What is a Group Purchasing Organization (GPO)?

What is a GPO?  

A group purchasing organization (GPO) helps healthcare providers, including hospitals, nursing homes and home health agencies, negotiate prices of drugs, devices and medical products with manufacturers and other vendors. The goal is to lower prices and reduce costs for providers by using the purchasing power of the group.

What are PBM GPOs?

Recently, pharmacy benefit managers (PBMs) created their own GPOs. In a PBM GPO, the PBM is no longer contracting with the health plans, but instead, the health plans now contract with the PBM’s GPO.

Approximately 80% of all prescription drug claims are managed by the top three PBMs: Express Scripts’ Ascent Health, OptumRx’s Emisar Pharmacy Solutions and CVS Caremark’s Zinc Health Services. Express Scripts, owned by Cigna, has set up Ascent in Switzerland. Ascent’s clients, in addition to Express Scripts and Cigna, include Kroger, Prime Therapeutics and Humana Commercial. Optum Rx, owned by UnitedHealthcare, has chosen Ireland as the headquarters for its GPO, Emisar. Zinc, the GPO created by CVS Health (which owns Aetna), is U.S.-based.

How are PBM GPOs impacting reimbursement and formulary decisions?  

In a PBM GPO, health plans now enter into contracts with the PBM’s GPO, instead of PBMs simply contracting with health plans. Pharma companies are also now contracting with the PBM’s GPOs instead of contracting directly with the PBMs.

How are PBM GPOs impacting patient access?

Exactly how PBM GPOs will work has yet to be seen. There is concern in the industry that PBM rebate reform won’t happen because two of the three big PBM GPOs are located overseas. So far, information about how PBM GPOs will improve the drug therapy supply chain or lower the price of prescriptions for the general public has been limited.