A major pharmacy benefits manager, Optum Rx, announced Thursday it will implement a new cost-based reimbursement system for pharmacies, marking a significant shift in how drug dispensers are compensated. The change is expected to increase payments for brand-name medications while reducing reimbursements for generic drugs.
The transition, which will be completed by early 2028, represents the latest effort by a major drug intermediary to address widespread criticism of current pharmacy payment practices. Optum Rx, a subsidiary of UnitedHealth, has begun moving its employer and health plan clients to the new model.
The existing pharmacy compensation system has faced substantial criticism from pharmacy operators who argue its complexity and reliance on various non-cost factors has created an unsustainable business environment. Many pharmacies currently depend on higher payments for certain medications to offset losses on others, a practice that has become increasingly difficult to maintain as more expensive branded drugs enter the market.
Pharmacy groups report frequently being reimbursed at rates below their costs for acquiring and dispensing medications. While pharmacies often blame PBMs for these losses, the benefits managers counter that drug manufacturers’ high list prices are the root cause of pharmacies’ procurement expenses.
The announcement follows similar moves by other major PBMs. CVS Health initiated a transition to cost-based pricing in 2023, while Express Scripts, owned by Cigna, has introduced a cost-plus pricing option. Under these models, pharmacies typically receive the drug’s
acquisition cost plus a defined markup and potentially additional dispensing fees.
Specific details about Optum Rx’s new payment structure remain unclear. When questioned, a company spokesperson indicated their approach would incorporate multiple market indices and data points to determine drug reimbursement rates.
The impact of this change could be substantial, given Optum Rx’s significant market presence. The company managed $178 billion in pharmaceutical spending for more than 61 million individuals last year.
While pharmacy organizations have expressed cautious optimism about the announcement, they emphasize that the actual benefit will depend on the specific implementation details. The National Community Pharmacists Association noted that similar past announcements by PBMs have sometimes served more as public relations exercises than meaningful reforms.
The reimbursement pressures have contributed to significant industry upheaval, including hundreds of CVS store closures, Rite Aid’s bankruptcy filing, and Walgreens’ move toward privatization. These closures have exacerbated pharmacy access issues, with approximately 15.8 million Americans now living in areas without convenient access to a pharmacy.
The announcement comes amid increasing scrutiny of PBMs by lawmakers and regulators, particularly regarding their drug pricing negotiations with manufacturers. Despite various legislative proposals and Federal Trade Commission litigation, concrete PBM reform has yet to
materialize at the federal level.
Optum Rx appears to be responding to reform pressure through internal changes. The day before announcing the new reimbursement model, the company revealed plans to reduce prior authorization requirements for numerous medications. The PBM has also recently committed to passing through all manufacturer rebates to its customers.
The pharmacy industry’s response suggests that while the move could represent progress, the ultimate impact will depend on the specific details of implementation and whether it genuinely addresses the financial challenges facing pharmacies across the country.