Blue Shield of California is making a significant change to its partnership with CVS Health’s pharmacy benefit management (PBM) service as part of an effort to reduce prescription drug prices. The company plans to drop most of its services from CVS Caremark and instead form partnerships with other companies, including entrepreneur Mark Cuban’s Cost Plus Drugs and e-commerce giant Amazon Pharmacy, to purchase and deliver medications.
This move by Blue Shield comes at a time when PBMs are under scrutiny from federal regulators and Congress amid concerns that they may be driving up drug prices. By adopting a new model that aims to save up to $500 million annually in drug costs, Blue Shield hopes to lead the way in providing more transparency and lower costs for its nearly 5 million members.
The decision by Blue Shield to partner with Amazon Pharmacy and Cost Plus Drugs is expected to have a significant impact on the PBM industry. If successful in achieving the projected savings, it may encourage other insurers and employers to follow suit or put pressure on PBMs to modify their practices.
Under the new arrangement, Amazon Pharmacy will play a crucial role in delivering prescription medications, while Cost Plus Drugs, led by Mark Cuban, will establish a more affordable pricing model. Abarca will handle prescription drug claims, Prime Therapeutics will assist in negotiating prices with drug manufacturers, and CVS Caremark will continue to provide specialty pharmacy services.
Despite this ambitious move by Blue Shield, some experts are concerned that the company may struggle to match the discounts negotiated by traditional PBMs. The announcement has already had an impact on the stock prices of various PBM companies, causing them to dip. However, CVS maintains that Blue Shield’s decision will not have any negative impact on its financial guidance for 2023.
As healthcare costs continue to rise, Blue Shield’s initiative to lower prescription drug prices could potentially benefit millions of members. It remains to be seen whether other insurers and employers will follow their lead, but this bold step could pave the way for a shift in the industry and potentially put pressure on PBMs to reevaluate their practices.
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