Blue Shield of California drops CVS Caremark, collaborates with Amazon Pharmacy, Mark Cuban Cost Plus Drug Company

Blue Shield of California is unveiling a new pharmacy care model that has it dropping CVS Caremark and partnering with Amazon Pharmacy and Mark Cuban Cost Plus Drug Company and several other companies, in a move that it says will save up to $500 million in annual drug costs.

Amazon Pharmacy will provide fast and free delivery of prescription medications, complete with status updates, as well as upfront pricing and 24/7 access to pharmacists, while Mark Cuban Cost Plus Drug Company will establish a simple, transparent and more affordable pricing model, reducing surprise drug costs at the pharmacy pick-up counter, Blue Shield of California said.

Additionally, Blue Shield of California announced its collaboration with Abarca, who "will pay prescription drug claims quickly and accurately while continuing to evolve its technology platform, Darwin, to support new, simplified payment models. Prime Therapeutics will work with Blue Shield to negotiate savings with drug manufacturers to move toward a value-based model that aligns drug prices to patient efficacy and health outcomes."

CVS Caremark will continue to provide specialty pharmacy services for members with complex conditions, including education and high-touch patient support, Blue Shield of California said.

[Read more: Amazon Pharmacy offers savings on insulin with automatic coupons]

“Today’s announcement is a major milestone in Blue Shield’s Pharmacy Care Reimagined initiative, which will help provide its members with convenient, transparent access to medications while lowering costs. Once Blue Shield’s multi-year strategy is fully implemented, the health plan expects to save up to $500 million in annual drug costs,” Blue Shield of California said.

Pointing out that most American adults take at least one prescription drug annually, with more than a third of adults taking at least three medications per year, Blue Shield of California said, “Already a significant cost, total prescription drug spend in the United States is consistently rising. In 2021, the American healthcare system spent more than $600 billion on prescription drugs—about $1,500 per person, per year.”

“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,” said Paul Markovich, president and CEO of Blue Shield of California. “That is why 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."

“In today’s current pharmacy supply chain, there can be up to a dozen companies involved in the process from when a drug is made to when a member receives it. Some can add complexity and cost without adding value or providing transparency into the rationale for their pricing. To simplify the system and cut unnecessary costs, Blue Shield has selected five companies with like-minded philosophical and technology standards to build a new, innovative model following regulatory approval. Together, Blue Shield will offer an integrated, coordinated, and holistic pharmacy experience to its members," the company said.

[Read more: Good Neighbor Pharmacy Network’s ThoughtSpot 2023 celebrates independent community pharmacy]

“Amazon Pharmacy is thrilled to join Blue Shield of California in their effort to help members get the medications they need, when they need them, at a price they can afford,” said John Love, vice president of Amazon Pharmacy. “With the help of Amazon’s upfront pricing, on-time delivery, and round-the-clock access to clinical care, we can provide a customer-centric pharmacy experience that supports better health outcomes.”

"Our company was built on a commitment to deliver transparent and affordable prescription drugs to everyone, and we are excited to collaborate with Blue Shield of California to change this part of the healthcare system in such an impactful and meaningful way,” said Alex Oshmyansky, founder and CEO of Mark Cuban Cost Plus Drug Company. “We hope others will follow in the effort to fix this convoluted and inefficient prescription drug supply chain.”

CVS Health provided a statement to Drug Store News, which said, "Based on nearly 20 years of success, we have retained the specialty business for Blue Shield of California. Specialty pharmacy spend now represents over 50% of pharmacy benefit spend in the marketplace. Fragmentation in the healthcare industry is one of the primary reasons health care remains too complex and expensive. We remain confident in the value we provide our customers and that our integrated solutions will continue to resonate in the marketplace. Customers choose CVS Caremark because of our ability to seamlessly administer complex pharmacy and specialty pharmacy benefits to their members with high levels of customer service and satisfaction. BSC is a unique health plan with a long history of unbundled pharmacy services. This is not a new concept. In fact, they only recently rebundled their pharmacy services in 2021.We have won several large BCBS plans on an integrated basis within the last two years and are confident in our ability to serve these large, sophisticated plans. BSC’s decision will have no impact to our 2023 guidance and an immaterial impact on our longer-term outlook."

CVS Health also provided DSN with the following comment from Lisa Gill, JP Morgan: "We believe Blue Shield’s decision to keep the most critical piece of the business with CVS demonstrates the value legacy PBMs bring to the table. We think the decision to carve out so many different offerings carries potential execution risk that could result in a less coordinated offering for patients."

Additionally, CVS Health provided a comment from Steve Valiquette (Barclays): "As the contract is more mid-sized and the company is maintaining the specialty pharmacy component, the ultimate financial impact is fairly immaterial for CVS. As we estimate the EPS impact is largely immaterial, we leave our CVS model unchanged around this specific contract change."