According to The Wall Street Journal, Blue Shield of California has announced it will no longer be using CVS Health's (NYSE:CVS) Caremark, its current pharmacy-benefit manager.
CVS shares are down more than 4% premarket.
The nonprofit health plan, with about 4.8 million members, instead said it would work with a select choice of companies that perform a designated function, According to the report. One of the partners includes Amazon (NASDAQ:AMZN), which will offer at-home drug delivery.
Another partner will be entrepreneur Mark Cuban's Cost Plus Drug Company. It will deliver access to low-cost medications, including through retail pharmacies, while another company, Abarca, will process drug claims.
Blue Shield reportedly said that by working with its partners, it would strive to negotiate prices with pharmaceutical makers in a different way from the typical approach in order to eliminate rebates and hidden fees.
In an interview with The Wall Street Journal, Paul Markovich, Blue Shield's chief executive officer, said, "The current pharmacy supply chain is a forest of opacity and profit," and the new setup will be "flipping that on its head."
Blue Shield believes its plan, which it is aiming to fully launch in 2025, could save it around $500 million annually, or approximately 10% to 15% of what the insurer currently spends on drugs.