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Pharmacy Services Administrative Organizations' which was released on 
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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Energy and Commerce, House 
of Representatives: 

January 2013: 

Prescription Drugs: 

The Number, Role, and Ownership of Pharmacy Services Administrative 
Organizations: 

GAO-13-176: 

GAO Highlights: 

Highlights of GAO-13-176, a report to Report to the Ranking Member, 
Committee on Energy and Commerce, House of Representatives. 

Why GAO Did This Study: 

Independent pharmacies dispensed about 17 percent of all prescription 
drugs in the United States in 2010. To obtain, distribute, and collect 
payment for drugs dispensed, pharmacies interact with a network of 
entities, including drug wholesalers and third-party payers. With 
limited time and resources, independent pharmacies may need assistance 
in interacting with these entities, particularly with third-party 
payers that include large private and public health plans. Most use a 
PSAO to interact on their behalf. PSAOs develop networks of pharmacies 
by signing contractual agreements with each pharmacy that authorizes 
them to interact with third-party payers on the pharmacy’s behalf by, 
for example, negotiating contracts. While specific services provided 
by PSAOs may vary, PSAOs can be identified and distinguished from 
other entities in the pharmaceutical distribution and payment system 
by their provision of intermediary or other services to assist 
pharmacies with third-party payers. 

GAO was asked to review the role of PSAOs. In this report, GAO 
describes: (1) how many PSAOs are in operation and how many pharmacies 
contract with PSAOs for services; (2) the services PSAOs offer and how 
they are paid for these services; and (3) entities that own PSAOs and 
the types of relationships that exists between owners and the 
pharmacies they represent. GAO analyzed data on PSAOs in operation in 
2011 and 2012, reviewed literature on PSAOs and model agreements from 
8 PSAOs, and interviewed federal agencies and entities in the 
pharmaceutical industry. 

What GAO Found: 

At least 22 pharmacy services administrative organizations (PSAO), 
which varied in the number and location of the pharmacies to which 
they provided services, were in operation in 2011 or 2012. In total, 
depending on different data sources, these PSAOs represented or 
provided other services to between 20,275 and 28,343 pharmacies in 
2011 or 2012, most of which were independent pharmacies. While the 
number of pharmacies with which each PSAO contracted ranged from 24 to 
5,000 pharmacies, most PSAOs represented or provided other services to 
fewer than 1,000 pharmacies. Additionally, some PSAOs contracted with 
pharmacies primarily located in a particular region rather than 
contracting with pharmacies located across the United States. 

While PSAOs provide a broad range of services to independent 
pharmacies, and vary in how they offer these services, PSAOs 
consistently provide contract negotiation, communication, and help-
desk services. All of the model agreements between PSAOs and 
independent pharmacies that GAO reviewed stated that the PSAO will 
negotiate and enter into contracts with third-party payers on behalf 
of member pharmacies. PSAOs may also contract with pharmacy benefit 
managers (PBM), which many third-party payers use to manage their 
prescription drug benefit. In addition to contracting, PSAOs also 
communicate information to members regarding contractual and 
regulatory requirements, and provide general and claims-specific 
assistance to members by means of a help-desk or a dedicated staff 
person. They may also provide other services to help member pharmacies 
interact with third-party payers or their PBMs, such as managing and 
analyzing payment and drug-dispensing data to identify claims unpaid 
or incorrectly paid by a third-party payer. PSAO services are intended 
to achieve administrative efficiencies, including contract and payment 
efficiencies for both independent pharmacies and third-party payers or 
their PBMs. Most PSAOs charge a monthly fee for a bundle of services 
and may charge additional fees for other services provided to its 
member pharmacies. Virtually all of the fees paid for PSAO services 
are paid by member pharmacies, with PSAOs receiving no administrative 
fees from other entities such as third-party payers or their PBMs. 

The majority of PSAOs in operation in 2011 or 2012 were owned by drug 
wholesalers and independent pharmacy cooperatives. Of the 22 PSAOs we 
identified, 9 PSAOs were owned by wholesalers, 6 were owned by 
independent pharmacy cooperatives, 4 were owned by group purchasing 
organizations, and 3 were stand-alone PSAOs owned by other private 
entities. These owners varied in their requirements for PSAO member 
pharmacies to also use services from their separate, non-PSAO line of 
business. Three PSAO owners GAO spoke with required PSAO members to 
also use their non-PSAO services. For example, one wholesaler-owned 
PSAO limited its offer of PSAO services to existing customers of its 
drug distribution line of business. All but one PSAO owner GAO spoke 
with reported that their PSAO line of business earned little to no 
profit. However, PSAO owners may operate PSAOs for a number of 
reasons, including helping pharmacies gain access to third-party payer 
contracts and to provide benefits to the owner’s non-PSAO line of 
business. 

View [hyperlink, http://www.gao.gov/products/GAO-13-176]. For more 
information, contact John Dicken at (202) 512-7114 or dickenj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

At Least 22 PSAOs Contracted with over 20,000 Pharmacies in 2011 or 
2012, the Majority of Which Were Independent Pharmacies: 

PSAOs Provide Independent Pharmacies with a Range of Services Intended 
to Achieve Administrative Efficiencies, and Most PSAOs Are Paid a 
Monthly Fee for These Services: 

Wholesalers and Independent Pharmacy Cooperatives Owned the Majority 
of PSAOs; Requirements to Use Non-PSAO Services Varied by Owner: 

Appendix I: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Number of Pharmacies Contracting with Pharmacy Services 
Administrative Organizations (PSAO) in 2011 or 2012: 

Table 2: Description of Other PSAO Services: 

Table 3: Ownership of Pharmacy Services Administrative Organizations 
(PSAO) in Operation in 2011 or 2012: 

Figure: 

Figure 1: Interactions Among Key Entities Involved in the Distribution 
of and Payment for Pharmaceuticals: 

Abbreviations: 

DOJ: Department of Justice: 

FEHBP: Federal Employees Health Benefits Program: 

FTC: Federal Trade Commission: 

HHS OIG: Department of Health and Human Services, Office of Inspector 
General: 

NCPA: National Community Pharmacists Association: 

NCPDP: National Council for Prescription Drug Programs: 

PBM: pharmacy benefit manager: 

PSAO: pharmacy services administrative organization: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 29, 2013: 

The Honorable Henry A. Waxman: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

Dear Mr. Waxman: 

Independent pharmacies dispensed almost 20 percent of all prescription 
drugs in the United States in 2010, with chain pharmacies accounting 
for the majority of the remaining 80 percent.[Footnote 1] To obtain, 
distribute, and collect payment for the drugs they dispense, 
independent pharmacies interact with a network of entities that offer 
a variety of services. These entities include drug wholesalers that 
purchase and distribute drugs to pharmacies, and third-party payers 
that pay for the dispensed drugs on behalf of enrollees. With limited 
time and resources, independent pharmacies may need assistance in 
interacting with these entities, particularly with third-party payers 
that include large private and public health plans such as those 
offered by large corporations and the federal government through 
Medicare and the Federal Employees Health Benefits Program (FEHBP). 
[Footnote 2] 

To address independent pharmacies' need for assistance with third-
party payer interactions, both existing entities--such as drug 
wholesalers--as well as new entities began providing a variety of 
administrative services to independent pharmacies. These 
administrative services included, for example, managing pharmacies' 
claims payments from third-party payers. Entities that provide 
administrative services to independent pharmacies to assist such 
pharmacies in interacting with third-party payers are called pharmacy 
services administrative organizations (PSAO). While specific services 
provided by PSAOs may vary, PSAOs can be identified and distinguished 
from other entities in the pharmaceutical distribution and payment 
system by their provision of intermediary services to assist 
pharmacies with third-party payers. 

