Summary:
- Shares of CVS decline by about 7 percent after Blue Shield of California decides to end its use of CVS's care mark for drug pricing and services.
- Blue Shield of California's move has significant consequences as CVS holds a 33 percent market share in the pharmacy benefits management sector.
- Amazon and Mark Cuban are among the new collaborators Blue Shield of California plans to engage with for its pharmacy benefit needs.
- The CEO of Blue Shield California, Carl Markovich, emphasizes the complexity of the current pharmacy supply chain and the expected cost-saving benefits of the new approach.
Shares of CVS are facing a decline as Blue Shield of California announces its decision to terminate the use of CVS's care mark for drug pricing and services, opting for new collaborations including Amazon and Mark Cuban.
CVS health shares have witnessed a 7 percent decrease following the news that Blue Shield of California, a healthcare plan provider for over four and a half million members, will no longer utilize CVS's care mark for pharmacy benefits. This move has significant implications for CVS, as it accounts for around 33 percent of the market share in pharmacy benefits management businesses. Despite Amazon gaining the at-home drug delivery portion of the business, their shares remain relatively stable, whereas CVS's response has been unfavorable. The decision by Blue Shield of California marks a notable shift in the industry landscape.
The CEO of Blue Shield California, Carl Markovich, highlighted the complex and profit-driven nature of the current pharmacy supply chain. The transition to the new approach is expected to save Blue Shield $500 million annually by 2025, raising questions about potential similar shifts in the industry.