I commend Blue Shield of California for undertaking a noble experiment to unbundle the PBM business model. But let’s curb our enthusiasm over any purported “disruption.” The model is intriguing, but less novel than advertised—and retains an unexpected reliance on the largest pharmacy benefit managers (PBMs).

Blue Shield of California’s self-congratulatory press announcement oh-so-modestly claims: “The nonprofit health plan is transforming how medications are purchased and supplied.”

In reality, Blue Shield will be acting as the general contractor for a subset of pharmacy benefit management services. From my perspective, it has always been true that the various functions of pharmacy benefit management can be performed by different entities: an employer, a health plan, the government, an independent PBM company, a pharmacy, and more

Amazon Pharmacy will deliver nonspecialty brand and generic prescriptions by mail, and provide “24/7 access to pharmacists.” So, everyone’s favorite “disrupter” will be no more than an in-network mail pharmacy. Unknown: Will beneficiaries be able to access Amazon Prime subscription pricing, i.e., the GoodRx-like option that relies on Cigna’s Express Scripts business via the PBM’s wholly owned Inside Rx business? If they can’t access the Prime/Inside Rx prices within their benefit, will Amazon present these prices to the patient anyway?
Mark Cuban Cost Plus Drug Company (MCCPDC) will provide pricing “at the pharmacy pick-up counter.” It sounds like MCCPDC’s role will be to establish retail prescription prices via its Team Cuban savings card. However, the card is only accepted at a few thousand independent pharmacies plus Kroger’s nearly 2,300 pharmacies. Note that MCCPDC currently provides pricing for a subset of generics and a handful of brand-name medications. Presumably, MCCPDC has also agreed not to compete with Amazon’s mail pharmacy, the Amazon Prime retail discount card, or Amazon’s RxPass generic program. I guess everyone is hoping that beneficiaries won’t use the Internet t

Does Blue Shield know that specialty pharmacy dispensing is a disproportionate share of the large PBMs’ total gross profits, due partly to such non-transparent revenue sources as 340B contract pharmacy participation, copay maximizers, and manufacturer fees? CVS Health is already the largest dispenser of specialty drugs. Who will control prescription pricing of specialty drugs? What happens when a beneficiary comparison shops for a specialty generic at Amazon Pharmacy or Mark Cuban’s mail pharmacy?

The press release claims that the new approach will “simplify the system and cut unnecessary costs.” For now, I’m skeptical that Blue Shield can efficiently corral these subcontractors while maintaining an attractive beneficiary experience with lower total expenses. It’s unclear if the headline “$500 million in medication savings” figure counts the new internal administration costs to coordinate everything and provide the additional services that I note above.

Why not work with one of the many smaller, more transparent PBMs that would surely welcome the business opportunity? Possible partners include Capital Rx, Navitus, WellDyne, and more.