating “hoops that [they] have to jump through in order to access medications.”
Pennsylvania resident Rebecca Savastio is currently battling OptumRx over the medication she needs for metabolic syndrome and a genetic leptin receptor deficiency. For nearly three years, Savastio had been taking Ozempic, which her insurance Blue Cross Blue Shield approved with the caveat that it couldn’t be used for weight loss alone. Then her doctor suggested switching to Mounjaro. OptumRx, which is contracted by Savastio’s insurance, denied the claim, saying the drug would be used for off-label purposes. They also stopped covering the Ozempic she had already been taking long-term. Eli Lilly, the drug manufacturer that makes Mounjaro, offers a coupon for a similar drug called Zepbound; customers can buy it directly from the Eli Lilly website for a discounted $500 a month. Still, that’s a far cry from the $50 a month Savastio had been paying for Ozempic. This is all on top of the $11,000 a year she pays in health insurance premiums.
“I’m going to take money out of retirement,” she says, “and I’m going to take [OptumRx] to court.” She’s not the only one sizing up her legal options. In March, a federal judge tossed out a lawsuit brought by four ex-employees of Wells Fargo that accused their former employer of allowing Express Scripts, the PBM Wells Fargo contracted, to overcharge for drugs. The dismissal came as a relief for large employers who are now facing a new wave of litigation from workers seeking justice for costly PBM fees.
A former OptumRx employee who worked in the appeals department, fielding calls from people who’d been denied coverage for medications they were prescribed, said he felt the company intentionally subjected patients and providers to a byzantine process. The employee, who asked to remain anonymous, ended up on disability leave for depression when the task of repeatedly rejecting lifesaving medications became too much. As a senior pharmacy appeals technician, he handled prior-authorization requests. He would log the information that doctors sent over, and the PBM’s computer system would generate specific questions for the doctors about a given prescription. Doctors were faced with impossible timeframes to answer these questions, he says. For instance, if questions were faxed to a provider on a Friday and the office responded the following Monday, the medication request would be automatically rejected, or “auto-denied.”
Employees were also expected to limit phone calls to just seven minutes per customer, however irate. Patients would appeal algorithmically denied chemotherapy claims, he says, only to be faced with a human representative trying to hang up as soon as possible. “I never understood how a system that can auto-deny medications knows better than the patient’s doctor,” says the former employee.
It’s natural, then, that an OptumRx customer faced with impossible medication denials or outrageous costs would turn to GoodRx if they can. But GoodRx now works with OptumRx, helping, in turn, to rake in new customers for the PBM. Coupons are presented as a stopgap measure to make drugs more affordable, but they’re still helping to line the pockets of bad actors in the health insurance industry whose main function is to deny coverage and drive costs up. (OptumRx did not respond to questions about his account, nor Schmidtknecht’s death.)
Lucrative Failure or Sophistry?
It used to be that patients had to decide between GoodRx coupons or their insurance, but never the twain shall meet. Then, in 2024, GoodRx created a formal partnership called the “integrated savings program,” or ISP, with several PBMs, giving them access to the company’s drug pricing database. This switched up the old GoodRx model: now, when eligible customers covered by the program present their insurance card to a pharmacist, the ISP software automatically compares their copay for a generic drug to the GoodRx price and selects the lowest one, applying the cost to the customer’s deductible even if they use a coupon. On the other side of the transaction, the partnership allows participating PBMs to reimburse pharmacies at the lowest possible rate offered by their competitors. GoodRx makes money both ways: pharmacies, as usual, pay GoodRx a small transaction fee, and PBMs pay GoodRx for helping them access new customers. In its 2024 financial report, “prescriptions transactions revenue,” which includes kickbacks from PBMs as well as those pharmacy fees, accounted for 73 percent of GoodRx’s total income. “PBMs don’t view them as a threat,” explains Joyce, “because they are filling a part of the market that PBMs don’t have access to.”
“You talk to employers, you talk to manufacturers, everybody knows the PBMs are ripping them off. They just don’t know how.”
Late last year, independent pharmacies who’d long begrudged GoodRx for dipping into their registers had had enough. A group of small pharmacists and the organizations that represent them filed several lawsuits in quick succession, culminating in a class action antitrust lawsuit against GoodRx and the PBMs in its ISP. The legal complaints make for captivating reading, accusing the coupon aggregator of being in cahoots with Big Insurance and operating a “cartel” to implement price-fixing, all part of an “illegal conspiracy” to kill small pharmacies. (GoodRx did not respond to a request for comment.)
One of the pharmacists leading the charge was Deborah Keaveny, owner of Keaveny Drug in Winsted, Minnesota, and president of Pharmacists United for Truth and Transparency. According to Keaveny’s October complaint, “GoodRx and the PBM Defendants agreed to artificially suppress prescription drug reimbursement rates paid to independent pharmacies, and to increase fees charged to pharmacies, on all GoodRx transactions. This conspiracy has caused harm to independent pharmacies throughout the United States.”
