What Does Blue Shield of California’s New Unbundled Pharmacy Model Mean to Employers?

Blue Shield of California’s recent decision to unbundle its pharmacy benefit program and work with multiple vendors – including Amazon and the Mark Cuban Cost Plus Drug Company – wiped out $20 billion in market capitalization of the owners of the three largest pharmacy benefit managers within hours of the announcement.

This decision comes at a time when pharmacy costs are under intense scrutiny by federal and state regulators. Driven by significant life-altering but very expensive specialty biologic medications, weight loss drugs, and next-generation cell and gene therapies, the pharmacy component of the healthcare bill is rising quickly. Everyone, including large health plans, is trying to rein in these costs. The market is ripe for disruption, and Blue Shield’s new approach is a huge departure from the status quo.

So, what does this news mean to employers?

Employers seeking lower costs should proceed cautiously. This new model is a great opportunity to request stronger guaranteed discounts, rebates, and even trend guarantees. These types of guarantees are not generally available in traditional carve-in models, where medical and pharmacy benefits are bundled together. Pharmacy carve-out is likely necessary, and a market check is essential even if there is no intention to change PBMs. By negotiating for these guarantees, employers can ensure they are receiving the best possible pricing for their employees’ prescription medications. Additionally, employers should request the right to audit these guarantees to ensure transparency and accountability. 

To address the promise of a simpler system and improved accessibility trumpeted by Blue Shield, employers should request detailed overviews of the PBM’s new unbundled operational model.

Details should include how claims processing, retail pharmacy, specialty pharmacy, home delivery pharmacy and customer service components will work together seamlessly. Understanding how these parts connect and deliver a cohesive member experience is crucial. Employers should also ask for performance guarantees related to employee satisfaction with their pharmacy services. This will ensure employees have a positive experience and get easy access to the medications they need. 

Blue Shield of California’s newly announced pharmacy model has shaken the market and holds the potential for significant benefits, including lower costs, a simpler system, and improved accessibility.

Contracting is very complex, and the implementation of any new platform may be disruptive to employees. It is more essential than ever to work with a very capable advisor. EPIC has always been a proponent of transparency and advocacy within the pharmacy benefit for employers. Contact us to discover how our market-leading pharmacy consulting practice can partner with you to ensure the best possible program with minimum disruption for your employees.

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