Blue Shield of California’s Carve-Out Deals Are ‘Warning Shot’ to Big Three PBMs

Blue Shield of California will shift from a traditional PBM contract with CVS Health Corp.’s Caremark to a pharmacy benefits model that uses five different vendors to fulfill the discrete functions that Caremark previously managed all at once, the nonprofit carrier said Aug. 15. Managed care and pharmacy insiders say the move is just the latest sign that employers and regional carriers are dissatisfied with the services large PBMs provide, and they suggest that more plans could follow Blue Shield’s example if the model is successful.

According to Blue Shield of California Chief Operating Officer Sandra Clarke, when the insurer’s Caremark contract lapses at the end of this plan year, the Blues affiliate will begin agreements with five different firms to manage its various pharmacy benefit operations:

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Peter Johnson

Peter Johnson

Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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