What They Are Saying: Diverse Voices Sound the Alarm on PBM-GPO Ties

Health insurers and their affiliated pharmacy benefit managers (PBMs) have brought in yet another middleman – Group Purchasing Organizations (GPOs) – to the already complex and opaque health insurance web. GPOs act as additional pass-through, shell corporations vertically integrated with insurers and their PBMs and pharmacies – several are headquartered overseas, making U.S. oversight difficult. PBMs use GPOs to rebrand rebates as “administrative fees,” letting them pocket more money while still claiming to return “100% of rebates” to plan sponsors.  

The downstream effect is significant – see what experts and stakeholders are saying about GPOs’ role and impact on the system:  

“The takeaway: PBM GPOs appear to generate astronomical revenue with skeleton staff — making Zinc, Emisar, and Ascent among the world’s most lucrative enterprises on paper, even though they appear barely to exist in the real world.”  - Hunterbrook Study

“While designing these reforms it is essential to account for the continued evolution of the PBM business model. The latest iteration uses group purchasing organizations (GPOs) to place yet another organizational layer between the PBMs and purchasers of medicines.”  - Wayne Winegarden Forbes Article 

“So they opened these offshore different kind of GPOs to basically launder fees. And so now manufacturers and employers are basically extorted for fees. Some of those fees are rebates. Some of those fees are offshore in Switzerland or Ireland or who knows where in the world they have their places.”  - Douglas Hoey, CEO of NCPA 

“They [GPOs] are covers for the Big Three to say in a contract that they pass through 100% of the rebates they get.”  - Mark Cuban, Cost Plus Drug Company 

(GPOs) "appear to be yet another example of the institutional intent at opacity and avoidance of oversight within your company ... the committee is concerned that your company's opaque business practices and relationships, including the creation of new corporate structures abroad, combined with unchecked integration, is hurting patients and costing taxpayers."  - Rep. James Comer 

“As PBMs have consolidated and vertically integrated, we hear of a system where corporate red tape and bureaucracy obstruct patients from getting their medications, sometimes with devastating results. One doctor shared how delays created by a PBM led her patient to develop resistance to an otherwise effective treatment, leading to the needless loss of the patient’s eye.”  - Former FTC Chair Lina Khan Statement

“We have seen significant vertical integration, not just among the largest PBMs, but also on part of the wholesalers who now own and operate provider groups, pharmacy services, administrative organizations, GPOs, pharmacies and white label manufacturers.”  - Rep. Brett Guthrie 

“So while it might appear as though three PBMs make up 80 percent of all transactions, you move a layer up to the GPO level, the rebate aggregator, you’ll find that three companies make up around 95 percent of that marketplace and other ‘competitor’ PBMs are essentially subcontracting to those large three to provide rebate aggregation services and manufacturer negotiations.  - Antonio Ciaccia, President, 3 Axis Advisors 

"Reshore its group purchasing organization Ascent from Switzerland to the United States, which will bring back to the United States more than $750 billion in purchasing activity over the duration of the order." - FTC Secures Landmark Settlement with Express Scripts to Lower Drug Costs for American Patients

From policymakers and regulators to employers, patient advocates, and industry leaders, voices from across the spectrum are reaching the same conclusion: greater transparency and accountability are urgently needed in the PBM GPO model. This is not a partisan issue. It is a shared concern about fairness, oversight, and protecting patients.  

Now is the moment to build on this broad alignment and advance more practical, commonsense reforms that bring sunlight to opaque practices and ensure the system works for patients. 

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