Blog Post

2026 Brings Changes to Pharmacy Reimbursement Rates
and Pressures to Pharmacy Profitability

Schedule A Demo

Introduction

Pharmacists begin 2026 faced with several regulatory and procedural changes that will affect profitability. Specifically, this includes changes to PBM reimbursement practices, price reductions on several popular medications, and payer plan reforms, to name a few. Each has the potential to seriously affect pharmacy profitability, but fallout can be mitigated by leveraging functionality offered through an efficient software management system. 

What are Pharmacy Reimbursement Rates and Why Do they Matter?

First though, it’s important to understand the pharmacy reimbursement process, and how any change can dramatically impact profitability. As the name implies, reimbursement refers to the process pharmacies must follow to be paid for the medications dispensed to patients with insurance coverage, regardless of whether coverage is offered through a private plan or a government program such as Medicare. The process though, is quite complex and involves multiple parties. The process is also highly controversial, since pharmacies are often reimbursed at rates that fail to cover the costs of medications, let alone allow a degree of profitability. 

The Journal of Managed Care-Specialty Pharmacy provides an overview of the steps involved in the reimbursement process which include: 

  • Manufacturers produce medications and set a list price. 
  • Wholesalers purchase medications from manufacturers based on agreed-upon quantities and list price discounts. 
  • Wholesalers distribute drugs to pharmacies, with contractual agreements setting the terms of the sale, including pricing. Many pharmacies opt to join group purchasing organizations (GPOs) to gain leverage in negotiating lower prices. 
  • Pharmacies set the retail price for each medication based on factors including the cost of obtaining the medication from the wholesaler, rebates or discounts received from the manufacturer or wholesaler, and the desired profit level. 
  • Pharmacies dispense drugs to patients and collect out-of-pocket payments including copayments (fixed amounts), payments that count toward the deductible of a plan, or coinsurance (calculated as a percentage.) 
  • Manufacturers may offer coupons or other types of assistance to patients at point-of-sale.  
  • Pharmacies enter into contracts with the pharmacy benefit managers (PBMs) which serve as agents for plan providers. A pharmacy may either contract directly with PBMs or, as is the case with most independent pharmacies, will use a pharmacy services administrative organization (PSAO) to represent its interests.  
  • The reimbursement rates set by PBMs are crucial to the pharmacy’s economic health. According to Drug Topics, “[t]he reimbursement rate established by a PBM determines a pharmacy’s prescription revenue and, in turn, its gross profit margin from third-party insurance.” 
  • Pharmacies submit claims to PBMs for reimbursement of drugs dispensed to patients. Claims submissions typically reflect the cost of the medication plus a dispensing fee. Reimbursements are then issued based on the contract negotiated between pharmacies and PBMs, or between PSAOs and PBMs. 

How are Reimbursement Rates Determined?

PBMs negotiate reimbursement rates through complex formulas that take into account factors including drug ingredient costs, pharmacy dispensing fees and, in theory, rebates obtained from manufacturers. PBMs also “extract volume purchase discounts” from pharmacies, explains a Department of Health and Human Services analysis, which results in reduced reimbursement rates. “Levels of prices paid by PBMs generally are the lowest or some of the lowest accepted by pharmacies for any types of customers,” the analysis noted.  

 

A PBM can also control costs through its formularies – lists of drugs eligible for reimbursement – by insisting on certain discounts for a drug to be included on the formulary. Drugs left off a formulary will not be reimbursed by an insurer, which dramatically reduces the likelihood of it being prescribed by a doctor. Thus, PBMs exert significant control over both the precise drugs available to patients, and the cost. 

 

PBMs have become the focus of much controversy, amidst claims that discounts are not passed along, that PBMs are allowed to operate with little transparency or accountability, and that PBMs have become inordinately profitable. Currently, just three PBMs – CVS Caremark, Express Scripts (Cigna), and OptumRx (UnitedHealth) – account for roughly 80% of annual prescription claims, demonstrating the outsized influence these companies have on setting pricing and reimbursement rates. 

