A woman walks past a CVS Pharmacy in Washington, DC, on November 2, 2022.
Brendan Smialowski | AFP | Getty Images
Shares of CVS Health plunged 9% on Thursday after Blue Shield of California announced its decision to discontinue its pharmacy benefit management (PBM) services provided by CVS and instead partner with Mark Cuban’s Cost Plus Drugs company and Amazon Pharmacy, aiming to reduce drug costs for its nearly 5 million members.
This move signifies a potential shift in the healthcare industry, with health insurers considering alternative partnerships for managing pharmacy benefits, causing a decline in the stock prices of other companies offering PBM services.
Cigna and UnitedHealth Group also experienced a decline of about 7% and 1%, respectively, following the news.
PBMs, responsible for maintaining lists of covered drugs and negotiating discounts with manufacturers, have faced criticism from lawmakers for their contribution to inflated drug prices and increased healthcare expenses.
CVS Health’s Caremark has been Blue Shield’s PBM partner for over 15 years, but Blue Shield has now decided to collaborate with five different companies to ensure “convenient, transparent access to medications while lowering costs.”
Blue Shield’s CEO, Paul Markovich, anticipates saving up to $500 million annually with the new partnership, scheduled to be fully operational by 2025.
Under the new arrangement, Amazon Pharmacy will provide at-home drug delivery, while Cuban’s Cost Plus Drug Company will offer access to affordable medications through retail pharmacies. Abarca Health will handle the processing of drug claims.
Despite this change, CVS Caremark will continue to provide specialty pharmacy services to Blue Shield, catering to patients with complex disorders and specialized therapy needs.
“We remain committed to serving Blue Shield of California’s members who require complex, specialty medications, as we have done for nearly two decades,” stated Michael DeAngelis, a spokesman for CVS Health.
However, the loss of Blue Shield’s PBM partnership adds to the challenges faced by Caremark, as it is also expected to lose a contract with Centene next year.
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