Optum Rx’s new payment model favors brand names over generics

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Effective March 20, Optum Rx will increase reimbursements to pharmacies for brand-name drugs and cut them for generics. 

Optum Rx said the new pharmacy payment models are in response to price increases set by brand name drug manufacturers. 

“With this change, Optum Rx is addressing a legacy, industrywide model that was originally designed to help promote the use of affordable generics,” the company said in a news release. “Effective generic adoption is now quite strong, and increasingly, more high-cost branded drugs are entering the market, raising costs for pharmacies.”

The National Community Pharmacists Association recently reported that 99% of independent pharmacies have seen reductions in reimbursements, and many pharmacy owners are reported to be tapping into personal savings or limiting inventory to stay open. In 2023, a U.S. pharmacy closed nearly every day. 

Optum Rx said increasing reimbursements for branded drugs and lowering them for generics will help the more than 24,000 independent pharmacies the company serves. 

The new cost-based payment models became effective March 20 and will be fully implemented by 2028, the company said. In recent months, CVS Health and Cigna’s Express Scripts launched new drug pricing models. Optum Rx’s announcement comes a day after the drug benefits business, run under UnitedHealth Group, said it is removing prior authorizations for about 80 prescription medications.

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