 

Pharmacies – independent pharmacies in particular — are especially vulnerable to PBM control over drug reimbursement rates. When a pharmacy enters into a contract with a PBM, a reimbursement rate is agreed upon for brand drugs, generics and specialty pharmaceuticals. Reimbursement rates for brand and specialty drugs are usually based on a straightforward formula (average wholesale price less some percentage, plus a dispensing fee). But the reimbursement rate for generics is more complicated and is based on a fixed amount called the “maximum allowable cost “(MAC). The MAC is the maximum amount that a plan will pay for a specific drug. However, the PBM can adjust the MAC without notifying the pharmacy and is often slow making the required reimbursement rate adjustment. As a result, many pharmacies must contend with reimbursement rates that do not cover purchase prices for the affected drugs. 

What’s Changing in 2026 and How Will Reimbursement Rates be Affected?

Pharmacies will see several changes in drug pricing and plan coverage that may affect reimbursement rates. More significant reforms include: 

  • Reduced Negotiated Medicare Part D Drug Prices. Starting in 2026, prices are set to decrease on ten specific drugs dispensed to Medicare Part D beneficiaries, in accordance with provisions of the 2022 Inflation Reduction Act (IRA). Drug-specific provisions of the IRA called for negotiations between drug manufacturers and the Centers for Medicare & Medicaid Services (CMS) with the goal of reducing costs for Medicare Part D beneficiaries. The negotiations resulted in a list of 10 medications that, effective January 1, 2026, are subject to the negotiated prices, called “maximum fair prices.” The new pricing structure applies to medications dispensed during 2026.  The list of 10 affected drugs includes:  
  • Eliquis 
  • Enbrel 
  • Entresto 
  • Farxiga 
  • Fiasp and NovoLog 
  • Imbruvica 
  • Januvia 
  • Jardiance 
  • Stelara 
  • Xarelto 

An additional 15 drugs will be affected in 2027.  

In a statement, the National Community Pharmacists Association (NCPA) notes that the price reductions, which will be reflected in wholesale acquisition costs (WACs), reflect “the biggest WAC reductions in the history of the pharmaceutical industry,” amounting to as much as $50 billion.  

However, the price reductions are likely to come at quite a cost – to pharmacists. 

Analysis by Frier Levitt legal firm noted that while the purpose of the drug price negotiations is to help reduce Medicare drug spending, “pharmacies must remain vigilant,” as the program “fundamentally shifts pharmacy reimbursement dynamics, altering cash flow patterns for some of the most utilized brand drugs.” 

The analysis explains that while pharmacies typically purchase drugs for their Medicare patients “at a slight discount from the Wholesale Acquisition Cost (WAC),” they will now be reimbursed “at the lesser or the Maximum Fair Price or the current default reimbursement logic, which may create a significant financial gap.” 

The National Community Pharmacists Association (NCPA) also warned of serious consequences for pharmacies that include: 

  • Payment delays: Pharmacies will face prescription payment settlement delays of at least seven additional days for MFP drugs. This delay, NCPA notes, will exceed Medicare Part D prompt pay requirements. 
  • Cash Flow Strain: The delayed payments will result in a weekly cash flow crunch of nearly $11,000 for each pharmacy. 
  • Annual Revenue Losses: Pharmacies could forfeit an average of $43,000 in annual revenue. This amount, the analysis notes, is “roughly equivalent to a pharmacy technician’s yearly salary.” 

In January 2025, NCPA reported survey results in which “a jaw-dropping” 93.2 percent of respondents said they “may decide, or have already decided” to not stock the drugs included in the Medicare price reduction plan because “they will cause massive financial losses and potentially put them out of business.”  