PSAOs develop networks of member pharmacies by signing contractual 
agreements with individual pharmacies. These agreements set forth the 
duties and obligations of the PSAO to each pharmacy and vice versa, 
and generally authorize PSAOs to interact with third-party payers on 
behalf of the members in their network. Among the responsibilities 
established between the PSAO and the pharmacy, the PSAO is frequently 
given the responsibility to contract on behalf of the pharmacy with 
third-party payers.[Footnote 3] Independent pharmacies may want the 
assistance of a PSAO due to the complexity of the contract terms and 
financial interactions with multiple third-party payers. As an 
intermediary, a PSAO may also provide other services that assist 
pharmacies in working with third-party payers. Because these other 
services may vary by PSAO, pharmacies may belong to multiple PSAOs' 
networks that provide complementary services. For example, a pharmacy 
may belong to one PSAO network that contracts with third-party payers 
on its behalf and belong to another PSAO network that assists the 
pharmacy with reconciling claim payments from third-party payers. 
[Footnote 4] According to industry reports, 80 percent of independent 
pharmacies obtain services from a PSAO.[Footnote 5] In addition, 
nearly 80 percent of the independent pharmacies surveyed by the 
Department of Health and Human Services, Office of Inspector General 
(HHS OIG) for its 2008 study reported obtaining PSAO services. 
[Footnote 6] 

Although PSAOs are focused on assisting independent pharmacies, their 
services may also benefit third-party payers. In addition, PSAO 
services may also benefit pharmacy benefit managers (PBMs), which many 
third-party payers use to help manage their prescription drug benefit, 
including developing contracts that set forth the terms and conditions 
for pharmacies to dispense prescriptions to health plan enrollees. 
According to PBMs, PSAOs make it easier for third-party payers or 
their PBMs to interact with multiple independent pharmacies by serving 
as a single point of contact. In addition, by providing access to 
multiple independent pharmacies, PSAOs enable third-party payers or 
their PBMs to expand and maintain networks in certain geographic 
areas--such as rural and underserved areas--where independent 
pharmacies are more likely to be located. Thus, PSAOs help third-party 
payers or their PBMs build networks of pharmacies to meet the needs of 
health plans and their enrollees and, in some cases, to satisfy 
federal requirements.[Footnote 7] 

You expressed interest in knowing more about the role of PSAOs in the 
network of entities that interact to distribute and pay for 
prescription drugs. In this report, we describe: (1) how many PSAOs 
are in operation and how many independent pharmacies contract with 
PSAOs for services; (2) the services PSAOs offer to independent 
pharmacies and how they are paid for these services; and (3) the 
entities that own PSAOs and the types of relationships that exist 
between PSAO owners and the independent pharmacies with which they 
contract. 

To determine how many PSAOs are in operation and how many independent 
pharmacies with which they contract, we reviewed literature on PSAOs, 
and conducted interviews with various entities including key entities 
in the pharmaceutical industry and federal agencies that have 
conducted work involving PSAOs. We also analyzed National Council for 
Prescription Drug Programs (NCPDP) data from February 2011. NCPDP 
collects and maintains a database of in-depth pharmacy information 
from both pharmacies and PSAOs.[Footnote 8] Specifically, we conducted 
a comprehensive literature review that included materials published 
through October 2012.[Footnote 9] We also obtained and reviewed 
published and unpublished reports we identified through Internet 
searches for information related to PSAOs and an interview with a 
pharmaceutical trade association. We conducted a total of 24 
interviews with various entities including federal agencies--HHS OIG 
and the Federal Trade Commission (FTC)--trade associations, 
pharmaceutical industry experts, three independent pharmacy owners, 
and a sample of PSAOs and PBMs.[Footnote 10] 

* PSAO sample: Our sample of PSAOs to interview included the 5 largest 
PSAOs based on the number of pharmacies they contracted with according 
to NCPDP data, as well as 5 additional PSAOs that varied by the number 
of pharmacies they represented and by ownership. According to NCPDP 
data, these 10 PSAOs represented over 17,000 pharmacies. 

* PBM sample: Our sample of PBMs to interview included the three 
largest PBMs as of March 2012, as defined by prescription volume, 
according to Atlantic Information Services data.[Footnote 11] 
Combined, these PBMs represented about 60 percent of total 
prescription volume in the United States. 

Finally, we analyzed NCPDP data and reviewed other available 
information, such as industry reports. We analyzed NCPDP data to 
determine the total number of PSAOs in operation in 2011 by first 
identifying potential PSAOs in the NCPDP data and then verifying 
whether the entity was a PSAO by reviewing its website and other 
available information.[Footnote 12] We considered an entity to be a 
PSAO if it contracted to provide intermediary or other services that 
assist independent pharmacies in working with third-party payers or 
their PBMs. We developed this criterion on the basis of information we 
gathered from the literature review and interviews with key entities, 
including an industry expert and a PSAO. Using our list of PSAOs, we 
then searched the NCPDP database to determine the total number and 
types of pharmacies that each of the PSAOs represented in 
2011.[Footnote 13] We reviewed NCPDP data for reasonableness and 
consistency, including screening for outliers. We also reviewed 
documentation and spoke with NCPDP officials about steps taken to 
ensure data reliability. 

We determined that the data used in this report were sufficiently 
reliable for our purposes. However, there are some limitations to the 
NCPDP data, including that these data may not contain the complete 
universe of PSAOs or independent pharmacies. For example, according to 
NCPDP officials, smaller independent pharmacies that do not conduct 
electronic transactions may not be included in the NCPDP data. 
Multiple entities we interviewed reported that there is no one 
comprehensive data source for information on PSAOs; however, several 
entities, including the HHS OIG, reported using NCPDP to determine the 
number of independent pharmacies in operation, the number of PSAOs in 
operation, or the affiliations between pharmacies and PSAOs. Due to 
NCPDP data limitations, we also reviewed industry reports and other 
sources of information, such as PSAO websites, to supplement these 
data when answering our research objectives. These supplemental data 
provided the number of PSAOs in operation and the number of pharmacies 
they contracted with in 2011 or 2012, which may vary from the data 
reported by NCPDP. Consequently, we report a range in the number of 
pharmacies represented by PSAOs in 2011 or 2012. Additionally, since 
PSAOs can represent other types of pharmacies, such as small chains, 
in addition to independent pharmacies and pharmacies can have 
agreements with multiple PSAOs for different services, the number of 
pharmacies that we report as being represented by PSAOs may be greater 
than the total number of independent pharmacies operating in the 
United States. 

To describe the services provided by PSAOs and how PSAOs are paid for 
these services, we interviewed officials from the various entities 
noted above and reviewed agreements between PSAOs and independent 
pharmacies. In conducting our interviews with PSAOs and independent 
pharmacies, we asked about how payment for PSAO services were made and 
received, including the frequency and amount of payments. We also 
obtained model agreements from eight of the ten PSAOs we interviewed. 
We reviewed these agreements to determine the duties and obligations 
of each PSAO to its member pharmacies. In addition, we reviewed the 
duties and obligations of member pharmacies joining the PSAO network 
as well as the payment and termination provisions included in each 
agreement. The information obtained from these interviews and 
agreements may not be generalizeable due, in part, to variation in the 
types of services offered by different PSAOs. 

To determine the entities that own PSAOs and the types of 
relationships that exist between PSAO owners and the independent 
pharmacies they represent, we analyzed NCPDP data, reviewed industry 
reports and PSAO websites, and interviewed the various entities noted 
above. Specifically, using NCPDP data, we obtained the contact 
information for each PSAO, which in some cases indicated the owner of 
the PSAO. Where it did not indicate the owner, we reviewed industry 
reports that included ownership information for some PSAOs, reviewed 
the PSAO's website, or contacted the PSAO directly. We reviewed NCPDP 
data for reasonableness and consistency, including screening for 
outliers. We also reviewed documentation and spoke with NCPDP 
officials about steps taken to ensure data reliability. We determined 
that the data used in this report were sufficiently reliable for our 
purposes. In addition, we spoke with PSAOs, independent pharmacies, 
and other industry stakeholders as noted above about the relationships 
existing between PSAOs and the pharmacies that they represent. 

We conducted this performance audit from June 2012 through January 
2013 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. Because we 
did not evaluate the policies or operations of any federal agency to 
develop the information presented in this report, we did not seek 
comments from any agency. 

Background: 

The distribution of and payment for prescription drugs involves 
interactions among multiple entities. These entities include drug 
wholesalers, independent pharmacies, PSAOs, and third-party payers and 
their PBMs. Interactions among these entities facilitate the flow of 
and payment for drugs from manufacturers to consumers. 

Drug Wholesalers: 

Drug wholesalers (hereafter referred to as wholesalers) purchase bulk 
quantities of drugs from pharmaceutical manufacturers and then 
distribute them to pharmacies, including independent pharmacies. For 
example, a wholesaler may fill an order from an independent pharmacy 
for a specified quantity of drugs produced by manufacturers and 
deliver the order to the pharmacy. In addition to supplying drugs, 
some wholesalers offer ancillary services to independent pharmacies 
such as helping them manage their inventory. Three wholesalers--
AmerisourceBergen Corporation, McKesson Corporation, and Cardinal 
Health Inc.--accounted for over 80 percent of all drug distribution 
revenue in the United States in 2011.[Footnote 14] 

Independent Pharmacies and PSAOs: 

Independent pharmacies are a type of retail pharmacy with a store-
based location--often in rural and underserved areas--that dispense 
medications to consumers, including both prescription and over-the-
counter drugs.[Footnote 15] In this report, we define independent 
pharmacies as one to three pharmacies under common ownership. 
Approximately 21,000 independent pharmacies constituted almost 34 
percent of the retail pharmacies operating in the United States in 
2010.[Footnote 16] Although independent pharmacies offer other 
products such as greeting cards and cosmetics, prescription drugs 
account for the majority of independent pharmacy sales. These sales 
accounted for almost 17 percent of the $266 billion in prescription 
drug sales in the United States in 2010.[Footnote 17] In addition to 
products, independent pharmacies provide patient-care services such as 
patient education to encourage patients' appropriate use of 
medications. According to a 2009 survey of pharmacists, independent 
pharmacies spend the majority of their time dispensing prescription 
drugs and providing patient-care services. 

