Shares of CVS Health plunged 9% on Thursday after Blue Shield of California said it will drop the company's pharmacy benefit management services and instead partner with Mark Cuban's Cost Plus Drugs company and Amazon Pharmacy to save on drug costs for its nearly 5 million members.
The announcement hints at the potential for health insurers to abandon the traditional pharmacy benefit manager, or PBM, system and sent shares of other companies that offer PBM services lower.
Cigna and UnitedHealth Group dropped about 7% and 1%, respectively.
PBMs maintain lists of drugs covered by health insurance plans and negotiate drug discounts with manufacturers. But they have recently come under scrutiny from lawmakers for their role in inflating drug prices and causing health-care costs to skyrocket.
CVS Health's Caremark has been Blue Shield's PBM partner for more than 15 years.
Blue Shield will now work with five different companies to provide "convenient, transparent access to medications while lowering costs."
Blue Shield CEO Paul Markovich said the plan, which is scheduled to fully launch in 2025, could save the company up to $500 million annually.
Amazon Pharmacy will offer at-home drug delivery. Cuban's Cost Plus Drug Company will provide access to low-cost medications through retail pharmacies. Another company, Abarca Health, will process drug claims.
Blue Shield will retain CVS Caremark for its specialty pharmacy services, which provide specialized therapies and counseling to patients suffering from complex disorders.
"We look forward to providing care for Blue Shield of California's members who require complex, specialty medications — as we have for nearly two decades," said Michael DeAngelis, a spokesman for CVS Health, in a statement to CNBC.
Still, the loss of Blue Shield's PBM partnership is another blow to Caremark, which is also set to lose a contract with Centene next year.
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