PSAO Market Insights: Highlights from the 2025–26 DCI Economic Report

Adam J. Fein, PhD, founder and President of Drug Channels Institute, has previewed highlights from the forthcoming 2025–26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors in his Drug Channels post, Inside the 2025 PSAO Market: How Wholesalers Shape Pharmacy–PBM Relationships. His analysis focuses on the often-overlooked role of pharmacy services administrative organizations (PSAOs), which he describes as “among the most mysterious—and misunderstood—intermediaries in our complex U.S. drug channel.”

Smaller pharmacies rely on PSAOs for leverage in contracting with pharmacy benefit managers (PBMs) and payers. According to Dr Fein, “the PSAO relationship is crucial for smaller pharmacies, which generate more than 90% of their total sales from prescription dispensing.” For an annual fee of $2000 to $3000, PSAOs provide services that include:

• Contracting with PBMs and payers
• Negotiating for preferred network access
• Claims payment, reimbursement management, and appeals
• Business and legislative support

The PSAO market is now dominated by the 3 largest US pharmaceutical wholesalers—Cencora, Cardinal Health, and McKesson—which together distribute more than 96% of prescription drugs. Dr Fein explains that “pharmaceutical wholesalers now own and operate the largest PSAOs, making them critical intermediaries between PBMs and smaller pharmacies.”

The leading PSAOs include:

• Health Mart Atlas (McKesson) – still the largest, though membership is declining
• LeaderNet (Cardinal Health) – now approaching 5900 members after steady growth
• Elevate Provider Network (Cencora) – stable at more than 5100 members
• AlignRx – formed from the Arete/PPOk merger and expanded through Pharmacy First
• EPIC Pharmacy Network – the largest PSAO without wholesaler ownership, adding 300 members this year

Fein’s analysis highlights the changing landscape:

• PSAOs collectively lost 425 locations in the past year, reflecting retail pharmacy contraction.
• Health Mart Atlas remains the largest, with 6100 locations, but “that figure represents a steep decline from its peak of 7,000 locations in 2019.”
• LeaderNet has expanded by 25% since 2019, even as other Cardinal-affiliated networks contract.
• Cencora’s Elevate remains relatively stable, while AlignRx’s membership is below its combined 2024 total.
• AlignRx’s membership has expanded, though still below its 2024 combined totals.
• EPIC Pharmacy Network emerged as the year’s “big winner,” with steady membership growth.

Membership numbers tell only part of the story. Fein stresses that “via PSAOs, wholesalers negotiate with PBMs and other payers on behalf of their pharmacy customers. Their control of the PSAO market shows just how vertically integrated—and powerful—these intermediaries have become in shaping the future of U.S. pharmacy.”

Wholesalers are using PSAOs as part of a broader vertical integration strategy that includes:

• Private-label generic drugs
• Retail pharmacy franchises
• Group purchasing for physician practices
• Office technology systems
• Consulting and patient services for manufacturers 
• Investments in management services organizations in oncology, ophthalmology, and urology 

For smaller pharmacies, Dr Fein warns that “the road to PBMs runs through a phantom tollbooth controlled by wholesalers. The price of passage? Ever more influence ceded to the intermediaries who set the rules of the road.”

The forthcoming DCI report will expand on these themes, offering detailed data on PSAO membership, wholesaler strategy, and the long-term implications for independent pharmacy economics. The full report is available for purchase and provides a comprehensive examination of the evolving wholesaler landscape, including forecasts, detailed exhibits, and strategic insights for stakeholders across the drug channel.

Reference

Fein A. Inside the 2025 PSAO market: how wholesalers shape pharmacy-PBM relationships. Drug Channels Institute. Published September 16, 2025. Accessed October 3, 2025. https://www.drugchannels.net/2025/09/inside-2025-psao-market-how-wholesalers.html