Independent pharmacies primarily purchase drugs from wholesalers 
(although they may also purchase them directly from manufacturers) and 
represented slightly over 15 percent of wholesalers' total sales to 
retail pharmacies in 2010.[Footnote 18] Independent pharmacies are an 
important part of a wholesaler's customer portfolio because, in 
addition to purchasing drugs, independent pharmacies may also pay the 
wholesaler to provide logistical functions and ancillary services such 
as direct delivery of drugs to individual stores and inventory 
management. Thus, a wholesaler's relationship with an independent 
pharmacy may result in multiple business opportunities for the 
wholesaler and administrative efficiencies for the pharmacy. After 
receipt of drugs from a wholesaler or manufacturer, pharmacies then 
fill and dispense prescriptions to consumers, such as health plan 
enrollees. These latter prescriptions are dispensed according to 
contractual terms agreed upon with each enrollee's health plan, that 
is, with each third-party payer or its PBM. 

According to the National Community Pharmacists Association (NCPA), 
payments based on the contractual terms of third-party payers or their 
PBMs significantly affect the financial viability of independent 
pharmacies. Consequently, these pharmacies must carefully choose which 
contracts to accept or reject. Accordingly, most independent 
pharmacies rely on PSAOs to negotiate directly, or to make 
recommendations for negotiating contracts on their behalf with third-
party payers or their PBMs. When a PSAO enters into a contract with a 
third-party payer or its PBM, the pharmacies in its network gain 
access to the third-party payer or PBM contract--and the individuals 
it covers--by virtue of belonging to the PSAO's network. 

Third-Party Payers and PBMs: 

Third-party payers accounted for almost 80 percent of drug 
expenditures in 2010, which represents a significant shift from 30 
years ago when payment from individual consumers accounted for the 
largest portion of expenditures.[Footnote 19] Third-party payers 
include private and public health plans such as those offered by large 
corporations and the federal government through Medicare and the 
FEHBP, many of which use PBMs to help them manage their prescription 
drug benefits. As part of the management of these benefits, PBMs 
assemble networks of retail pharmacies, including independent 
pharmacies, where the health plan's enrollees can fill prescriptions. 
[Footnote 20] A pharmacy becomes a member of a third-party payer's or 
its PBM's network by entering into an agreement with the third-party 
payer or its PBM. It does so either directly or through a PSAO that 
has negotiated with that third-party payer or its PBM on the 
pharmacy's behalf. Contract terms and conditions may include specifics 
about reimbursement rates (how much the pharmacy will be paid for 
dispensed drugs), payment terms (e.g., the frequency with which the 
third-party payer or its PBM will reimburse the pharmacy for dispensed 
drugs), and audit provisions (e.g., the frequency and parameters of 
audits conducted by the third-party payer, its PBM, or designee), 
among other things.[Footnote 21] 

The reimbursement rate that third-party payers or their PBMs pay 
pharmacies significantly affects pharmacy revenues. Retail pharmacies 
participating in a PBM's network are reimbursed for prescriptions 
below the level paid by cash-paying customers (those whose 
prescriptions are not covered by a third-party payer). In addition, 
pharmacies must undertake additional administrative tasks related to 
transactions for customers who are covered by third-party payers that 
are not required for cash-paying customer transactions. For example, 
for customers covered by third-party payers, pharmacy staff must file 
claims electronically and may be required to counsel them on their 
health plan's benefits. However, most retail pharmacies participate in 
PBM networks because of the large market share PBMs command, which 
represents potential pharmacy customers. The five largest PBMs 
operating in the first quarter of 2012 represented over 330 million 
individuals.[Footnote 22] In addition, retail pharmacies benefit from 
the prescription and nonprescription sales generated by customers that 
PBMs help bring into their stores. (See fig. 1 for a diagram of the 
network of entities in the distribution of and payment for 
pharmaceuticals.) 

Figure 1: Interactions Among Key Entities Involved in the Distribution 
of and Payment for Pharmaceuticals: 

[Refer to PDF for image: illustration] 

Third-Party Payer: 
Third-party payers that use PBMs compensate them to help manage their 
prescription drug benefits. 

Pharmacy Benefit Manager (PBM): 
Third-party payers or their PBMs reimburse independent pharmacies for 
prescription drugs dispensed prescriptions to enrollees. 

Independent Pharmacy: 
Independent pharmacies purchase drugs from drug wholesalers; 
Independent pharmacies may pay a PSAO to contract on their behalf with 
multiple third-party payers or their PBMs, or to provide other 
services to assist them in working with third-party payers. 

Pharmacy Services Administrative Organizations (PSAO): 
PSAOs may contract or behalf of independent pharmacies with third-
party payers or their PBMs. 

Enrollees: 
Enrollees purchase prescription drug from a pharmacy; 
Enrollees pay third-party payers for their prescription drug benefits. 

Source: GAO analysis based on interviews and industry reports. 

Note: Arrows represent some of the financial interactions that occur 
between key entities involved in the distribution of and payment for 
pharmaceuticals. The dashed lines represent nonfinancial interactions 
between PSAOs and third-party payers or their PBMs on behalf of 
independent pharmacies. 

[End of figure] 

At Least 22 PSAOs Contracted with over 20,000 Pharmacies in 2011 or 
2012, the Majority of Which Were Independent Pharmacies: 

At least 22 PSAOs, which varied in the number and location of 
pharmacies to which they provided services, were in operation in 2011 
or 2012.[Footnote 23] In total, depending on different data sources, 
these 22 PSAOs represented or provided other services to between 
20,275 and 28,343 pharmacies in 2011 or 2012.[Footnote 24] (See table 
1.) The number of pharmacies contracted with each PSAO across these 
sources ranged from 24 to 5,000 pharmacies; however, according to 
NCPDP data most contracted with fewer than 1,000 pharmacies. The 
largest 5 PSAOs combined contracted with more than half of all 
pharmacies that were represented by a PSAO in 2011 or 2012. Because 
pharmacies may change their PSAO, the number of pharmacies contracting 
with each PSAO fluctuates as PSAOs enroll and disenroll pharmacies. 
[Footnote 25] For example, according to one PSAO, member pharmacies 
will change PSAOs whenever they think that another PSAO can negotiate 
better contract terms with third-party payers or their PBMs. Some 
PSAOs contracted primarily with pharmacies located in a particular 
region. These PSAOs generally represented fewer pharmacies than PSAOs 
representing pharmacies across the United States. For example, the 
Northeast Pharmacy Service Corporation represented 250 independent 
pharmacies while the RxSelect Pharmacy Network represented from 451 to 
569 independent pharmacies. 

Table 1: Number of Pharmacies Contracting with Pharmacy Services 
Administrative Organizations (PSAO) in 2011 or 2012: 

PSAO: Good Neighbor Pharmacy Provider Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 4,198; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 3,600-5,000. 

PSAO: Access Health; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 3,635; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 3,000-3,850. 

PSAO: LeaderNET; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 1,901; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 1,900-2,000. 

PSAO: EPIC Pharmacy Network, Inc.; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 1,830; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 1,830-2,000. 

PSAO: Third Party Station; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 1,814; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 1,814-2,500. 

PSAO: United Drugs; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 1,102; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 1,102-2,000. 

PSAO: MHA Long Term Care Pharmacy Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 1,025; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 1,025-1,100. 

PSAO: Third Party Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 952; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 952-1,027. 

PSAO: American Pharmacy Network Solutions; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 938; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 750-938. 

PSAO: TriNet Third Party Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 777; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 777-1,200. 

PSAO: RxPr1de/Managed Pharmacy Care[B]; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 675; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 675-3,300. 

PSAO: Managed Care Connection[C]; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 619; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 619-630. 

PSAO: Medicine Shoppe International[D]; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 456; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 456-600. 

PSAO: RxSelect Pharmacy Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 451; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 451-569. 

PSAO: FamilyCare Pharmacy Member Network; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 441; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 441. 

PSAO: GeriMed Long Term Care Network, Inc.; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 291; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 291. 

PSAO: Innovatix Network, LLC; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 177; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 177. 

PSAO: Progressive Pharmacies, LLC; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 104; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 40-104. 

PSAO: Valu Merchandisers Company; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 75; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 75. 

PSAO: Pharmacy Select; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 26; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 26. 

PSAO: United Pharmacist Network, Inc.; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 24; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 24-265. 

PSAO: Northeast Pharmacy Services Corporation[E]; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): N/A; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 250. 

PSAO: Total; 
Number of pharmacies contracting with each PSAO according to NCPDP 
data (2011): 21,511; 
Range in number of pharmacies contracting with each PSAO across all 
data sources (2011-2012)[A]: 20,275-28,343. 

Source: GAO analysis of National Council for Prescription Drug 
Programs (NCPDP) data, interviews with PSAOs, PSAO websites, and 
industry reports. 

