GAO Report Finds Lower Payments at Owned Pharmacies

By Juan Dominguez Miami, FL · HEALTH DESK

Published 2 min read

The GAO reported on October 5, 2026, that owned pharmacies received lower payments for most common drugs. In 2023, these pharmacies saw cost sharing up to $340 higher for some high-payment medications.

The Government Accountability Office released a report on October 5, 2026, analyzing payments and contracts in vertically integrated Medicare Part D plans. The agency examined how insurance plan sponsors that provide Medicare Part D drug coverage have increasingly become vertically integrated with pharmacy benefit managers and pharmacies.

Payments to pharmacies included both reimbursement from plan sponsors and cost sharing paid by or on behalf of beneficiaries. Payments and cost sharing for at least 94 percent of the 100 most commonly used prescription drugs were lower at owned pharmacies than at non-owned pharmacies for a 30-day supply. The 100 drugs with the highest total utilization in 2023 were primarily generic drugs.

Average payments to owned and non-owned pharmacies for a 30-day supply of most of the 100 most commonly used prescription drugs were $10 or less. Cost sharing was up to about $340 higher at owned pharmacies for about half of the 20 drugs with the highest payments per 30-day supply. Medicare Part D spent $150 billion on prescription drug coverage for 54 million beneficiaries in 2025.

Timeline

For four large Medicare Part D plan sponsors, owned pharmacies received about 28 percent of total pharmacy payments in 2023. The four selected vertically integrated plan sponsors accounted for over 40 percent of total Part D enrollment in 2023.

What's New

The Office of Inspector General (OIG) found that 79% of Medicare Part D enrollees were in plans offered by vertically integrated sponsors in 2023, with three major organizations—UnitedHealth, CVS Health, and Humana—covering 57% of all enrollees. Vertically integrated Medicare Part D sponsors accounted for 82% of total Part D spending in 2023, with six organizations (UnitedHealth, CVS Health, Humana, Centene, Cigna, and Elevance Health) collectively responsible for $225.9 billion in gross spending. The Office of Inspector General (OIG) noted that vertically integrated sponsors recouped 34% of gross spending on Part D drugs through direct and indirect remuneration (DIR), compared to 29% for non-vertically integrated sponsors. Primary sources: oig.hhs.gov, oig.hhs.gov (2)

In 2023, 11 vertically integrated organizations accounted for 82% of $275.9 billion in Part D spending, according to a separate report by the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services. A 2023 Medicare Payment Advisory Commission (MedPAC) report noted that vertically integrated pharmacies may not necessarily reduce costs. Primary source: oig.hhs.gov

Why It Matters

The scale of vertical integration in the Medicare Part D market is substantial, with 11 vertically integrated organizations managing prescription drug benefits for 79% of enrollees in 2023. These entities accounted for 82% of total Part D spending. UnitedHealth alone covered 24% of enrollees, and 33% of all pharmacies in the Part D market were owned by vertically integrated organizations. The Government Accountability Office has previously examined how vertical integration may affect competition in the Medicare Part D market, with concerns raised about potential anticompetitive behavior that could negatively impact independent pharmacies. Primary source: oig.hhs.gov

The financial mechanisms within these integrated systems involve complex payment structures. Vertically integrated sponsors recouped 34% of gross Part D drug spending through direct and indirect remuneration, compared to 29% for non-integrated sponsors. In 2023, vertically integrated sponsors paid their own pharmacies 4% less at the point of sale than unaffiliated pharmacies, but this did not account for later payment adjustments that typically reduced what pharmacies ultimately received. The Medicare Payment Advisory Commission noted that vertically integrated pharmacies may not necessarily reduce costs for beneficiaries. Primary source: oig.hhs.gov

