On a Sept. 12 investor presentation, Ms. Lynch said Blue Shield’s plan is an unbundling, rather than a radical departure from typical PBM services.
“I think people thought the Blue Shield contract was disruptive. What I would say is, it really is just an unbundling of PBM services. As a company, we continue to offer unbundled services as well,” Ms. Lynch said.
Blue Shield of California made headlines in August when it said it would not renew its contract with CVS Caremark to manage pharmacy benefits for its 4.8 million members, opting instead for a partnership with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs as preferred pharmacy providers. CVS will continue to administer Blue Shield’s specialty drug benefits.
“One of the highest trend areas is specialty. Blue Shield is continuing to engage with us on those specialty services. That’s where the value from that business is coming from,” Ms. Lynch said.
CVS Health’s stock prices dropped following Blue Shield’s announcement, though the company said it would not affect its earnings, according to documents filed with the Securities and Exchange Commission.
During the call, Ms. Lynch questioned Blue Shield’s estimate that the new pharmacy management structure will save up $500 million annually.
“The other question I consistently get is the $500 million in savings — do I know where they’re getting that? I don’t know. We’re not earning that kind of money on that account. I think there’s some questions still out there. What’s their formulary management strategy? What’s their network contracting strategy?” Ms. Lynch told investors.
Paul Markovich, CEO of Blue Shield of California, told Becker’s in a previous interview the company has sketched out what aspects of pharmacy benefits Blue Shield will manage itself, and which will be delegated to other partners.
“Even today, we handle customer service and we set our own formulary — our pharmacy benefit manager does not,” he said. “Some of those things are going to work the same way they do today. … Everything our partners aren’t doing, we will do.”
Mr. Markovich told Becker’s he’s confident in the plan’s ability to save money.
“The reason there’s going to be savings is that we are treating pharmacy like a cost and quality center,” he said. “It’s a place that can improve the quality of our members’ health and reduce costs, as opposed to a revenue and profit center. Right now, everyone in the value chain is treating it like a revenue and profit center.”