Notes: The number of pharmacies associated with each PSAO is self-
reported across all sources and a pharmacy may contract with multiple 
PSAOs that provide complementary services. As such, the number of 
pharmacies contracting with PSAOs may be larger than the total number 
of independent pharmacies in the market. In addition, not all 
pharmacies and PSAOs are contained in NCPDP and other data sources. 
The number of pharmacies associated with each PSAO according to the 
PSAO website may be approximate. For example, MHA Long Term Care 
Pharmacy Network states that "more than 1,100 pharmacies" are 
represented by its PSAO. Finally, although the majority of pharmacies 
represented by PSAOs are independent pharmacies, some PSAOs contract 
with small chains and franchise pharmacies. A franchise pharmacy is an 
independently owned pharmacy that has signed a franchise agreement 
with a franchisor to receive services such as training, marketing, and 
other support. 

[A] The ranges presented are based on all sources of data used, 
including NCPDP data, interviews with PSAOs, PSAO websites, and an 
industry report. These data are self-reported by the PSAOs and may 
vary by source. Additionally, some PSAOs may have appeared in only one 
source and therefore do not have a range of pharmacies that they 
represent in this table. 

[B] RxPr1de is owned by Managed Pharmacy Care, both of which appear in 
the NCPDP database. Managed Pharmacy Care identifies itself as a PSAO, 
but RxPr1de does not. RxPr1de does serve as an intermediary between 
independent pharmacies and pharmacy benefit managers (PBM), therefore, 
we consider RxPr1de a PSAO for purposes of this report. We combined 
the number of pharmacies represented by RxPr1de and Managed Pharmacy 
Care. The total number of pharmacies included in the range for these 
entities may include some duplication. We could not confirm with 
RxPr1de and Managed Care Pharmacy the number of pharmacies that they 
represent. 

[C] Managed Care Connection represents small pharmacy chains ranging 
in size from 25 to150 pharmacies. 

[D] The Medicine Shoppe International PSAO represents members of the 
Medicine Shoppe pharmacy franchise. 

[E] Northeast Pharmacy Services Corporation did not appear in our 
search of the NCPDP database, but was cited by another source. We 
contacted the organization to confirm that it is a PSAO and use "N/A" 
to indicate that there were no pharmacies represented by this entity 
in the NCPDP data. 

[End of table] 

According to NCPDP data, PSAOs provide services primarily to 
independent pharmacies. Of the 21,511 pharmacies associated with PSAOs 
in the 2011 NCPDP database, 18,103 were identified as independent 
pharmacies.[Footnote 26] These independent pharmacies represent nearly 
75 percent of the total number of independent pharmacies in the 2011 
NCPDP database. This is close to an estimate reported by NCPA and the 
HHS OIG, both of which conducted surveys in which approximately 80 
percent of responding independent pharmacies were represented by 
PSAOs.[Footnote 27] In addition to independent pharmacies, some PSAOs 
also contracted with small chains and franchise pharmacy members. 
[Footnote 28] For example, Managed Care Connection provides services 
to small chain pharmacies ranging in size from 25 to 150 pharmacies 
under common ownership, and the Medicine Shoppe only offers its PSAO 
services to its franchise pharmacies. 

PSAOs Provide Independent Pharmacies with a Range of Services Intended 
to Achieve Administrative Efficiencies, and Most PSAOs Are Paid a 
Monthly Fee for These Services: 

PSAOs provide a broad range of services to independent pharmacies 
including negotiating contractual agreements and providing 
communication and help-desk services. These and other services are 
intended to achieve administrative efficiencies for both independent 
pharmacies and third-party payers or their PBMs. Most PSAOs charge a 
monthly fee for a bundled set of services and separate fees for 
additional services. 

PSAOs Provide a Range of Services to Independent Pharmacies Including 
Contract Negotiation, Communication, and Help-Desk Services: 

While PSAOs provide a broad range of services to independent 
pharmacies and vary in how they offer these services, we found that 
PSAOs consistently offer contract negotiation, communication, and help-
desk services. Several entities, including industry experts, trade 
associations, and PSAOs we spoke with, referred to one or all of these 
services as a PSAO's "key service(s)"--meaning that a PSAO can be 
distinguished from other entities in the pharmaceutical industry by 
its provision of these services. In addition, PSAOs may provide many 
other services that assist their member pharmacies--the majority of 
which are independent pharmacies--in interacting with third-party 
payers or their PBMs, although those PSAOs we spoke with did not 
provide these other services as consistently as their key services. 

Contract Negotiation Services: 

On behalf of pharmacies, PSAOs may negotiate and enter into contracts 
with third-party payers or their PBMs. Both the HHS OIG and an 
industry study reported that small businesses such as independent 
pharmacies generally lack the legal expertise and time to adequately 
review and negotiate third-party payer or PBM contracts, which can be 
lengthy and complex.[Footnote 29] All of the model agreements between 
PSAOs and independent pharmacies that we reviewed indicated, and all 
of the PSAOs we spoke with stated, that the PSAO was explicitly 
authorized to negotiate and enter into contracts with third-party 
payers on behalf of member pharmacies. By signing the agreement with 
the PSAO, a member pharmacy acknowledges and agrees that the PSAO has 
the right to negotiate contracts with third-party payers or their PBMs 
on its behalf. 

PSAOs we spoke with had different processes for negotiating and 
entering into contracts with third-party payers or their PBMs. These 
processes included following guidance or parameters established by a 
governing body such as a board of directors composed partially or 
entirely of representatives from the PSAO's member pharmacies. In 
addition, some PSAOs' decisions about entering into contracts are made 
by their contracting department or executive staff that base the 
decision on factors such as analyses of the contract's proposed 
reimbursement rate and the efficiencies and value that the PSAO's 
member pharmacies would provide to the particular market in which the 
contracts are offered. Decisions about entering into contracts may 
also include consultation with a PSAO's advisory board composed of 
representatives from the PSAO's member pharmacies. 

While PSAOs may review and negotiate a wide range of contract 
provisions, PSAOs we spoke with reported negotiating a variety of 
provisions including reimbursement rates, payment terms, audits of 
pharmacies by third-party payers or their PBMs, price updates and 
appeals, and administrative requirements.[Footnote 30] Regarding these 
contract areas, PBMs and PSAOs we spoke with reported that audits and 
reimbursement rates were of particular concern to pharmacies. One PSAO 
reported that its negotiations about a contract's audit provisions 
were intended to minimize member pharmacies' risks and burdens as 
audit provisions can include withholding reimbursement on the basis of 
audit findings. In addition, according to some PSAOs that we spoke 
with, reimbursement rates to pharmacies have decreased over time, and 
PSAOs and other sources we spoke with reported that PSAOs' ability to 
negotiate reimbursement rates has also decreased over time. 

Over half of the PSAOs we spoke with reported having little success in 
modifying certain contract terms as a result of negotiations. This may 
be due to PBMs' use of standard contract terms and the dominant market 
share of the largest PBMs. Many PBM contracts contain standard terms 
and conditions that are largely nonnegotiable. According to one PSAO, 
this may be particularly true for national contracts, in which third-
party payers or their PBMs have set contract terms for all pharmacies 
across the country that opt into the third-party payer's, or its PBM's 
network. For example, a national contract exists for some federal 
government programs, such as TRICARE.[Footnote 31] In addition, 
several sources told us that the increasing consolidation of entities 
in the PBM market has resulted in a few PBMs having large market 
shares, which has diminished the ability of PSAOs to negotiate with 
them, particularly over reimbursement rates. 

In contrast, PBMs we spoke with reported that PSAOs can and do 
negotiate effectively. PBMs and PSAOs reported that several factors 
may affect negotiations in favor of PSAOs and their members, including 
the number and location of pharmacies represented and the services 
provided by those pharmacies in relation to the size and needs of the 
third-party payer or its PBM. For example, a third-party payer or its 
PBM may be more willing to modify its contract terms in order to sign 
a contract with a PSAO that represents pharmacies in a rural area in 
order to expand the PBM's network in that area. In addition, a third-
party payer or its PBM may be more willing to negotiate in order to 
add pharmacies in a PSAO's network that offer a specialized service 
such as diabetes care needed by a health plan's enrollees. One PSAO 
also reported that small PBMs wishing to increase their network's size 
may be more willing to negotiate contract terms. 

We found that PSAOs vary in their requirements for their member 
pharmacies. Two PSAO-pharmacy model agreements that we reviewed stated 
that member pharmacies must participate in all contracts in which the 
PSAO entered on behalf of members. These PSAOs and six additional 
PSAOs we spoke with reported that their member pharmacies must 
participate in all contracts between the PSAO and third-party payers 
or their PBMs. The remaining two PSAOs we spoke with reported that 
they build a portfolio of contracts from which member pharmacies can 
choose. These PSAOs negotiate contracts with various third-party 
payers or their PBMs and member pharmacies review the terms and 
conditions of each contract and select specific contracts to enter 
into. Most of the PSAO-pharmacy model agreements we reviewed contained 
provisions expressly authorizing member pharmacies to contract with a 
third-party payer independent of the PSAO. Two additional PSAOs we 
spoke with confirmed that they do not restrict member pharmacies from 
entering into contracts independent of the PSAO. All three PBMs we 
spoke with confirmed that pharmacies may contract with them if their 
PSAO did not sign a contract with them on the pharmacies' behalf. 