Small pharmacies say they play a crucial role in their communities that differentiates them from the profit-driven big chains. (They can certainly look different; a pharmacy I visited in Weeksville, New York, prints out memes and tapes them on the customer-facing plexiglass: Bernie Sanders, bundled up in a scarf, says, “I am once again asking for your birthday”; Homer Simpson, a phone pressed to his ear, says, “I need to speak to your pharmacist . . . what time do you close?”) They are able to cultivate personal relationships with their customers and play a more active role in their overall health. Teresa Dickinson of Melrose Pharmacy in Phoenix, Arizona, recalled a regular who came in one day with yellow-tinged skin. “I asked her if she had noticed it, or if someone had mentioned something, and she said ‘no,’” Dickinson explained. “It ended up being something to do with her liver.” Keaveny said that smaller pharmacies act as a de facto health hub. “People are going to come to us first and say, ‘Do I need stitches, or can I just put a band-aid on it? Do I need cough syrup, or do you think I have pneumonia?’” Jersey Shore pharmacist Kalyan Dandu added that if a customer calls with a prescription ten minutes before closing, he or another staff member might drop it off on the way home. “That’s not something a big chain pharmacy would do.”
Fighting the Pharm-Headed Hydra
As fed up as they are with the current system, most of the pharmacists I spoke to aren’t looking for radical change. Many told me, unprompted, that they believe in the free market. They asked: Who else but a PBM would administer prescription drug payouts? But short of genuinely transforming the American health care industry, there are many possible ways to rein in both prescription drug prices and the most flagrant bad practices of PBMs. Joyce thinks that PBMs should be paid a flat administrative fee, something like $4 a prescription, and that Congress should expand the Employee Retirement Income Security Act to stipulate that PBMs act in the best interests of their clients. (Thanks to one of Trump’s recent executive orders, Lowering Drug Prices by Once Again Putting Americans First, the latter wish might come to fruition.) Barron agrees, adding that true reform would include banning spread pricing, increasing transparency around PBM data, and strengthening “any willing pharmacy” rules, where PBMs are required to contract with any eligible pharmacy, rather than preferring the ones that they own, to prevent the arbitrary exclusion of certain pharmacies.
In 2023, Senator Bernie Sanders put forth a bill which would ban spread pricing. It never passed. But advocates are continuing to apply pressure.
On the state level, a law that will severely cut back the influence of PBMs has just passed in Arkansas. House Bill 1150, which will go into effect in January 2026, seeks to cut down on anticompetitive consolidation, dictating that a company can have a license to operate either as a PBM or a business, but it can’t do both. It is the first bill to prevent PBMs from owning pharmacies. Various other states have also passed anti-steering laws that aim to prohibit PBMs from forcing customers to only fill their prescriptions at the pharmacies that they own. “But,” says Keaveny, “it’s a complaint-driven system. So the pharmacist has to take the time to make the complaint, fight it at the state level, the state has to do the investigation, and it’s really cumbersome.”
Many more ambitious federal PBM reforms have been introduced only to go nowhere. In 2023, Senator Bernie Sanders put forth a bill which, among other things, would ban spread pricing. It never passed. But advocates are continuing to apply pressure.
Months after Cole Schmidtknecht’s death, the manufacturer of his inhaler announced it would cap its out-of-pocket costs at $35 a month after a group of senators launched an investigation into inhaler prices. His parents went on to launch a website, Patient Protector, dedicated to PBM and insurance reform. Last December, Schmidknecht’s story was shared at a congressional hearing in support of a bipartisan bill called the Pharmacists Fight Back Act, which aimed to stop price gouging by PBMs. Congressman Jake Auchincloss spoke about how Schmidtknecht was an independent young man, someone “who stood up for the little guy” and enjoyed playing video games. He added that Schmidtknecht loved elephants and had hoped to one day get a tattoo of the animal on his arm.
The Pharmacists Fight Back Act was part of a slate of PBM reforms included in the massive federal spending bill put before Congress in December 2024. There was a mood of bipartisan hope after years of negotiation. But then, as portends many other disasters, Elon Musk posted on X. “This bill should not pass,” he said. A few minutes later, he posted a photo of the bill’s 1,547 pages, which included new requirements for PBMs. The caption read, “Ever seen a bigger piece of pork?” Musk, alongside president-elect Donald Trump, who also opposed the spending bill, got his wish: Congress ended up passing a smaller package with no provisions related to PBMs. Two weeks later, he reposted a video of frequent Joe Rogan guest Brigham Buhler criticizing PBMs as a “pay-to-play system.” “What is a ‘pharmacy benefit manager’?” Musk asked, with no obvious trace of irony.
If the episode was another blow to PBM reform, it was a boon for GoodRx, whose business model depends not just on the PBMs they partner with but the continued unaffordability of prescription medication more broadly. In the small print of a deck presented to investors this February, a disclaimer section on forward-looking statements notes the possible “impact of PBM regulation and reform on our business.” GoodRx’s new CEO, Wendy Barnes, is counting on the Musks of the world to continue their obstruction. In a recent article about her new position, she sounded an ominous note: “What we know is there will always be a growing list of drugs that are not funded, which means there will always be a place for GoodRx.”