(Reuters) -Blue Shield of California plans to drop CVS Health as its pharmacy benefit manager and work with Amazon and others to cut drug costs for its members in a first-of-its-kind move by a major insurer to replace companies that negotiate drug prices.
Pharmacy benefit managers, which maintain lists of drugs covered by health insurance plans and negotiate prices with manufacturers, have recently come under scrutiny from lawmakers for their role in rising healthcare costs.
The news, first reported by the Wall Street Journal, sent shares of CVS down 5%, while rivals Cigna Group and UnitedHealth Group, which also have pharmacy benefit management units, fell up to 2% in premarket trading.
Non-profit health plan provider Blue Shield, which has 4.8 million members, said it will work with partners including Amazon.com and Mark Cuban’s Cost Plus Drug Company to provide at-home delivery and access to low-cost medications.
Privately held Abarca will pay prescription drug claims, while Prime Therapeutics will work with Blue Shield to negotiate savings with drugmakers, the company said.
Blue Shield will also work with CVS Caremark for specialty pharmacy services.
The loss of Blue Shield marks another blow to Caremark, which is also set to lose the contract to manage Centene’s $40 billion annual pharmacy needs from next year.
(Reporting by Manas Mishra, Mariam Sunny and Bhanvi Satija in Bengaluru; Editing by Shweta Agarwal and Pooja Desai)