Communication Services: 

PSAOs serve as a communication link between member pharmacies and 
third-party payers or their PBMs. Such communication may include 
information regarding contractual and regulatory requirements as well 
as general news and information of interest to pharmacy owners. All of 
the PSAOs we spoke with provided communication services to pharmacies 
such as reviewing PBMs' provider manuals to make member pharmacies 
aware of their contents.[Footnote 32] Communication with pharmacies 
was provided by means of newsletters and the PSAOs' Internet sites. In 
addition to communicating contractual requirements, PSAOs may also 
communicate applicable federal and state regulatory updates. For 
example, one PSAO we spoke with told us that it provides its member 
pharmacies with regulatory updates from the Centers for Medicare & 
Medicaid Services by publishing this information in its newsletter. 
Another PSAO we spoke with provided regulatory analyses that included 
examining and briefing its member pharmacies on durable medical 
equipment accreditation requirements, and fraud, waste, and abuse 
training requirements. According to the PSAO, this was to ensure that 
its member pharmacies were taking the right steps to comply with 
applicable regulations. 

Help-Desk Services: 

PSAOs provide general assistance to pharmacies and assistance with 
issues related to third-party payers and their PBMs such as questions 
about claims, contracting, reimbursement, and audits. PSAOs may 
provide such assistance by means of a help-desk (or customer service 
department) or a dedicated staff person. For example, one PSAO we 
spoke with reported that it provides general pharmacy support services 
to help pharmacies with any needs they may have in the course of 
operating their businesses. This PSAO also had a staff person 
responsible for providing support services to member pharmacies 
including answering their questions about claims and each contract's 
reimbursement rate or payment methodology. A PSAO may also help a 
pharmacy identify why a certain claim was rejected. 

Other Services: 

PSAOs provide many other services that assist member pharmacies in 
interacting with third-party payers or their PBMs. For example, PSAOs 
may provide services that help the pharmacy with payment from a third-
party payer or its PBM, comply with third-party payer requirements, or 
develop services that make the pharmacy more appealing to third-party 
payers or their PBMs. (See table 2 for a list and description of these 
services.) 

Table 2: Description of Other PSAO Services: 

PSAO Service: Assistance with claims[A]; 
Description: A variety of services and tools intended to help a 
pharmacy submit and receive correct claims reimbursements. Assistance 
may include processing certain claims on behalf of pharmacies. For 
example, one PSAO we spoke with processed Medicare and Medicaid claims 
for member pharmacies. 

PSAO Service: Audit assistance[B]; 
Description: Educational and informational support to help pharmacies 
prepare and undergo audits, including helping pharmacies understand 
their rights and responsibilities when undergoing an audit and in 
responding to or appealing audit findings. 

PSAO Service: Central payment; 
Description: A service in which a PSAO receives aggregated, single 
payments from a third-party payer on behalf of its member pharmacies. 
The PSAO then distributes individual payments to its members from the 
single payment made by the third-party payer. 

PSAO Service: Certification in specialized care programs; 
Description: One or multiple certification programs that may include 
training, marketing, and program development in specialized areas 
including immunization/vaccination, diabetes management, long term 
care, home health, medication therapy management, patient safety, and 
quality assurance programs. 

PSAO Service: Compliance support; 
Description: A service that assists pharmacies comply with regulatory 
and credentialing (e.g., proper licensure and accreditation) 
requirements. 

PSAO Service: Flat generics; 
Description: A service that provides resources for pharmacies wishing 
to operate a program that offers generic drugs for a flat fee (e.g., 
$4.00). 

PSAO Service: Front store layout assistance; 
Description: A service that assists pharmacies with the design of the 
"front" of the pharmacy (i.e., the part that customers see), including 
assistance with signage and placement of products to facilitate 
customer flow. 

PSAO Service: Inventory management; 
Description: An inventory control service to achieve a product mix 
intended to increase cash flow, improve customer service, and reduce 
wasteful expenses. 

PSAO Service: Marketing support; 
Description: A service that may include media advertising and 
marketing strategy consultation intended to increase public awareness 
of the pharmacy. 

PSAO Service: Reconciliation or access to a reconciliation vendor; 
Description: A service in which a PSAO manages and analyzes 
pharmacies' payment and drug dispensing data to identify claims that 
have not been paid or were paid incorrectly by a third-party payer. A 
PSAO may also provide access to a vendor that performs this service. 

PSAO Service: Retail cash cards; 
Description: A service that provides resources for pharmacies wishing 
to operate a discount program for cash paying customers. 

Source: GAO analysis of PSAO interviews and marketing materials. 

Note: The PSAOs we interviewed consistently offered three key services 
to its member pharmacies, namely: contract negotiation, communication, 
and help-desk services. In addition, PSAOs may also offer the other 
services listed, although the PSAOs we spoke with did not provide 
these other services as consistently as their key services. 

[A] Although PSAOs we interviewed provided help-desk services that may 
have included assistance with claims, PSAOs varied in their provision 
of other claims related services. 

[B] Pharmacies must submit to audits conducted by third-party payers 
or their designee(s). Audits by a third-party payer may include an on-
site inspection of various aspects of the pharmacy including 
inspections of its dispensing records to ensure compliance with 
regulatory and contractual requirements. 

[End of table] 

The PSAOs we spoke with varied in their provision of these other 
services although 9 of the 10 PSAOs we spoke with provided central 
payment and reconciliation services or access to reconciliation 
vendors that provided the service. However, other services were not 
provided as consistently across PSAOs. For example, only 1 PSAO 
reported that it provided inventory management or front store layout 
assistance. 

PSAO services have changed over time to meet member pharmacies' 
interests. In some cases, this has meant adding new services, while in 
other cases PSAOs have expanded existing services. Several PSAOs we 
spoke with reported adding services intended to increase cost 
efficiencies and member pharmacies' revenues. For example, three PSAOs 
we spoke with reported that they began offering central pay services 
and two of these PSAOs and an additional PSAO reported that they began 
offering reconciliation services. PSAOs we spoke with also reported 
expanding existing services. For example, one PSAO reported adding 
electronic funds transfers, while two other PSAOs reported that 
although they were already providing electronic funds transfers, they 
increased the frequency of transfers to five days per week.[Footnote 
33] This increase was made to improve pharmacies' cash flow by giving 
them quicker access to funds owed them by third-party payers or their 
PBMs. Two PSAOs we spoke with reported adding certification programs, 
particularly vaccination/immunization certification programs, because 
of the needs of third-party payers or their PBMs for this service to 
be provided through their network pharmacies.[Footnote 34] 

PSAOs Provide Services Intended to Achieve Administrative Efficiencies 
for Independent Pharmacies and Third-Party Payers or Their PBMs: 

PSAOs provide services intended to achieve administrative efficiencies 
for both independent pharmacies and third-party payers or their PBMs. 
PSAO services enable pharmacy staff, including pharmacists, to focus 
on patient-care services rather than administrative issues that 
pharmacists may not have the time to address. PSAO services also 
reduce the number of resources that PBMs must direct toward developing 
and maintaining relationships with multiple independent pharmacies. 

PSAO services are intended to help independent pharmacies achieve 
efficiencies particularly in contract negotiation. For example, 
independent pharmacies and PBMs we spoke with told us that PSAO 
contract negotiation services eased their contracting burden and 
allowed them to expand the number of entities with which they 
contracted. As a member of a PSAO, pharmacies may no longer have to 
negotiate contracts with multiple third-party payers or their PBMs 
operating in any given market. Independent pharmacies also told us 
that PSAOs provide other services that create both administrative and 
cost efficiencies for them. For example, one pharmacist told us that 
the marketing services provided by his PSAO relieved him of 
advertising costs because the PSAO provided advertising circulars to 
its PSAO-franchise members. Another independent pharmacy reported that 
its PSAO provides services such as claims reconciliation less 
expensively than the pharmacy could perform on its own. 

