A major health insurer says it will jettison the complicated system that Americans use to pay for drugs, and create something that aims to be better, with partners including Amazon.com AMZN 0.07%increase; green up pointing triangle and the entrepreneur Mark Cuban.

Blue Shield of California said it is dropping CVS Health’s CVS 0.19%increase; green up pointing triangle Caremark, the pharmacy-benefit manager it currently uses, which negotiates drug prices and wraps in other services such as a mail-order pharmacy.

Instead, Blue Shield, a nonprofit health plan with about 4.8 million members, will work with a selection of companies that each perform a designated function. Amazon will offer at-home drug delivery. Cuban said Mark Cuban Cost Plus Drug Company will provide access to low-cost medications, including through retail pharmacies. Another company, Abarca, will process drug claims

Blue Shield said that, working with its partners, it aims to negotiate prices with pharmaceutical makers in a way that is different from the typical approach—with a simple net price structure that is supposed to eliminate rebates and hidden fees

“The current pharmacy supply chain is a forest of opacity and profit,” said Paul Markovich, Blue Shield’s chief executive officer, in an interview with The Wall Street Journal. “It is overwhelmingly complex, it is designed to maximize the earnings of the participants.” His company’s new setup, he said, will be “flipping that on its head.”

After Blue Shield’s announcement, first reported in The Wall Street Journal, shares of CVS dropped more than 8%. Shares of some CVS competitors also fell. In a statement and a filing with the Securities and Exchange Commission, CVS said Blue Shield’s decision won’t affect its 2023 earnings guidance and will have an “immaterial impact on our longer-term outlook.”

Blue Shield said its plan, which it hopes to fully launch in 2025 after a limited rollout next year, could save the company about $500 million annually, or about 10% to 15% of what the insurer currently spends on drugs

“They are trading the black box for a collection of competing interests,” said Adam Fein, chief executive of the Drug Channels Institute, which provides research on the drug-supply chain. “They may be biting off more than they can chew.”

Still, Blue Shield’s new setup will rely on incumbent players for some important services. While CVS Caremark CVS 0.19%increase; green up pointing triangle will no longer oversee the overall administration of drug benefits, CVS will still be handling specialty drugs, typically the most complicated and expensive medications