Mark Cuban’s Company Shifts From Partner To ‘Consultant’ In Amazon-Blue Shield Pharmacy Venture

A big California health insurer that grabbed headlines a year ago for its effort to “rip up the playbook on drug pricing,” may launch with Mark Cuban’s Cost Plus Drugs in a different role than originally billed.

The role of Mark Cuban Cost Plus Drug Company has changed a year after Blue Shield of California a year ago announced the prescription management model that also includes Amazon, a pharmacy benefit venture owned by Blue Cross and Blue Shield plans called Prime Therapeutics, and Abarca Health, a pharmacy benefit and services firm.

A year ago, Blue Shield of California said Mark Cuban Cost Plus Drug Company will “establish a simple, transparent, and more affordable pricing model, reducing surprise drug costs at the pharmacy pick-up counter.” And in January, Blue Shield of California chief executive officer Paul Markovich said at the JP Morgan Healthcare Conference that Mark Cuban Cost Plus Drug Company and Amazon Pharmacy were “partners” that “will be reimbursed for getting members their medications efficiently and affordably.”

Now, Blue Shield of California says it expects Cuban’s Cost Plus Drug Company to be “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 pharmacy benefits supply chain redesign that Blue Shield has envisioned 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 have consulted with many experts, including Mark Cuban Cost Plus Drug Company, to ensure a thoughtful and tested approach.”

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

The new model, which begins managing Blue Shield of California’s prescription costs in January of 2025, replaces 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 shares and stocks of other companies like UnitedHealth Group and Cigna that own PBMs, plummeted.

But Blue Shield of California still believes the new model will still bring 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 for our new Pharmacy Care Reimagined model to go live for Blue Shield members on January 1, 2025,” Blue Shield of California’s statement said.

Despite the blow to established PBM company stocks after the August 17, 2023 announcement, CVS Caremark retained an important part of Blue Shield of California’s business. CVS Caremark will continue to provide specialty pharmacy services for Blue Shield “members with complex conditions, including education and high-touch patient support,” the health plan said last year.

As more expensive specialty drugs from Alzheimer treatments to new drugs for cancer hit the U.S. market, those handling prescriptions and their claims are bracing for an even larger focus on these costly medicines.

Health plans and pharmacy benefit managers that manage drug costs say specialty drugs now account for 50% or greater of the total prescription spending they manage. In some cases, employer clients are seeing specialty costs account for 60% or even greater of their total drug spending.

“We think the announcement actually highlights the value of legacy PBMs and limitations of newer models as Blue Shield is keeping the fastest growing and largest portion of its drug spend with CVS,” Lisa Gill, managing director at J.P. 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. These days, it’s specialty drugs derived from biotechnology that may only be 1% to 2% of the claims health plans process for an employer or government client but are becoming a more dominant part of what they have to administer and manage.

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

“As the largest purchaser of pharmaceuticals in the United States, we are using our size and scale to provide drug net cost guarantees through a transparent model tied to the price we pay,” CVS Health’s executive vice president David Joyner, who is also president of CVS Caremark wrote in a Fortune commentary in April. “We offer cost predictability, whereas pharmacies like Cost Plus can and do change their prices at any time. And we manage all medications, including insulin and others that require special handling. This is what our customers expect and deserve.”

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

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