Similar to independent pharmacies, PBMs we spoke with reported that 
PSAO services create administrative efficiencies for them, including 
efficiencies in contracting, payment, and their call centers. PSAO 
services create contracting efficiencies because they provide PBMs 
with a single point through which they can reach multiple independent 
pharmacies. For example, the PBMs we spoke with each had over 20,000 
independent pharmacies in their networks, however, each PBM only 
negotiated contracts with 15 to 19 PSAOs, representing a majority of 
the pharmacies in its network. PBMs also reported that PSAO services 
create payment efficiencies when PSAOs provide central payment 
services. One PBM reported that instead of mailing checks to hundreds 
of individual pharmacies, the PBM made one electronic funds transfer 
to the PSAO, which then distributed the payments to its members. 
Finally, PBMs benefit from reduced call center volume because PSAOs 
often provide similar support directly to member pharmacies. For 
example, a call that may have gone to the PBM about a claim that was 
not paid may instead go to the pharmacy's PSAO, which will help the 
pharmacy understand any issues with the claim. PSAOs may also 
aggregate member pharmacies' issues and contact the PBM to discuss 
issues on behalf of multiple pharmacies and relay pertinent 
information back to those pharmacies. 

While creating efficiencies by acting on behalf of multiple 
pharmacies, PSAOs must ensure that their arrangements do not 
unreasonably restrain trade, thereby raising antitrust 
concerns.[Footnote 35] The FTC and the Antitrust Division of the 
Department of Justice (DOJ) are the federal agencies responsible for 
determining whether a particular collaborative arrangement may be 
unlawful and for enforcing applicable prohibitions.[Footnote 36] 
According to FTC officials, such a determination is dependent on 
multiple factors including the geographic region that a PSAO is 
operating in and the health care program (e.g., Medicare Part D) with 
which a PSAO is contracting. These factors affect the PSAO's ability 
(and the abilities of the pharmacies the PSAO represents) to affect 
the terms of a contract or the pricing of a good. For example, a group 
of rural pharmacies may more effectively influence contract 
negotiations than a single pharmacy operating in an urban area with 
many competitors. PSAOs we spoke with were aware of potential 
antitrust issues and reported taking measures to minimize them. For 
example, two of the PSAOs we spoke with reported developing their 
PSAO's organizational structure to ensure compliance with antitrust 
laws. 

Most PSAOs Charge a Monthly Fee for Bundled Services and Additional 
Fees for Other Services: 

Although PSAOs' charges to member pharmacies for their services may 
vary depending on how the services are provided, 8 of the 10 PSAOs we 
spoke with charged a monthly fee for a bundled set of services. For 
example, 1 PSAO charged $40 to $80 per month for a bundle of services 
that included contract negotiation, communication with member 
pharmacies, help-desk services, business advice, and limited audit 
support. In comparison, another PSAO's monthly fee ranged from $59 to 
$149 per month depending on the combination of services that the 
pharmacy requested. One of the remaining PSAOs we spoke with charged 
an annual fee rather than a monthly fee, while the other PSAO did not 
charge any fees for its PSAO services. The latter PSAO provided PSAO 
services as a value-added service to members of its group purchasing 
organization, for which it charged a monthly fee.[Footnote 37] Other 
services that are offered by most, but not all, PSAOs we spoke with 
are either provided within the bundle or as separate add-on services. 
PSAOs may also charge fees for individual services that are based on 
the type or value of that service. 

Virtually all of the fees for PSAO services are paid for by member 
pharmacies. All of the PSAOs we spoke with reported that they did not 
receive any type of fees from other entities such as an administrative 
fee from a third-party payer or its PBM. Similarly, all of the PBMs we 
spoke with told us that they did not pay PSAOs for their services. 
However 1 of the 3 PBMs we spoke with reported that it paid part of a 
pharmacy's dispensing fee to 1 of the 16 PSAOs with which it 
contracted rather than to the pharmacy. 

Wholesalers and Independent Pharmacy Cooperatives Owned the Majority 
of PSAOs; Requirements to Use Non-PSAO Services Varied by Owner: 

The majority of PSAOs in operation in 2011 or 2012 were owned by 
wholesalers and independent pharmacy cooperatives.[Footnote 38] In 
addition, these PSAO owners varied as to whether they require member 
pharmacies to also use the non-PSAO services they offer. 

Wholesalers and Independent Pharmacy Cooperatives Owned the Majority 
of PSAOs: 

Wholesalers and independent pharmacy cooperatives owned the majority 
of the PSAOs in operation in 2011 or 2012. Specifically, of the 22 
PSAOs we identified, 9 PSAOs were owned by wholesalers, 6 were owned 
by independent pharmacy cooperatives ("member-owned"), 4 were owned by 
group purchasing organizations, and 3 were stand-alone PSAOs owned by 
other private entities. (See table 3.) Three of the 5 largest PSAOs 
were owned by the 3 largest wholesalers in the U.S.: AmerisourceBergen 
Corporation, Cardinal Health Inc., and McKesson Corporation. Across 
all sources included in our review, the PSAOs owned by these 
wholesalers represented 9,575 to 12,080 pharmacies, and PSAOs owned by 
independent pharmacies represented 4,883 to 8,882 pharmacies. 
According to one industry report, the services provided by member-
owned PSAOs are similar to those offered by wholesaler-owned 
PSAOs.[Footnote 39] One PBM we spoke with noted that because of the 
financial backing of wholesaler-owned PSAOs, their PSAOs generally 
offer central payment services more often than PSAOs owned by other 
types of entities. This strong financial backing is necessary to offer 
these services because there is a considerable liability and risk in 
providing a central payment service. 

Table 3: Ownership of Pharmacy Services Administrative Organizations 
(PSAO) in Operation in 2011 or 2012: 

PSAOs: ranked largest to smallest by number of pharmacies represented: 

PSAO: Good Neighbor Pharmacy Provider Network; 
Ownership type (owner name): Wholesaler (AmerisourceBergen 
Corporation). 

PSAO: Access Health; 
Ownership type (owner name): Wholesaler (McKesson Corporation). 

PSAO: LeaderNET; 
Ownership type (owner name): Wholesaler (Cardinal Health Inc.)[A]. 

PSAO: EPIC Pharmacy Network, Inc.; 
Ownership type (owner name): Member-owned (EPIC Pharmacies, Inc.). 

PSAO: Third Party Station; 
Ownership type (owner name): Wholesaler (Wholesale Alliance, LLC). 

PSAO: United Drugs; 
Ownership type (owner name): Member-owned (American Associated 
Pharmacies). 

PSAO: MHA Long Term Care Pharmacy Network; 
Ownership type (owner name): Group purchasing organization (Managed 
Health Care Associates, Inc.). 

PSAO: Third Party Network; 
Ownership type (owner name): Wholesaler (H.D. Smith Wholesale Drug 
Co.). 

PSAO: American Pharmacy Network Solutions; 
Ownership type (owner name): Member-owned (American Pharmacy 
Cooperative, Inc.). 

PSAO: TriNet Third Party Network; 
Ownership type (owner name): Group purchasing organization (PBA 
Health). 

PSAO: RxPr1de/Managed Pharmacy Care[B]; 
Ownership type (owner name): Member-owned. 

PSAO: Managed Care Connection; 
Ownership type (owner name): Wholesaler (Cardinal Health Inc.)[A]. 

PSAO: Medicine Shoppe International; 
Ownership type (owner name): Wholesaler (Cardinal Health Inc.)[A]. 

PSAO: RxSelect Pharmacy Network; 
Ownership type (owner name): Member-owned (Pharmacy Providers of 
Oklahoma). 

PSAO: Family Care Pharmacy Member Network[C]; 
Ownership type (owner name): Wholesaler (JM Smith Corporation). 

PSAO: Gerimed Long Term Care Network, Inc.; 
Ownership type (owner name): Group purchasing organization (Gerimed, 
Inc.). 

PSAO: Innovatix Network; 
Ownership type (owner name): Group purchasing organization (Innovatix 
Group Purchasing Organization). 

PSAO: Progressive Pharmacies, LLC; 
Ownership type (owner name): Wholesaler (Frank W. Kerr Company). 

PSAO: Valu Merchandisers Company; 
Ownership type (owner name): Member-owned (Associated Wholesale 
Grocers). 

PSAO: Pharmacy Select; 
Ownership type (owner name): Stand alone pharmacy services company 
(Pharmacy Providers Services Corporation). 

PSAO: United Pharmacist Network, Inc.; 
Ownership type (owner name): Stand alone pharmacy services company. 

PSAO: Northeast Pharmacy Services Corporation; 
Ownership type (owner name): Stand alone pharmacy services company. 

Source: GAO analysis of National Council for Prescription Drug 
Programs (NCPDP) data, pharmaceutical industry reports, PSAO websites 
and interviews. 

Notes: Although the majority of pharmacies represented by these PSAOs 
are independent pharmacies, some PSAOs represent small chains and 
franchise pharmacies. Pharmacies are listed by size on the basis of 
the number of pharmacies each represented according to NCPDP data from
February 2011, with the exception of Northeast Pharmacy Services 
Corporation, which did not appear in the NCPDP data. For the purposes 
of this report, PSAOs that are owned by independent pharmacy 
cooperatives are referred to as “member-owned.”

[A] Cardinal Health Inc. operates three separate PSAOs that serve 
different segments of its business. LeaderNET provides services to its 
drug distribution customers, Medicine Shoppe International provides 
services to members of its pharmacy franchise, and Managed Care 
Connection provides services to small independent chains. 