fact_check Facts

For four large Medicare Part D plan sponsors, owned pharmacies handled about 24 percent of drug utilization in 2023.
Source: oig.hhs.gov
For four large Medicare Part D plan sponsors, owned pharmacies received about 28 percent of total pharmacy payments in 2023.
Vertically integrated plan sponsors’ own pharmacies primarily provided drugs to enrollees through mail-order pharmacies.
Source: oig.hhs.gov
Non-owned pharmacies primarily provided drugs through retail pharmacies.
The four selected vertically integrated plan sponsors accounted for over 40 percent of total Part D enrollment in 2023.
Source: oig.hhs.gov
The practice of vertically integrated plan sponsors encouraging beneficiaries to fill prescriptions at their own pharmacies is known as steering.
The Government Accountability Office selected four vertically integrated Part D plan sponsors from among the 15 plan sponsors with the largest Part D enrollment in 2023.
The Government Accountability Office analyzed Centers for Medicare & Medicaid Services Part D utilization and payments data for 2023.
The 2023 data were the most recently available at the time of the Government Accountability Office’s analysis.
Source: oig.hhs.gov
Insurance plan sponsors that provide Medicare Part D drug coverage have increasingly become vertically integrated with pharmacy benefit managers and pharmacies.

menu_bookBackground & Sources

Context and data our newsroom added to the originating report, with the primary source for each item shown below it.

In 2023, 79% of Medicare Part D enrollees were in plans offered by vertically integrated organizations, according to a 2026 Office of Inspector General (OIG) report, highlighting the market dominance of these entities.
Source: oig.hhs.gov
In 2023, 11 vertically integrated organizations accounted for 82% of $275.9 billion in Part D spending, according to a separate report by the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services.
Source: oig.hhs.gov
The Office of Inspector General (OIG) found that 79% of Medicare Part D enrollees were in plans offered by vertically integrated sponsors in 2023, with three major organizations—UnitedHealth, CVS Health, and Humana—covering 57% of all enrollees.
Source: oig.hhs.gov
The Government Accountability Office (GAO) has previously investigated the role of pharmacy benefit managers (PBMs) in Medicare Part D, with a 2019 report finding that PBMs managed 74% of drug benefit services for Part D plans in 2016.
Source: gao.gov
The 2026 GAO report on Medicare Part D payments and contracts followed a 2025 GAO analysis (GAO-25-106996) of the Inflation Reduction Act’s implementation, which focused on Medicare drug pricing provisions and maximum fair prices for selected drugs.
Source: oig.hhs.gov
The Office of Inspector General (OIG) noted that vertically integrated sponsors recouped 34% of gross spending on Part D drugs through direct and indirect remuneration (DIR), compared to 29% for non-vertically integrated sponsors.
Source: oig.hhs.gov
The Office of Inspector General (OIG) identified 11 vertically integrated organizations among the 300 that offered Part D plans in 2023, with these 11 organizations managing the prescription drug benefits for 79% of enrollees.
Source: oig.hhs.gov
Vertically integrated Medicare Part D sponsors accounted for 82% of total Part D spending in 2023, with six organizations (UnitedHealth, CVS Health, Humana, Centene, Cigna, and Elevance Health) collectively responsible for $225.9 billion in gross spending.
Source: oig.hhs.gov
A 2023 Medicare Payment Advisory Commission (MedPAC) report noted that vertically integrated pharmacies may not necessarily reduce costs, raising concerns about the financial impact of vertical integration on Medicare beneficiaries.
Source: oig.hhs.gov
Vertically integrated sponsors recouped 34% of gross Part D drug spending through direct and indirect remuneration (DIR), compared to 29% for non-integrated sponsors, as reported by the OIG in 2026.
Source: oig.hhs.gov
The GAO has historically focused on Medicare Part D, including an earlier study on the use of PBMs and efforts to manage drug expenditures, which found that rebates and price concessions grew faster than Part D expenditures from 2014 to 2016.
Source: oig.hhs.gov
The OIG report identified 11 vertically integrated organizations in the 2023 Part D market, with UnitedHealth alone covering 24% of enrollees, demonstrating significant market concentration.
Source: oig.hhs.gov
The OIG report noted that 33% of all pharmacies in the Part D market (13,297 out of 40,475) were owned by vertically integrated organizations in 2023, underscoring their extensive network presence.
Source: oig.hhs.gov

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