unbundling drug insurance services will reduce drug pricescan unbundling drug insurance services will reduce drug prices?

Blue Shield of California hopes to overhaul the “broken prescription drug system” with a new approach by replacing CVS as its primary benefits manager (PBM) with a partnership with several companies. 

According to a recent statement, the new model is expected to save up to $500 million on medications per year. 

The goal is to lower prescription costs and provide “convenient, transparent access” to medications to its members. 

Experts predict that if successful, this move could have a massive impact on the industry and average consumers. 

How Would It Work

Blue Shield would drop most of its services from CVS Caremark, its current sole pharmacy benefits manager (PBM).  However, the PBM giant will still handle specialty drugs, which account for more than half of drug spending in the U.S.

  • Another PBM called Prime Therapeutics will negotiate prices directly with manufacturers for brand-name drugs.
  • Mark Cuban’s Cost Plus Drugs will create a transparent pricing model for generics.
  • Abarca PBM will manage prescription drug claims.
  • Amazon Pharmacy will provide upfront pricing and free, fast drug delivery.

Why Does It Matter?

According to Sandra Clarke, Blue Shield of California’s chief operating officer, “The whole point of this is that we don’t have one pharmacy benefit manager anymore,” We have partners that are best in breed at particular pieces, and we are working in the middle, if you will, making sure that our members are getting the best prices and the best experience.

If this model can be a success in California, a large and complicated state, then it could be the basis for broader applications across the country.

High Drug Costs in the US

Prescription drug prices in the U.S. average 2.56 times more than those seen in 32 other countries according to a recent study that compared international drug prices. 

In fact, close to 10% of adults and 20% of adults with disabilities do not take their prescriptions regularly because of the high cost according to the CDC.  

Drug companies have always been blamed for the high cost of drugs.  

However, in recent years PBMs have been accused by Congress and state regulators of also driving up drug prices.  Because there is very little transparency, PBMs have been criticized for operating in a “black box.”

Final Thoughts  

If this model works, other large employers and health plans will follow. The drug supply chain from manufacturer to a patient’s hands is incredibly complex.  As a result, this model may be challenging to implement.

Adam Fein, Ph.D., the chief executive of the Drug Channels Institute, told The Wall Street Journal that he thinks the companies involved “are trading the black box for a collection of competing interests. They may be biting off more than they can chew.”

To learn more about PBMs and the money flow, look at this YouTube video, PBMs Explained.  

Image by Freepik

2 thoughts on “Blue Shield, CA Aims To Lower Drug Cost With A New Pharmacy Model”
  1. Kudos to you for providing such a positive and informative space for your readers. You’re doing an excellent job!

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