[B] RxPr1de is owned by Managed Pharmacy Care. Managed Pharmacy Care 
identifies itself as a PSAO, but RxPr1de does not. RxPr1de does serve 
as an intermediary between independent pharmacies and pharmacy benefit 
managers (PBM), therefore, we consider RxPr1de a PSAO for purposes of 
this report. 

[C] Family Care Pharmacy Network is run by QS/1, a division of the JM 
Smith Corporation. The JM Smith Corporation is focused on various 
areas of healthcare and technology and operates six divisions, 
including its original division that provides drug distribution 
services. 

[End of table] 

PSAO owners may operate PSAOs for a number of reasons, including to 
benefit another, non-PSAO line of their business. The wholesalers we 
spoke with provided various reasons for offering PSAO services, such 
as wanting to assist independent pharmacies in gaining access to third-
party payer or PBM contracts, or to help pharmacies operate more 
efficiently. Additionally, one wholesaler noted that it created its 
PSAO because third-party payers and independent pharmacies indicated 
there was a need for PSAO services in the market. These third-party 
payers wanted a sole source for reaching multiple pharmacies, while 
independent pharmacies wanted a facilitator to assist them with 
reviewing third-party payer contracts. Other pharmaceutical entities 
noted that wholesalers may have an interest in developing 
relationships with independent pharmacies, which are potential 
customers of the wholesaler's drug distribution line of business. By 
obtaining multiple services from a wholesaler, an independent pharmacy 
may be less likely to switch wholesalers. Additionally, by having 
their PSAOs assist independent pharmacies with entering multiple third-
party payer or PBM contracts, wholesalers may benefit from the 
increased drug volume needed by independent pharmacies to serve the 
third-party payer's or PBM's enrollees. Other types of PSAO owners 
also provided a number of reasons for providing PSAO services, for 
instance, a number of these owners stated that they began offering 
PSAO services as a market-driven response to the growth of third-party 
payers and PBMs. In fact, one PSAO owner we spoke with stated that it 
reluctantly began offering these services at the request of customers 
of its group purchasing services, who wanted help navigating the 
issues and complexities of third-party payer and PBM contracting. 

PSAO Owners Vary As to Whether They Require Member Pharmacies to Use 
Their Non-PSAO Services: 

The owners of PSAOs we spoke with varied as to whether they require 
PSAO member pharmacies to also use services from a separate non-PSAO 
line of their business. Of the nine PSAO owners we spoke with that had 
a separate non-PSAO line of business (e.g., drug distribution or group 
purchasing), six did not require their PSAO member pharmacies to use 
services from that non-PSAO line of business.[Footnote 40] Of the 
remaining three, one wholesaler-owned PSAO limited its offer of 
services to pharmacies that were existing customers of its drug 
distribution line of business, while two member-owned PSAOs reported 
requiring their PSAO member pharmacies to join their group purchasing 
organizations. Officials from the wholesaler-owned PSAO stated that 
their limiting the availability of PSAO services to existing customers 
ensures that their PSAO already has basic information about their 
member pharmacies and a salesperson who serves as each member 
pharmacy's point of contact. 

While most PSAO owners do not require their member pharmacies to use 
services from their primary line of business, member pharmacies may 
choose to do so. In this case, a pharmacy must contract and pay for 
PSAO and other services separately. In fact, according to one 
wholesaler we spoke with, approximately 36 percent of its drug 
distribution customers were also members of its PSAOs.[Footnote 41] 
Pharmacies may be required to submit an application to join a PSAO 
network. PSAO applications we reviewed requested information about the 
pharmacy's licensing, services provided, and insurance. Additionally, 
applications asked pharmacies to indicate whether they had been 
investigated by the HHS OIG, had filed for bankruptcy, or had their 
pharmacy's state license limited, suspended, or revoked. PSAOs stated 
they used the information provided in applications to verify that the 
pharmacies applying for membership in their network are licensed by 
their state and in good standing. 

Most PSAOs we spoke with operated their PSAO separately from any 
separate non-PSAO line of business. For example, most wholesalers we 
spoke with stated their PSAO staff and drug distribution staff are 
distinct and do not interact. One of these wholesalers reported its 
PSAO has a distinct corporate structure, management team, sales 
organization and financial component from its drug distribution line 
of business. However, nearly all of the PSAO owners we spoke with 
operate their PSAO as a subsidiary of their non-PSAO line of business. 
For example, two PSAOs were organized as subsidiaries of a member-
owned buying group, while another PSAO operated as a branded service 
under the owner's non-PSAO line of business. 

Most PSAO owners reported that PSAO services are not a profitable line 
of business. Only 1 of the 10 PSAO owners we spoke with stated that 
its PSAO service was profitable. Other PSAO owners reported little to 
no profit earned from the PSAO services they provided.[Footnote 42] 
For those PSAOs that are not profitable, the cost of operating them 
may be subsidized by the owner's non-PSAO lines of business. As 
previously noted, it may be the case that offering PSAO services may 
benefit the owner's non-PSAO line of business even if the PSAO service 
itself is not profitable. For example, one member-owned PSAO we spoke 
with also owned a group purchasing organization to which its members 
must belong in order to obtain PSAO services. The group purchasing 
organization may benefit from increased membership driven by 
pharmacies that want to obtain its PSAO services. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
Secretary of Health and Human Services, the Chairman of the Federal 
Trade Commission, and interested congressional committees. In 
addition, the report will be available at no charge on the GAO website 
at [hyperlink, http://www.gao.gov]. 

If you or your staff have questions about this report, please contact 
John E. Dicken at (202) 512-7114 or DickenJ@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff members who made key 
contributions to this report are listed in appendix I. 

Sincerely yours, 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Appendix I: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John E. Dicken, (202) 512-7114 or DickenJ@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Rashmi Agarwal and Robert 
Copeland, Assistant Directors; George Bogart; Zhi Boon; Jennel 
Lockley; Laurie Pachter; and Brienne Tierney made key contributions to 
this report. 

[End of section] 

Footnotes: 

[1] There are various definitions of independent pharmacies. In this 
report, we use the definition from the National Council for 
Prescription Drug Programs (NCPDP), which defines an independent 
pharmacy as one to three pharmacies under common ownership. Chain 
pharmacies and pharmacies operated by a mass merchant such as Wal-Mart 
or a supermarket accounted for nearly 73 percent of dispensed 
prescription drugs, and mail-order pharmacies accounted for the rest. 
A chain pharmacy is part of a group of four or more pharmacies under 
common ownership. Mail order pharmacies are highly automated 
facilities that fill prescriptions from a central location and deliver 
the prescription directly to the consumer. 

National Association of Chain Drug Stores, 2011-2012 Chain Pharmacy 
Industry Profile, (Alexandria, VA: 2011). 

[2] Medicare is the federally financed health insurance program for 
persons age 65 or over, certain individuals with disabilities, and 
individuals with end-stage renal disease. Medicare beneficiaries may 
purchase coverage for outpatient prescription drugs under the Medicare 
Part D program. The FEHBP is the largest employer-sponsored insurance 
program in the United States. Most federal employees, retirees, and 
their dependents participate in the program. 

[3] These agreements may also establish specific requirements for a 
PSAO's use and disclosure of personal health information created, 
maintained, received, or transmitted by the PSAO on behalf of the 
pharmacy, and provide for the security of such information. 
Information subject to such requirements may include but not be 
limited to protected health information under federal law. See, 45 
C.F.R. Part 164, Subpart E (2011). 

[4] While independent pharmacies may obtain complementary services 
from multiple PSAOs, according to model agreements we reviewed, some 
PSAOs require that a pharmacy use the PSAO's third-party contracting 
services exclusively. In these instances, a pharmacy cannot obtain 
third-party contracting services from more than one PSAO, although the 
pharmacy may obtain other services from another PSAO. 

[5] Fein, Adam, Pembroke Consulting, Inc. 2011-12 Economic Report on 
Retail and Specialty Pharmacies, (Philadelphia: January 2012). An 
unpublished report by a trade association also included this statistic. 

[6] Department of Health and Human Services, Office of Inspector 
General, Review of Medicare Part D Contracting For Contract Year 2006 
(A-06-07-00082), (Washington, DC: 2008). 

[7] For example, to participate as Medicare Part D sponsors, health 
plans are required to have a contracted pharmacy network sufficient to 
ensure that at least 70 percent of Medicare beneficiaries in the 
sponsor's rural service area, on average, live within 15 miles of a 
retail or other specified type of pharmacy participating in the 
sponsor's network. See 42 C.F.R. § 423.120(a) (2011). Consequently, it 
may be necessary for a sponsor to contract with independent 
pharmacies, which are more common in rural areas than chain pharmacies. 

[8] NCPDP is a not-for-profit accredited standards development 
organization whose membership includes various entities in the 
pharmaceutical industry. 

