CVS Falls on Report of Blue Shield Dropping Caremark

Blue Shield of California, a prominent nonprofit health plan boasting approximately 4.8 million members, has unveiled its plans to overhaul the convoluted drug payment system currently utilized by Americans, according to a report in the WSJ.

In a strategic move to improve efficiency and transparency, Blue Shield is partnering with industry giants Amazon.com (AMZN:US) and entrepreneur Mark Cuban to pioneer a more streamlined approach to drug payment processes.

The health insurer's decision will see it drop CVS Health's (CVS:US) pharmacy-benefit manager, CVS Caremark. Under the restructured model, Blue Shield will collaborate with a select group of specialized companies, each assigned a distinct role. 

CVS Health shares fell nearly 8% on the news.

Amazon will take charge of seamless at-home drug delivery, enhancing convenience for patients. Meanwhile, Mark Cuban's Cost Plus Drug Company will facilitate access to cost-effective medications through retail pharmacies. 

Another key player, Abarca, will handle the processing of drug claims, contributing to a more efficient administrative process.

While CVS will no longer oversee the overall administration of drug benefits, it will continue to manage specialty drugs—typically complex and high-cost medications.

In a statement, CVS Health said, “We look forward to providing care for Blue Shield of California’s members who require complex, specialty medications—as we have for nearly two decades.”

Today’s stock reaction will be of interest to Rep. Michael McCaul, who was actively trading CVS shares in May.