Blue Shield of California expects to save $500 million a year on prescription drugs by spreading its pharmacy benefit management operations among five companies and significantly scaling back its relationship with CVS Caremark, the nonprofit health insurer announced Thursday.
Amazon Pharmacy will handle medication delivery, the Mark Cuban Cost Plus Drug Co. will create a pricing model, Blue Cross and Blue Shield-affiliated PBM Prime Therapeutics will develop a valued-based care approach to negotiating discounts with pharmaceutical manufacturers, technology company Abarca will process claims and the CVS Health subsidiary—which had been Blue Shield of California’s PBM—will manage specialty medicines for policyholders with complex medical needs, according to the insurer.
“We are working with like-minded partners to create a completely new, more transparent system that gets the right drugs to the right people at the right time at a substantially lower cost,” Blue Shield of California President and CEO Paul Markovich said in a news release. “The current pharmacy system is extremely expensive, enormously complex, completely opaque and designed to maximize the profit of participants instead of the quality, convenience and cost-effectiveness for consumers.”
Blue Shield of California and CVS Health did not immediately respond to interview requests. The Wall Street Journal first reported on Blue Shield of California’s new pharmacy benefit management structure on Thursday.
Blue Shield of California suffered a $910 million net loss last year, more than three times its loses in 2021, on revenue growth of 2.4% to $23.9 billion, the company reported in May.
Blues carriers recently have been shaking up their prescription services. Thirty-four Blue Cross and Blue Shield companies founded Synergie Medication Collective this year to revamp the physician-administered drug supply chain. At least eight other Blues carriers have partnered with Amazon Pharmacy for prescription delivery services and Capital Blue Cross last year became the first insurer to ink a PBM contract with the Mark Cuban Cost Plus Drug Co.
CVS Health shares opened at $68.30 on the New York Stock Exchange on Thursday, down 6.1% from Wednesday’s close. CVS Caremark lost Centene’s PBM contract to Cigna subsidiary Express Scripts last year.
Share prices for Cigna and UnitedHealth Group, owner of the PBM OptumRx, also fell Thursday. UnitedHealth Group opened at $495.48, down 1.6%, and Cigna opened at $269.97, 6.6% lower.
