Optum Rx’s Cost-Based Pharmacy Payments Signal a Major Shift in Drug Reimbursement
Optum Rx’s full transition from community pharmacies to a cost-based reimbursement model marks a significant shift in how prescription drugs are paid for, aiming to stabilize pharmacy finances amid mounting industry pressures.
All community pharmacies in Optum Rx’s network have now moved to cost-based contracts, the pharmacy benefit manager (PBM) announced, as it seeks to reduce wide variation in reimbursement rates. The model was first launched in March 2025 across roughly 1400 pharmacies and has since expanded through agreements with 3 additional pharmacy services administration organizations (PSAOs) representing more than 17 000 community pharmacies. Optum Rx is owned by UnitedHealth.
Under cost-based reimbursement, pharmacies are typically paid the drug’s acquisition cost plus a defined markup and, in some cases, a dispensing fee. Optum Rx plans to migrate all pharmacy partners to the new approach by January 2028, including those owned by large retail chains and grocers. According to the company, the change is expected to increase payments for brand-name drugs while reducing reimbursement for generics.
Traditionally, pharmacies have been reimbursed through complex formulas that often force them to offset losses on some drugs with higher margins on others. That balancing act has grown more difficult as high-priced branded medications dominate the market, leaving many pharmacies reimbursed below their actual costs. In response to growing dissatisfaction from pharmacies, PBMs across the industry have begun experimenting with cost-based models.
Optum Rx says early feedback from participating pharmacies has been positive, though details of the agreements remain confidential and can vary by PSAO. Mary Jo Jones, Optum Rx’s vice president of network contracting, said, “We’ve worked with each PSAO to negotiate what works and what is in the interest of their pharmacies. It can look a little different PSAO to PSAO.”
The stakes are substantial. Optum Rx managed $178 billion in pharmaceutical spending for more than 61 million people in 2024, giving any reimbursement change broad implications for the US pharmacy landscape. The company argues that more predictable payments will allow pharmacies to stock a wider range of medications, potentially reducing drug shortages and dispensing delays.
Still, uncertainty remains over whether the model will boost overall pharmacy revenue or simply smooth cash flow. Reimbursement pressures have already reshaped the sector, contributing to widespread store closures, bankruptcies, and pharmacy deserts nationwide.
Optum Rx’s move follows similar steps by CVS Health, which announced a cost-based model in 2023, and Express Scripts, owned by Cigna. Together, these shifts suggest PBMs are recalibrating their business models amid regulatory scrutiny, client demands for transparency, and rising competition from low-cost pharmacy entrants.
Reference
Parduhn RP. Optum Rx says 100% of network community pharmacies in cost-based contracts. Healthcare Dive. Published online December 18, 2025. Accessed January 16, 2026. https://www.healthcaredive.com/news/optum-rx-all-community-pharmacies-cost-based/808233/
