A new report from Hunterbrook Media investigates how the three biggest health care giants in the U.S.— CVS Health Corp. (NASDAQ:CVS), UnitedHealth Group, Inc. (NYSE:UNH) and Cigna Group (NYSE:CI) — are allegedly using shell companies to hide billions of dollars that Hunterbrook says should be used to lower drug prices for patients.

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Benzinga reached out to CVS, Cigna and UnitedHealth for comment. CVS declined to comment, while Cigna and UnitedHealth did not immediately respond. 

Here is a look at the claims made by Hunterbrook. 

The Middleman Trick

Most people get their medicine through pharmacy benefit managers (PBMs) that are supposed to negotiate with drugmakers to get discounts (called “rebates”) and pass those savings on to customers. 

Because of new laws and public pressure, the PBMs promised to pass through 100% of those rebates to their customers. Hunterbrook alleges that in order to get around this promise, the large insurers created secret subsidiaries called GPOs (Group Purchasing Organizations).

Instead of taking a cut of the rebate, the parent companies now have their GPOs collect massive "fees” from drugmakers, while the PBM tells the customer that it has passed on 100% of the rebates it received.  

Hunterbrook claims the insurers fail to disclose that their own GPO company (which they also own) kept billions of dollars in fees for itself. It is essentially moving money from one pocket to another to keep it away from the public.

“Ghost” Offices

Hunterbrook reporters visited the headquarters of these GPOs in Ireland, Switzerland and Minnesota. Despite bringing in tens of billions of dollars, Hunterbrook said the offices were mostly empty. 

• Zinc (CVS): A deserted suite in Minnesota with mail piling up.
• Emisar (UnitedHealth): Empty cubicles in an Irish office.
• Ascent (Cigna): A small office in Switzerland that called the police on the reporter for asking questions.

Why It Matters

Hunterbrook alleges that while the insurers claim the GPOs help lower costs, they are a way for the companies to protect profits. 

In short, Hunterbrook claims the giant health companies created “fake” middleman companies with empty offices to siphon off billions of dollars in drug discounts that were supposed to go to the patients.

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