UnitedHealth will reimburse pharmacies more for brand-name drugs

UnitedHealth Group Inc.’s drug-benefits unit is starting to reimburse pharmacies more for dispensing brand-name medicines to address longstanding complaints that expensive prescriptions are losing money for drugstores.

Pharmacy benefit managers have traditionally compensated pharmacists more for cheaper generic medicines to encourage their use, said Patrick Conway, chief executive officer of UnitedHealth’s Optum Rx unit. But generic adoption has plateaued, and Conway said the old system discouraged some pharmacies from stocking newer branded drugs like diabetes and weight-loss shots.

“We want them to stock the drugs because we want people to be able to get the drugs wherever they go,” Conway said in an interview.

He said the company is adjusting pricing so that drugstores will make a small profit on whatever prescriptions they’re filling. UnitedHealth started to make these changes over the past year, and the company’s goal is to apply them to all prescriptions by 2028.

The two largest U.S. pharmacy chains, CVS Health Corp and Walgreens Boots Alliance Inc, have both said in recent years that declining reimbursements are harming their business.

Pharmacy benefit managers, which oversee drug plans for employers, unions and insurers, have faced mounting criticism in Washington over their complex arrangements with drugmakers and pharmacies. Companies have been making changes aimed at addressing scrutiny and preempting potential action from lawmakers.

UnitedHealth’s moves follow new pricing options at Express Scripts, the drug-benefits business owned by Cigna Group. CVS has also been modifying the way that its pharmacies get reimbursed.