Source: Blue Shield of California
In a strategic move aimed at reducing drug costs for its 4.8 million members, Blue Shield of California is partnering with Mark Cuban’s Cost Plus Drug Company and Amazon Pharmacy. This collaboration signifies a departure from traditional drug store chains, including CVS, which has been a health giant in the industry. By teaming up with these unconventional players, Blue Shield of California anticipates saving $500 million annually, thereby achieving a significant reduction in costs. These savings will be redirected back into the organization to benefit its members.
This decision aligns with Blue Shield of California’s goal of adopting a value-based model for pharmacy care. While CVS Caremark will continue to be utilized for specialty drugs, Cost Plus and Amazon Pharmacy will cater to the majority of prescription needs. The arrangement promises up-front pricing, free delivery, and round-the-clock access to pharmacists through online services provided by Amazon Pharmacy.
Notably, CVS’s shares experienced a 7% decline in premarket trading following the announcement.
California Blue Shield becomes the second insurer to partner with Cost Plus since its launch in January 2022. Cost Plus, which offers drugs at 15% above wholesale prices, secured its first collaboration with Capital Blue Cross last fall. Mark Cuban, co-founder of Cost Plus, acknowledges the challenges faced in contracting with health insurance plans and highlights the impact of Cost Plus’s transparent pricing on the healthcare industry as a whole.
Blue Shield of California plans to initiate the transition to Cost Plus and Amazon by introducing the program to its employees in 2024. This phased approach ensures that the online pharmacies can adequately meet the needs of Blue Shield’s members. The program is expected to be available to all members by 2025.
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