White Paper Shows PSAOs Provide Meaningful Support to the Vast Majority of Independent Pharmacies

October 28, 2021

ARLINGTON, Va. — Approximately 80 percent of independent retail and small chain pharmacies choose to use Pharmacy Services Administrative Organizations (PSAOs), as evidenced in a new white paper produced by Avalere Health.

The white paper, titled, “The Role of Pharmacy Services Administrative Organizations for Independent Retail and Small Chain Pharmacies,” describes the range of services PSAOs provide to pharmacies to help manage their administrative duties. With the support of PSAOs, pharmacies are able to concentrate on patient care — and even remain viable, especially in rural and underserved communities.

PSAOs are organizations that support independent and small chain pharmacies with their interactions, contract evaluation and execution, and communications with Pharmacy Benefit Managers (PBMs) and health plans. Independent pharmacies can leverage the knowledge and experience of PSAOs to streamline challenging processes that typically require subject matter expertise.

Based on findings from stakeholder interviews and a review of existing research, the report indicates that most independent pharmacies choose to contract with a PSAO. Further, independent pharmacy owners interviewed see these organizations as essential to operations, especially in an environment where many pharmacies are struggling with a lack of sufficient resources.

“The data included in this report strongly underscore the value PSAOs bring to the pharmacy community, and ultimately patients. These organizations make it possible for independent and small chain pharmacies of all sizes, notably those that are family-owned and may have limited resources, to keep up with rapidly evolving market dynamics. PSAOs provide support for complex reimbursement processes, as well as addressing environmental factors, such as responding to the COVID-19 pandemic and other public health emergencies,” said HDA Executive Vice President, Government Affairs, Patrick Kelly. “In short, PSAOs help thousands of pharmacists across the country manage administrative challenges so they can spend more time working with patients.”

Key insights and findings within the report include:

  • PSAOs evaluate, execute, and navigate PBM contracts on behalf of independent pharmacies and provide a range of administrative, clerical, audit and data analytics support services.
  • Independent pharmacies rely upon PSAOs “for services that they could not do on their own while simultaneously operating a pharmacy,” such as contract evaluation, analyses on accounts receivables and audit-risk assessment services.
  • Given 90 percent of all revenue for independent pharmacies comes from prescription drugs, appropriate reimbursement terms are important to independent pharmacies.
  • In certain rural and underserved communities, independent pharmacies are often the exclusive provider of pharmacy services – interviewees emphasized the importance of the efficiency PSAOs provide toward maintaining adequate networks.
  • PSAOs also have helped streamline numerous contract amendments and changes throughout the pandemic, including the inclusion of addendums that allowed pharmacies to be paid for administering COVID-19 vaccines.

The full white paper is accessible here.

About HDA

The Healthcare Distribution Alliance (HDA) represents primary pharmaceutical distributors — the vital link between the nation’s pharmaceutical manufacturers and pharmacies, hospitals, long-term care facilities, clinics and others nationwide. Since 1876, HDA has helped members navigate regulations and innovations to get the right medicines to the right patients at the right time, safely and efficiently. The HDA Research Foundation, HDA’s nonprofit charitable foundation, serves the healthcare industry by providing research and education focused on priority healthcare supply chain issues.