Study: Powerful PSAOs negotiate on behalf of independent pharmacies

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WASHINGTON — A new report, “Pharmacy Services Administrative Organizations (PSAOs) and their Little-Known Connection to Independent Pharmacies,” sheds light on the role of PSAOs in the prescription drug supply and payment chain.

The white paper, researched and written by the health care policy consulting firm Health Evaluations and released by the Pharmaceutical Care Management Association (PCMA), provides important perspective on the work that PSAOs do on behalf of independent pharmacies, including representing them in contract negotiations with pharmacy benefit managers (PBMs).

According to the white paper, in 2019, about 83 percent of independent pharmacies reported using a PSAO, and at least two-thirds of independent pharmacies in every state contracted with a PSAO. In addition to representing independent pharmacies in their contract negotiations with PBMs, PSAOs perform a variety of other essential services that enable pharmacies to operate successfully.

“For policymakers seeking to better understand the relationships between stakeholders in the prescription drug supply and payment chain, understanding the work done by PSAOs for independent pharmacies should be a central element. The fact is more than 80 percent of America’s independent pharmacies are backed by a PSAO with tremendous market scale to negotiate contracts with PBMs on their behalf,” said PCMA President and CEO JC Scott.

Click here to read the report.

Highlights in the report include:

  • PSAOs are little-known but large organizations that contract with pharmacies to perform many of the pharmacies’ core operations, such as negotiating reimbursement and tracking remittances.
  • About 83% of independent pharmacies contract with a PSAO.
  • Over 75% of independent and small chain pharmacies contract with PSAOs owned by the “Big Three” wholesalers (Amerisource Bergen, Cardinal Health, and McKesson).
  • PSAOs lack transparency and have almost no federal or state oversight.



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