How PBM Group Purchasing Organizations Retain Rebates and Fees — and Why They’re Being Investigated
By Mark Merritt
Executive Director, Insurance Watchdog Coalition
Congress is tightening the rules for pharmacy benefit managers (PBMs), including greater transparency and requirements that negotiated drug rebates be passed through to employer health plans. But reform can miss an increasingly important part of the business: PBM-owned Group Purchasing Organizations, or GPOs.
These are not traditional hospital purchasing groups. PBM GPOs sit between PBMs and drug manufacturers and negotiate rebates and other payments — work PBMs historically performed themselves.
Why does that matter? Follow the money. The FTC quoted a former OptumRx representative saying PBM GPOs were created to establish fee structures that could be retained rather than passed through to clients.
Investigators are already raising red flags:
• FTC: GPO fees may keep rebates from being passed through. A former OptumRx representative said GPOs were created to establish fee structures that could be retained rather than passed through.
• FEDERAL AUDITS: Billions in rebates were retained by a GPO rather than passed through to the carrier or federal government.
• STATE LAWSUITS: Rhode Island alleges PBMs and GPOs recategorized income and redefined rebates; Virginia, Hawaii and Vermont have made similar claims.
Congress shouldn’t allow a PBM to accomplish through an affiliated GPO what policymakers are trying to prevent the PBM from doing itself. Transparency and rebate pass-through rules should follow the money into affiliated GPOs, regardless of what manufacturer payments are called.
VOTERS WANT ACTION
88% OF VOTERS SUPPORT ACTION TO REFORM BIG INSURANCE
*Insurance Watchdog Coalition national survey of 1,000 likely voters, April 2026.
IT’S TIME TO REGULATE GPOs LIKE PBMs.
Sources: Federal Trade Commission; federal employee health-benefit audits; state litigation cited in PhRMA GPO policy materials.
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