One of America’s largest pharmacy benefit managers, Optum Rx, announced Thursday it will implement a new reimbursement model for pharmacies that ties payments more closely to drug acquisition costs. The shift represents a significant change in how pharmacies will be compensated, with higher payments expected for brand-name medications and reduced reimbursements for generic drugs.
The UnitedHealth-owned PBM plans to complete the transition to this cost-based model by early 2028, having already begun moving employer and health plan clients to the new system. This reform comes amid widespread criticism of current pharmacy payment practices and follows similar moves by competitors like CVS Health and Express Scripts.
The existing reimbursement structure has faced mounting criticism from pharmacy operators who argue it’s fundamentally flawed. Currently, pharmacies must balance losses on some medications against higher payments for others – a system that has become increasingly unstable as more expensive branded drugs enter the marketplace. Many pharmacies report being reimbursed at rates below their costs for acquiring and dispensing medications.
While pharmacy benefit managers point to pharmaceutical manufacturers’ high list prices as the root cause of rising drug costs, they’re now taking steps to address concerns about pharmacy sustainability. Optum Rx’s announcement is particularly significant given its scale – the company managed $178 billion in pharmaceutical spending last year for more than 61 million individuals.
The specifics of Optum Rx’s new model remain somewhat unclear. When questioned, a company spokesperson indicated their approach would incorporate various market indices and data points to determine drug reimbursement rates. Generally, cost-based models pay pharmacies the acquisition cost of drugs plus a defined markup and potentially additional dispensing fees.
Pharmacy advocacy groups have expressed cautious optimism about the change while emphasizing that the impact will depend heavily on implementation details. The National Community Pharmacists Association noted that previous PBM announcements of pharmacy-friendly reforms haven’t always delivered meaningful improvements, suggesting this could either represent genuine progress or merely serve as a public relations move.
The reimbursement pressures facing pharmacies have already led to significant industry disruption. Major chains like CVS have shuttered hundreds of locations, while Rite Aid filed for bankruptcy and Walgreens is pursuing privatization. Smaller regional chains and independent pharmacies have also closed, contributing to pharmacy deserts that now affect approximately 15.8 million Americans who lack convenient access to pharmacy services.
This reform comes as PBMs face increasing scrutiny from lawmakers and regulators over their role in drug pricing and market dynamics. While multiple bills have been introduced in Congress and the Federal Trade Commission is pursuing litigation, concrete regulatory reform has yet to materialize. In response, major PBMs are implementing voluntary changes to their practices.
Optum Rx’s reimbursement announcement coincides with other recent reforms, including a reduction in prior authorization requirements for numerous medications and a commitment to pass through 100% of manufacturer rebates to customers. The company maintains these changes will promote long-term financial stability for network pharmacies, though they acknowledge individual pharmacies may see varying effects across different medications.
The transition represents the latest development in ongoing efforts to address challenges in pharmaceutical pricing and access, though its ultimate impact on pharmacy operations and drug costs remains to be seen as implementation details emerge.