The shift away from Pharmacy Benefit Managers (PBMs) has moved again. Following Kroger’s move to Mark Cuban’s Cost Plus Drugs, Blue Shield of California has done the same.
The insurance carrier said it was dropping CVS’ PBM services and moving that business to Cost Plus and Amazon Pharmacy to give its 5 million members savings they may not have gotten through CVS.
“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."
CVS still holds on to a piece of Blue Shield’s action – specialty pharmacy services for members with complex conditions, including education and high-touch patient support -- and recently established the Cost Saver program in an effort to offer consumers lower prescription drug costs.
Will this trend continue?
Not that two major PBM changes qualify as a trend, but the fact that CVS processes 33% of all prescription claims handled by PBMs is a major piece of the drug business and could suggest PBMs' vulnerability. And if there is a snowball effect and it does continue, there are lots of things that can make the consumer very happy in this regard.
“Blue Shield of California's decision to work with Amazon and Mark Cuban's Drug Company might be the most important action we've seen so far in the PBM reform movement,” Monique M. Whitney, executive director, Pharmacists United for Truth and Transparency, told ConsumerAffairs.
“All 50 states have passed one or more PBM regulation laws and there are currently 40 PBM bills under consideration in Congress, but until the market is willing to try something different, nothing much will change. We believe Blue Shield is making the right decision for its customers, and it appears Wall Street thinks so too if the dropped share value is any indication.”
This could take a while
According to DrugChannels, about 80% of all prescription claims were processed by three PBMs. In addition to CVS/Caremark, there’s the Express Scripts business of Cigna (24%) and the OptumRx business of UnitedHealth Group (22%).
But the key turning point rests with whether the businesses using these PBMs will stick with them or shift like Blue Cross of California and Kroger have. If they do, it will be a slow burn.
For example, Express Scripts will begin a five-year agreement to manage pharmacy benefits for more than 20 million Centene beneficiaries in 2024, valued at as much as $40 billion in total gross pharmacy spend and more than 550 million prescriptions.
“Despite the ever-growing political rhetoric, the largest plan sponsor clients of the Big Three PBMs are not advocating for massive change in their PBM relationships,” Adam J. Fein, CEO of Drug Channels Institute, writes.
“They have also not been demanding that Congress protect them from their PBM vendors. Employers seem reluctant to disrupt systems that mostly work, even if those systems are partially uneconomic or somewhat inefficient.”