Blue Shield of California to trim its partnership with CVS Health

Blue Shield of California plans on trimming its partnership with CVS Health Corp (NYSE: CVS) to cut costs. Shares of the healthcare company are down 8.0% on Thursday.

Blue Shield to switch to Amazon and Cost Plus Drugs

Blue Shield has been working with Caremark – the pharmacy benefit management services of CVS Health for more than 15 years.

Moving forward, though, it will switch to Amazon Pharmacy for home delivery and Mark Cuban’s Cost Plus Drug Company for low-cost medications.

Blue Shield has also partnered with Abarca health to process drug claims, as per the press release. Its CEO Paul Markovich said today:

I expect – when this ramps up completely – we’re going to be saving $500 million a year. It’s a very significant reduction in cost that we, ultimately, will be putting back into our premiums.

CVS will continue to provide specialty pharmacy services

Blue Shield is not entirely cutting ties with CVS Health, though. It will continue to use its specialty pharmacy services for patients with complex disorders. According to a spokesperson of the retail pharmacy chain:

We look forward to providing care for Blue Shield of California’s members who require complex, specialty medications – as we have for nearly two decades.

The news arrives shortly after CVS said it no longer saw earnings growth next year (read more).

Blue Shield of California will start to switch to Amazon and Cost Plus in 2024. Its planned transition is a material blow to Caremark that will lose contract next with Centene as well. Shares of other PBM companies like Cigna and UnitedHealth are also in the red on Thursday.