Optum Rx has signaled a shift to a cost-based pharmacy reimbursement model that's intended to have pharmacies pay more for brand-name drugs and less for generics.
The model will reduce variation in how pharmacies are paid.
The pharmacy benefit manager said the payment model more closely aligns with the costs pharmacies often face due to "manufacturer pricing actions."
The change will begin immediately and full implementation will be achieved by January 2028, Optum Rx said. Affected pharmacies include more than 24,000 independent community pharmacies.
Optum Rx said the move will also make medications more affordable for consumers.
WHAT'S THE IMPACT
While the industry-wide pharmacy model was designed to help promote the use of more affordable generics, Optum Rx said that with generic adoption now quite strong, more high-cost branded drugs are entering the market, raising costs for pharmacies and creating a payment imbalance.
The new reimbursement model is intended to provide pharmacies with better financial means to stock more medicines, which is expected to alleviate drug shortages and improve medication access.
To pursue this cost-based reimbursement model, Optum Rx is partnering with Epic Pharmacy Network (EPN), a Pharmacy Services Administrative Organization representing more than 1,000 independent pharmacies across the United States.
Optum Rx said it will "transition client arrangements" – such as employer and health plan customers – to ensure transparency and greater alignment to drug costs.
THE LARGER TREND
CVS Health made a similar move in 2023, when it rolled out a model called CostVantage, which the company promised would evolve the traditional reimbursement model and provide more simplicity and transparency.
Planning to launch this year, CVS CostVantage will define the drug cost and related reimbursement with contracted PBMs and payers, using a transparent formula built on the cost of the drug, a set markup and a fee that reflects the care and value of pharmacy services.
Several companies have recently introduced cost-plus drug plans. In 2023, Mark Cuban Cost Plus Drug Company said it would team with pricing technology company Expion Health on pharmacy costs, and Express Scripts announced a pharmacy network option that offers cost-plus drug pricing for employers and health plans.
ON THE RECORD
"Pharmacies and pharmacists provide important care to patients, and we recognize that increasing drug prices make it hard for them to afford needed medicines, especially independent and community pharmacies," said Optum Rx CEO Patrick Conway. "This move will help correct imbalances in how pharmacies are paid for brand and generic drugs and will ensure greater access to medicines for patients across the country."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.