  • Fall-out from Lack of PBM Reform. The United States Congress completed its work in 2025 without passing comprehensive PBM reform. As a result, pharmacies can expect a continuation of onerous PBM practices, including of course, declining reimbursement rates. For many pharmacies, declining reimbursements have had an existential effect, with NCPA reporting independent pharmacy closures at a rate of roughly one per day. Additional examples include: 
    • The New York Times found significant disparities in reimbursement rates, with pharmacists located in different states reporting reimbursements as much as $100 less than what it cost them to purchase the medication from a wholesaler. The Times research also noted that “PBMs sometimes pay their own pharmacies more than what they pay local drugstores for the same medications.” 
    • Research by the Oregon State Pharmacy Association determined that roughly 75 percent of claims examined “were insufficient to cover pharmacy labor and drug costs.” 
    • Research by the New York City Pharmacists Society found almost 90 percent of local independent pharmacies said they had “been forced to turn away patients” due to low reimbursement rates. 
    • More than half of pharmacy owners are losing money on over 60 percent of the Part D prescriptions they fill, according to NCPA. 
  • New Plans Take Effect. Patients who opted to change health plans during the 2025 Open Enrollment period will see their new coverage take effect beginning in January. Among Medicare beneficiaries, this will mean an estimated 10 million patients acclimating to a new plan.  

While pharmacists will have a role in helping patients understand their new plans, specifically regarding medication coverage, they may also see an impact to their bottom lines. This is because, as noted by Sykes & Company pharmacy financial advisors, pharmacy reimbursements fluctuate across plans. It could be, the analysis notes, that “Plan A is reimbursing the pharmacy a lot less for the same medications in another pharmacy in another plan.” 

How Do Annual Insurance Changes Impact Pharmacy Reimbursement Rates?

As the above discussion makes clear, pharmacy reimbursement rates are quite vulnerable to changes in insurance/payer practices. An apropos saying could be: “When the insurance industry sneezes, independent pharmacies catch cold.” 

While the most serious impact of reimbursement changes is to the bottom line, effects reverberate throughout the pharmacy in ways that include: 

  • Cash flow crunches as reimbursements to cover costs of Maximum Fair Price medications are delayed.  
  • Increased incidences of medications dispensed at a loss to the pharmacy, as reimbursements fail to cover purchasing costs. 
  • Increased administrative burden in submitting and managing claims for MFP medications. 
  • Challenges in aligning accounting practices with new reimbursement formulas in place for MFP medications. 
  • Staff time spent addressing patient confusion about new Medicare drug pricing, as well as questions about new plan coverage. 

How Can Pharmacies Stay Informed About Reimbursement and Insurance Changes?

As pharmacies try to stay informed about 2026 reimbursement changes, they can turn to several reputable sources for updated, accurate information and analysis. A few of those resources include: 

  • State Pharmacy Associations 
  • Industry-aligned continuing education and issue-focused webinars. This includes, for example, the CoveryMyMeds webinar mentioned previously, which featured insight and analysis by representatives from McKesson and EY Parthenon financial management company. 

How Can Pharmacy Management Software, including PrimeRx Help Navigate New Reimbursement Rules?

Pharmacies can also look to technology for guidance in understanding the implications of reimbursement changes, and to identify opportunities for improving the bottom line. This includes the PrimeRx pharmacy management system, which offers comprehensive functionality presented in a logical, highly user-friendly format. Essential reimbursement-related capabilities include: 