[9] Our review included reports that discussed PSAOs specifically or 
PSAOs in conjunction with independent pharmacies or third-party payers. 

[10] The HHS OIG examined independent pharmacies' experiences 
contracting with Medicare Part D Prescription Drug Plan sponsors in 
2006. As part of this work, the HHS OIG collected information about 
the PSAOs associated with the independent pharmacies included in its 
study. The FTC is one of two federal agencies responsible for 
enforcing federal antitrust laws and has conducted reviews of PSAOs. 

We contacted a total of 20 independent pharmacies from the NCPDP data 
to request interviews. These independent pharmacies varied by location 
(urban vs. rural) and by the PSAO that provided them services. Of 
these 20 pharmacies, 3 responded to our request for an interview. 

[11] Atlantic Information Services, a publishing and information 
company, reports data compiled from the company's quarterly survey of 
PBMs. These data contain information on the PBM membership, 
prescription volume, and drug spending, among other things. 

[12] In some cases, we could not determine whether an entity was a 
PSAO on the basis of available information and contacted the entity 
directly to confirm whether it was a PSAO. 

[13] Pharmacies in the NCPDP database may choose from among several 
primary codes that indicate the type of pharmacy it is. For example, a 
pharmacy may classify itself as a community pharmacy that stores, 
prepares, and dispenses medicinal preparations and prescriptions for a 
local patient population or it may classify itself as a long-term care 
pharmacy that dispenses preparations delivered to patients residing 
within an intermediate or skilled nursing facility. 

[14] Fein, 2011-12 Economic Report. 

[15] Retail pharmacies are store-based retail locations that dispense 
medications to the public. 

[16] Chain pharmacies and pharmacies operated by a supermarket or mass 
merchant such as Wal-Mart comprised the remaining 66 percent of retail 
pharmacies operating in the United States in 2010. National 
Association of Chain Drug Stores, 2011-2012 Chain Pharmacy Industry 
Profile, (Alexandria, VA: 2011). 

[17] Other types of pharmacies that accounted for the remaining 83 
percent of prescription drugs dispensed in 2010 included chain 
pharmacies, pharmacies operated by a mass merchant such as Wal-Mart or 
a supermarket, and mail-order pharmacies. 

National Association of Chain Drug Stores, 2011-2012 Chain Pharmacy 
Industry Profile, (Alexandria, VA: 2011). 

[18] Center for Healthcare Supply Chain Research, 2011-2012 HDMA 
Factbook: The Facts, Figures and Trends in Healthcare, (Arlington, VA: 
2011). 

[19] Agency for Healthcare Research and Quality, Prescription 
Medicines--Mean and Median Expenses per Person With Expense and 
Distribution of Expenses by Source of Payment: United States, 2010. 
Medical Expenditure Panel Survey Household Component Data. Generated 
Interactively. Accessed December 19, 2012. [hyperlink, 
http://meps.ahrq.gov]. 

[20] PBMs may also provide health plans with clinical, cost 
containment, and administrative services such as claims processing. 

[21] Audits of pharmacies by a third-party payer or its PBM may 
include an on-site inspection of various aspects of the pharmacy 
including inspections of its dispensing records to ensure compliance 
with regulatory and contractual requirements. 

[22] This number includes duplication because every PBM involved in 
providing services to an individual includes that individual in its 
count of covered lives. As such, individuals may be counted multiple 
times across all PBMs. Atlantic Information Services, [hyperlink, 
http://www.aishealth.com]. 

[23] In determining the number of PSAOs in operation, we found a PSAO 
that did not identify itself as such, PSAOs that represented other 
types of pharmacies that were not independent, and a PSAO that did not 
appear in the NCPDP database. We included these PSAOs when determining 
the number of PSAOs in operation and the number of pharmacies 
represented by them in 2011 or 2012.The PSAO that did not identify 
itself as such met our criteria for inclusion because it provided 
intermediary and other services that assisted independent pharmacies 
in working with third-party payers or their PBMs. Additionally, of the 
two PSAOs that represented other types of pharmacies, one represented 
small chain pharmacies while the other represented members of a 
franchise. Finally, one PSAO did not appear in the NCPDP database but 
was identified by another source. We contacted the organization to 
confirm that it was a PSAO. 

[24] Since no single comprehensive source on PSAOs exists, we used 
several sources--including 2011 NCPDP data, and 2012 industry reports, 
PSAO websites and PSAO interviews--to determine the range in the 
number of independent pharmacies represented by these PSAOs in 2011 or 
2012. These data were self-reported and varied in terms of the PSAOs 
identified and the number and types of pharmacies represented by each 
PSAO. Additionally, the number of pharmacies represented across all 
PSAOs may be larger than the total number of independent pharmacies in 
operation in 2011 or 2012. This is because pharmacies may join 
multiple PSAOs that offer complimentary services and PSAOs may 
represent small chain pharmacies in addition to independent pharmacies. 

[25] All but one of the PSAO-pharmacy model agreements we reviewed 
included termination provisions that provided a member pharmacy the 
right to terminate the agreement--and thus leave the PSAO. Typically, 
a member pharmacy may terminate its relationship with the PSAO by 
providing the PSAO with 30 to 90 days written notice. However, some 
PSAOs require member pharmacies to meet an initial contract period 
before they may submit a termination notice. 

[26] Pharmacies may choose from five designations in the NCPDP 
database: independent pharmacy, chain pharmacy, franchise pharmacy, 
government pharmacy, and alternate dispensing site, such as a 
physician's office or mail-order pharmacy. 

[27] In all, 24,317 pharmacies in the NCPDP database were identified 
as independent pharmacies. This is larger than the total number of 
independent pharmacies in operation in 2010 (approximately 21,000 
according to industry reports). However, NCPDP designations are self-
reported and there are different definitions for an independent 
pharmacy. 

[28] A franchise pharmacy is an independently owned pharmacy that has 
signed a franchise agreement with a franchisor to receive services 
such as training, marketing, and other support. 

[29] Contract review is distinct from contract negotiation as a review 
may not include a PSAO entering into a contract on behalf of member 
pharmacies. A PSAO may review contracts on behalf of member pharmacies 
in order to provide guidance to pharmacies wishing to contract with a 
particular third-party payer. For example, one source reported that a 
PSAO may review contracts to make its member pharmacies aware of 
contract terms that could be problematic. 

[30] The entities we spoke with had various perspectives regarding 
negotiation. For example, a trade association official reported that 
"contract negotiation is the PSAO's ability to review PBM contracts 
and help the pharmacy understand the contract and the pharmacies' 
obligations per their involvement with the PBM." One PSAO described it 
as "an arm's length back and forth process between two parties where 
both agree to meet somewhere in the middle." 

[31] The Department of Defense provides health care to active duty 
service members, retirees, and their families through the TRICARE 
program. 

[32] Provider manuals contain details related to a pharmacy's rights 
and obligations per its contract with the PBM. 

[33] "Electronic funds transfers" refers to the PSAOs ability to 
receive funds electronically, such as reimbursements from a third-
party payer or its PBM. For example, a PSAO that provides central pay 
may receive consolidated funds electronically from a third-party payer 
or PBM and send individual payments electronically to its member 
pharmacies. 

[34] Certification programs may include training, marketing, and 
program development provided by the PSAO to the pharmacy so that the 
pharmacy is qualified to provide a specialized service. 

[35] Applicable federal antitrust laws include the Sherman Act, July 
2, 1890, c. 647, 26 Stat. 209 (codified as amended at 15 U.S.C. §§ 1 
et seq.); the Clayton Act, Oct. 15, 1914, c. 323, 38 Stat. 730 
(codified as amended at 15 U.S.C. §§ 12 et seq.); and the Federal 
Trade Commission Act, Sept. 26, 1914, c. 311, 38 Stat. 717 (codified 
as amended at 15 U.S.C. §§ 41 et. seq.). 

[36] FTC issues commission or staff advisory opinions and DOJ issues 
business review letters in response to requests to review specific 
proposed collaborative arrangements. According to agency officials, 
the review of a given collaborative arrangement is generally done by 
the agency with the most expertise with that type of arrangement. 

[37] A group purchasing organization negotiates on behalf of a group 
of pharmacies to get discounts and rebates from suppliers of 
prescription drugs, such as drug manufacturers. In some cases, an 
organization will operate both a group purchasing organization and a 
PSAO. 

[38] Independent pharmacy cooperatives are organizations composed of 
independent pharmacies that may, for example, operate a group 
purchasing organization or provide other services to their members. 

[39] Fein, 2011-12 Economic Report. 

[40] Member-owned PSAOs may also operate group purchasing 
organizations and provide other non-PSAO services to their members. 

[41] Pharmacies may choose to obtain PSAO services from their 
wholesaler, but not all do so. Instead, some pharmacies may choose to 
join another PSAO. 

[42] One PSAO owner that we spoke with did not provide information 
regarding the profitability of its PSAO. 

[End of section] 

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