Mark Cuban’s company shifts from partner to ‘consultant’ in Amazon-Blue Shield Pharmacy Venture

A major health insurer in California made headlines a year ago, for its efforts to “rip up the drug pricing playbook,” it could launch with Mark Cuban’s Cost Plus Drugs in a different role than originally billed.

The role of Highlight Cuban Cost Plus Drug Company was changed a year after Blue Shield of California announced a year ago the prescription management model that also includes Amazon, a pharmacy benefits company owned by Blue Cross and Blue Shield plans called Prime Therapeutics, And Abarca Health, a pharmacy and services company.

A year ago, Blue Shield of California said Mark Cuban Cost Plus Drug Company “will establish a simple, transparent and more affordable pricing model that will reduce the unexpected cost of medications at the pharmacy pick-up counter.” And in January, the CEO of Blue Shield of California said officer Paul Markovich said at the JP Morgan Healthcare Conference that Mark Cuban Cost Plus Drug Company and Amazon Pharmacy were “partners” who “will receive compensation for getting their medications to their members efficiently and affordably.”

Now California-based Blue Shield says it expects Cuban Cost Plus Drug Company to “become part of our pharmacy network” for its members when the model launches on January 1, 2025.

“As you know, Pharmacy Care Reimagined is an innovative redesign of the pharmacy benefits supply chain that Blue Shield envisions to make it easier and more affordable for members to get their prescriptions,” Blue Shield of California said in a statement Thursday evening. “This is a huge undertaking with significant investment in research and planning. Along the way, we consulted many experts, including Mark Cuban Cost Plus Drug Company, to ensure a thoughtful and proven approach.”

Entrepreneur Mark Cuban could not be reached for comment Thursday, and Mark Cuban Cost Plus Drug Company executives declined to comment when reached Thursday.

The new model, which will begin managing Blue Shield of California prescription costs in January 2025, will replace CVS Health’s Caremark, one of the nation’s largest pharmacy benefit management (PBM) companies. Shortly after the Wall Street Journal broke its “exclusive story,” the price of CVS Health stock and shares of other companies like UnitedHealth Group and Cigna that own PBMs plummeted.

But Blue Shield of California still believes the new model will still deliver value to the health insurer and its nearly 5 million health plan members. Blue Shield is the third-largest health insurer in California, Fitch Ratings said in a report last week.

“We are on track to have our new Pharmacy Care Reimagined model go live for Blue Shield members on January 1, 2025,” the statement from Blue Shield of California said.

Despite the hit to the shares of established PBM companies after the announcement of August 17, 2023, CVS Caremark retained a significant portion of Blue Shield of California’s business. CVS Caremark will continue to provide specialty pharmacy services to Blue Shield “members with complex conditions, including education and high-quality patient support,” the health plan said last year.

As more expensive specialty drugs, from Alzheimer’s treatments to new cancer drugs, enter the U.S. market, those who handle prescriptions and claims are bracing for an even greater focus on these expensive drugs.

Health plans and pharmacy benefit managers who manage drug costs say specialty drugs now make up 50% or more of the total prescription spend they manage. In some cases, employer customers are seeing specialty costs make up 60% or even more of their total drug spend.

“We think the announcement actually highlights the value of older PBMs and the limitations of newer models, as Blue Shield keeps the fastest-growing and largest share of its drug spend with CVS,” said Lisa Gill, managing director at JP Morgan Securities, and her colleagues wrote in a report last August.

Long gone are the days when health plans and PBMs had to worry about the launch of a new cholesterol pill or prescription antidepressant that would cost $4 each and be taken by millions of Americans. Today, specialty drugs derived from biotechnology may represent only 1% to 2% of the healthcare plan claims process for an employer or government client, but they are becoming an increasingly dominant part of what they are required to administer and manage.

CVS executives have stepped up efforts to highlight the differences between what their Caremark PBM does and what Amazon Pharmacy or Cost Plus Drug Company does.

“As the largest buyer of pharmaceutical products in the United States, we use our size and scale to provide net cost guarantees for medicines through a transparent model tied to the price we pay,” said David Joyner, executive vice president of CVS Health, who is also chairman of CVS, wrote to Caremark in a Fortune commentary in April. “We offer cost predictability, while pharmacies like Cost Plus can and do change their prices at any time. And we manage all medications, including insulin and other medications that require special treatment. This is what our customers expect and deserve.â€

Reached for comment Thursday evening, CVS said employers, unions, health plans and government programs are working with CVS Caremark “precisely because we deliver for them: lower drug costs, better health outcomes and broad access to pharmacies.”

“We provide access to more than 70,000 medications to more than 90 million Americans, and more than 2 billion prescriptions annually, treating everything from simple infections to chronic, complex conditions,” CVS said.