Blue Shield of CA Launches Value-Based Pharmacy Model to Lower Drug Costs

August 17, 2023 - Blue Shield of California (Blue Shield) has launched a value-based pharmacy model to improve member access to affordable prescription drugs.

The payer has partnered with five companies to deploy the new model, which is expected to save up to $500 million in annual drug costs after the multi-year strategy is fully implemented.

“The current pharmacy system is extremely expensive, enormously complex, completely opaque, and designed to maximize the profit of participants instead of the quality, convenience, and cost-effectiveness for consumers,” Paul Markovich, president and CEO of Blue Shield of California, said in the press release.

“That is why we are working with like-minded partners to create a completely new, more transparent system that gets the right drugs to the right people at the right time at a substantially lower cost.”

Amazon Pharmacy will deliver prescription medications to Blue Shield members for free and provide status updates, upfront pricing, and 24/7 access to pharmacists. Mark Cuban Cost Plus Drug Company plans to implement a transparent and more affordable pricing model that reduces surprise drug costs at the pharmacy pick-up counter.

Through the initiative, the company Abarca will accelerate the payment of prescription drug claims and continue updating its technology platform, Darwin, to support simplified payment models. Prime Therapeutics will work with Blue Shield to negotiate savings with drug manufacturers, aiming to shift to a value-based model that aligns drug prices with member health outcomes.

Lastly, Blue Shield is working with CVS Caremark, which will offer specialty pharmacy services to members with complex conditions, including education and high-touch patient support.

The value-based initiative is part of Blue Shield’s Pharmacy Care Reimagined strategy, which helps members access medications at lower costs. Furthermore, Pharmacy Care Reimagined is part of the payer’s broader Health Reimagined strategy, intended to improve overall healthcare costs and quality.

The pharmacy supply chain can involve up to 12 companies from when a drug is made to when a member receives it. This process can lead to complex issues and high costs without adding value or offering a reason for the prices, according to the press release.

Additionally, the current pharmacy care system often rewards some stakeholders for selling more drugs at higher prices.

Blue Shield’s partnerships with the five companies aim to simplify this system and avoid unnecessary costs.

Over a third of American adults take at least three prescription medications annually. In 2021, the healthcare system spent more than $600 billion on prescription drugs, amounting to $1,500 per person per year.

As prescription drug spending grows, health plans and federal agencies have launched programs and models to address high expenditures.

For example, Capital Blue Cross adopted a coupon program offered by its pharmacy benefit manager (PBM). The FlexAccess program is a point-of-sale solution that provides members access to specialty drug coupons through any participating pharmacy.

On the public payer side, the Department of Health and Human Services (HHS) released three models in February 2023 to reduce prescription drug spending for Medicare and Medicaid beneficiaries.

The Medicare High-Value Drug List model tests standardizing the Part D benefit for high-value generic drugs and assesses how this would impact healthcare spending, patient outcomes, and medication adherence.

The Cell and Gene Therapy Access model targets Medicaid beneficiaries and allows for multi-state agreements with cell and gene therapy manufacturers using outcomes-based payment models.

The Accelerating Clinical Evidence Model focuses on drug spending for fee-for-service Medicare beneficiaries and would adjust Medicare Part B payment amounts for Accelerate Approval Program drugs.