Optum Rx is switching up the pharmacy reimbursement game.
On March 20, UnitedHealth Group-owned Optum, one of the Big 3 pharmacy benefit managers (PBMs) in the US, announced it would move to a cost-based reimbursement model to “provide pharmacies with better financial means to stock more medicines” and “alleviate drug shortages,” according to a company press release.
“Our plan is to align drug payment models for clients and pharmacies more closely to the costs that pharmacies pay for those drugs,” Angela Adler, SVP of networks and transformation at Optum, told Healthcare Brew.
How it works
PBM reimbursement has historically favored generic drugs as part of an industrywide push to make medications more available to patients. But today, drugmakers increasingly prioritize expensive brand-name drugs, and pharmacies often lose money dispensing them, according to the National Community Pharmacists Association (NCPA), a trade group that represents the roughly 19,000 independent pharmacies in the US.
So instead of favoring one type of drug over the other, Optum now plans to reimburse pharmacies on a cost-based model, which means paying them for the cost of acquiring the drug plus a dispensing fee that covers the labor it takes to stock and dispense the drugs, counsel patients, and other overhead.
Increased utilization of GLP-1s and other specialty drugs, “accelerated this need to rebalance pricing,” Adler added.
Optum plans to fully implement the model by the start of 2028, Adler said. She added that the company has been working on a cost-based model for “at least three years.”
What pharmacies say
The shift could lead to more financial predictability and a more sustainable reimbursement model for pharmacies if implemented, according to Ronna Hauser, SVP of policy and pharmacy affairs at the NCPA.
But it’s “not so clear” whether this model is actually going to be offered to pharmacies, she added. As of April 11, Hauser said she wasn’t aware of any NCPA-affiliated pharmacies receiving information from Optum on when the model would be implemented.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
“Oftentimes we see these announcements…the problem is, it’s just talk, and we don’t see action,” Hauser said. “We don’t see that these models are actually being packaged into a network offering for pharmacies to consider.”
CVS announced in December 2023 that its PBM arm, Caremark, was moving to a cost-based model called CostVantage, which company executives said at the time would be a “step toward more pricing clarity for consumers.”
But NCPA-affiliated pharmacies “haven’t seen any movement on that program,” Hauser noted, saying none have received a cost-based reimbursement contract from Caremark.
CVS didn’t respond to a request for comment about its program.
What’s needed to hold PBMs to their promises, according to Hauser, is both state and federal legislation requiring the companies to reimburse pharmacies on a cost-based model.
The reimbursement model is already mandated for state fee-for-service Medicaid programs, Hauser noted, so it wouldn’t be “too far of a leap” for the government to pass legislation on a federal level requiring PBMs to switch over. Plus, a bipartisan group of senators introduced legislation in March, called the Protecting Patients in Medicaid Act, that would require Medicaid managed care programs to use a cost-based reimbursement model.
Optum’s response
When asked about the pharmacy group’s skepticism that Optum will follow through on its plans, Adler said that uncertainty is why the company chose to work with Epic Pharmacy Network, a pharmacy services administrative organization (PSAO) that represents more than 1,000 independent pharmacies.
A PSAO is a collective bargaining group that helps its small pharmacy members negotiate rates with PBMs and provides the pharmacies with administrative support.
Optum partnered with Epic “to demonstrate real action” because the company understands there may be doubt from pharmacies, Adler said.
“We’ve made the commitment publicly, and we’re working with PSAOs,” she added. “NCPA is very tuned in with all the pharmacies. They’ll know if this is happening or not in real life.”