Rising prescription costs have long been a point of contention, with employers and individuals alike seeking answers. As it turns out, insurance giants are on the same quest. A recent monumental shift by Blue Shield of California could signal a change in how the game is played.
A $500 Million Decision
In a surprising turn, Blue Shield of California made the choice to sever ties with CVS as its Pharmacy Benefit Manager (PBM). The aim? A significant reduction in prescription costs, with an ambitious target of $500 million annually.
Their new initiative, “Pharmacy Care Reimagined,” signifies a step towards decentralized control over drug pricing and distribution. Partnering with multiple stakeholders—including Amazon Pharmacy, Abarca, Mark Cuban Cost Plus Drug Company, Prime Therapeutics, and even CVS Caremark—Blue Shield aims to redesign how prescription drugs are administered, delivered, and navigated.
According to Alison Lum, VP of Pharmacy Services at Blue Shield, this move is about more than just cost-saving. It’s about creating a system that offers “safe, equitable access to sustainably affordable prescription drugs.”
Breaking the Mold
By dividing the roles traditionally filled by a singular PBM among several companies, Blue Shield hopes to bring more clarity and oversight into the pharmacy care sector. This endeavor is fueled by the overarching belief that the current pharmacy system is excessively complex, lacking transparency, and spiraling in costs. Lum emphasizes the importance of the human element, stating, “there is a human, a patient, a family member, a friend behind every prescription.”
Yet, the issue with PBMs isn’t unknown. Chris Blackley, CEO of Prescryptive, sheds light on the flawed dynamics of the PBM world. Often, PBMs might prioritize drugs based on lucrative kickbacks or rebates from manufacturers. In fact, a study from the IQVIA Institute for Human Data Science unveiled that in 2019, PBM rebates inflated medication prices by 30 cents on the dollar.
Blackley applauds Blue Shield’s initiative and sees it as a sign of things to come for many insurance companies. However, certain carriers like Aetna with CVS Caremark, Cigna with Express Scripts, and UnitedHealth with OptumRx have integrated ties with big PBMs, controlling a colossal 80% of the prescription drug market. For them, the dynamics are different.
The Ripple Effect
Blue Shield’s choice might have deeper implications for the healthcare industry. Blackley anticipates other carriers will reevaluate their ties with significant PBMs to potentially reduce costs and avoid inadvertently bolstering the profits of rival insurers. The hope is that a significant chunk of the savings will ultimately benefit employers and employees.
The significance of Blue Shield’s decision shouldn’t be underestimated. As Blackley notes, this move signals a glaring issue in the current setup. For any substantial savings to trickle down to employers or patients, a more transparent and accountable system is essential.
Alison Lum echoes this sentiment, viewing Blue Shield’s strategy as a part of a larger battle to reshape the healthcare system. While it’s too early to gauge the impact of this decision on the broader industry, the message from Blue Shield of California is crystal clear—they’re advocating for a more transparent, equitable, and affordable pharmacy care system for all.
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