In a significant shift to pharmacy reimbursement practices, Optum Rx announced Thursday it will transition to a cost-based payment model that aims to provide more stable revenue for pharmacies. The change is expected to result in higher payments for brand-name medications and reduced reimbursements for generic drugs.
The pharmacy benefit manager (PBM), a subsidiary of UnitedHealth, plans to implement these changes gradually with its employer and health plan clients, targeting full deployment by early 2028. This reform comes amid growing criticism of current pharmacy payment systems and follows similar moves by other major PBMs like CVS Health and Express Scripts.
The existing reimbursement structure has faced considerable scrutiny, with pharmacies arguing that complex payment calculations often result in below-cost reimbursements for dispensing medications. This has forced many pharmacies to rely on higher margins from certain drugs to offset losses on others, creating an increasingly unsustainable business model as more expensive branded medications enter the market.
While pharmacy groups cautiously welcomed the announcement, they emphasized that the impact would depend heavily on specific
implementation details. The National Community Pharmacists Association noted that previous PBM initiatives promising to support independent pharmacies have sometimes served more as public relations measures than meaningful reforms.
When asked for specifics about the new payment structure, an Optum Rx spokesperson indicated that the model would incorporate various market indices and data points to determine drug reimbursement rates, though exact details about markup calculations remained unclear.
The change could have far-reaching implications given Optum Rx’s substantial market presence, managing $178 billion in pharmaceutical spending for over 61 million individuals last year. The company expects the new model to help stabilize pharmacy finances, though they acknowledged some medications would see increased reimbursements while others would decrease.
This development comes against a backdrop of significant industry upheaval, with major pharmacy chains like CVS closing hundreds of locations, Rite Aid declaring bankruptcy, and Walgreens pursuing privatization. These challenges have contributed to growing pharmacy deserts, with research indicating that approximately 15.8 million Americans lack convenient access to pharmacy services.
The announcement represents part of a broader trend of PBMs
implementing internal reforms amid increasing scrutiny from lawmakers and regulators. The Federal Trade Commission has initiated legal action against major PBMs, while Congress considers various reform proposals, though concrete legislative changes have yet to
materialize.
Optum Rx has recently undertaken several other initiatives, including reducing prior authorization requirements for numerous medications and committing to complete transparency in passing through manufacturer rebates to customers. These changes appear designed to address mounting criticism of PBM practices and their role in drug pricing.
The transition to cost-based reimbursement reflects growing pressure on PBMs to reform their business practices, even as they continue to attribute high drug costs primarily to manufacturer pricing decisions. However, the success of these reforms in supporting pharmacy sustainability and improving patient access to medications will ultimately depend on their specific implementation and the willingness of PBMs to ensure fair compensation for pharmacy services.
For pharmacies struggling with financial pressures and operational challenges, the impact of Optum Rx’s new reimbursement model remains uncertain pending more detailed information about its structure and implementation timeline.