  • Planning and Visibility – Reimbursement Management. PrimeRx can soften the “surprise” of under-reimbursements by helping pharmacists understand how each plan contract is structured, and the terms of each payer’s reimbursement model. Although this will not affect a reimbursement rate, knowing what to expect can help a pharmacist better plan, and understand which plans are especially detrimental to the bottom line. 
  • PrimeRx planning tool. A unique “planning tool” allows pharmacies to anticipate reimbursements based on historical averages for a particular plan. The planning tool can help with budgeting and forecasting and allows visibility regarding the tremendous impact of these fees on the bottom line.  
  • Understanding patient plan usage. PrimeRx allows pharmacies to track the plans most-utilized by patients, and the volume of medications dispensed to those patients. This may present opportunities for soliciting additional patients with favorable plans. For example, a pharmacy may decide to engage with a local business that offers a healthcare plan with fair reimbursement practices. 
  • Report Generation. Pharmacies can have full visibility into financial health through customized reports that detail performance on a wide range of metrics. This can include, for example, a comparison of reimbursement rates by plan, or detailed information about accounts payable/receivable. 
  • Drug Cost Comparisons with PrimeRx MARKET. Pharmacies can help manage medication costs through the PrimeRx MARKET online platform, which enables real-time price comparisons. PrimeRx MARKET connects pharmacies with top wholesalers and suppliers and allows pharmacies to purchase required medications at the best possible price. Key PrimeRx MARKET benefits include: 
    • Direct access to dozens of drug wholesalers and suppliers. Pharmacists can easily compare prices, identify best sources for different types of drugs, and seamlessly submit orders with multiple providers.  
    • Single-source solution for all medication/inventory needs. Pharmacies can shop for a wide range of medicines including brand-name drugs, generics, and over-the-counter products, among other offerings. 
    • Fast, accurate results. Pharmacists no longer have to spend time checking with multiple suppliers to identify the best pricing for a specific drug. Instead, PrimeRx MARKET generates a comprehensive side-by-side comparison of each supplier’s pricing for a requested drug. The system generates immediate results in a user-friendly format. 
    • Seamless ordering capability. Once a preferred supplier is identified, the pharmacy can submit an order, without leaving the PrimeRx MARKET platform.  
    • Direct integration with PrimeRx. Pharmacies can access PrimeRx MARKET from within their PrimeRx workflow, meaning there is no need to jump between screens or access a separate system.  
  • Claims Processing. PrimeRx automatically generates claims which are submitted electronically to appropriate payers. The system tracks the progress of each claim, alerts the pharmacist about any that are outstanding, and flags claims that are rejected, or require additional information. 
  • Expanding Pharmacy Revenue Opportunities. Pharmacies are increasingly countering the effects of decreased reimbursements by adding non-dispensing products and services to their portfolio of offerings. PrimeRx helps manage these services with functionality that includes: 
  • OTC medicines and consumer products. Pharmacies can promote their consumer goods and OTC products by using the Local Inventory on Google solution, which can be accessed directly through PrimeRx. When consumers search for products near them, the pharmacy’s products appear, alongside the pharmacy’s name and contact information.  
  • Clinical services. Pharmacies can manage clinical services with PrimeRx capabilities that include: 
  • Immunization Reporting. The system allows direct integration with the Vaccine Registry Reporting solution which seamlessly links to Immunization Information Systems (IIS) registries. 
  • 340B Inventory Management. PrimeRx addresses 340B management challenges with functionality that includes: 
    • Compliance and regulatory support. The system offers automated compliance checks and alerts to ensure that pharmacies are in full compliance and meet program requirements. 
    • Inventory optimization. PrimeRx creates a unique 340B inventory “bucket” that allows this inventory to be managed separately from the pharmacy’s overall inventory.  
    • Auditing and Reporting. The system generates detailed reports, tracks dispensing history, and maintains records for all 340B program activities. This reduces administrative work and minimizes the risk of errors during an audit process. 
  • Medication Therapy Management. PrimeRx allows pharmacists to seamlessly create and manage MTM plans with capabilities for plan creation, medication synchronization, records management, refills, and communication, among others. 
  • eCare Plans. eCare plans have become more widespread throughout community pharmacies, as pharmacists increase the scope and volume of clinical services provided to patients. Plans can be created automatically within PrimeRx, with functionality built into the system. 
  • Workflow Optimization. The PrimeRx management system helps pharmacists save valuable time by automating key pharmacy workflows including prescription intake, dispensing, refills, inventory management, and claims processing, among others.  

Pharmacists will begin 2026 faced with challenges to profitability and efficiency. New Medicare drug pricing will reduce reimbursement rates and create myriad administrative challenges. And PBMs will continue to hover like a dark cloud. Despite these serious challenges, there is reason for optimism. Technology. Pharmacists can turn to their pharmacy management systems to not only manage these scenarios, but to help mitigate their impact on the bottom line, and ensure maximum efficiency. 

Make Sure Your Pharmacy is 2026 Ready!

Explore PrimeRx Ecosystem
Schedule a Demo