Blue Shield of California dumped its PBM and split pharmacy five ways to save $500M/year
In 2023 the insurer dropped CVS Caremark and split pharmacy across Amazon Pharmacy, Mark Cuban Cost Plus and others — saving $500M a year, per the company.
What was changed
In 2023, Blue Shield of California — one of the largest plans in the state, covering nearly six million members on more than $25 billion in annual revenue — announced it would drop CVS Caremark, one of the country's largest pharmacy benefit managers, as its pharmacy manager. Instead of replacing one PBM with another, it broke pharmacy services up between five companies, including Amazon Pharmacy and Mark Cuban Cost Plus Drug Company.
The arrangement, available to clients for 2025, will save $500 million annually according to the company. Healthcare Dive frames the move against widespread discontent with PBMs — the middlemen of the pharmaceutical supply chain, frequently blamed for rising US drug costs through complex 'black box' contracts that insurers and employers say leave them in the dark.
Blue Shield pushed further than most: in October 2024 it negotiated directly with a subsidiary of Germany's Fresenius for a biosimilar of Humira, AbbVie's blockbuster inflammatory-disease drug, sidestepping PBMs for expensive brand-name medications.
The pharmacy strategy became a platform for a larger corporate transformation: on 1 January 2025 the insurer moved under a new parent company, Ascendiun, launched a health services business called Stellarus to sell its pharmacy and technology offerings to other insurers, and named Lois Quam its first female CEO in 86 years. A spokesperson declined to share financial details of Ascendiun, and Stellarus initially focuses on internal programmes with no timeline for external sales.
Why it worked
It is a rare case of a major payer firing a top-three PBM outright rather than re-tendering — an unbundling of a role most insurers still treat as indivisible.
The gain is quantified and unusual in scale for a pharmacy move: $500 million a year, per the company, from splitting the work across five specialist firms.
The design anticipates the market's direction: buying direct from cost-plus and e-pharmacy players pre-figures the industry-wide revolt against PBM economics.
The follow-through is structural, not cosmetic — the capability became a new health services business (Stellarus) under a new parent company a year later.
What can be applied
When a middleman layer stops adding value, the boldest move is not renegotiation but unbundling: splitting one intermediary's job across specialists lets an insurer buy direct and keep the margin.
Aftermath
The five-way pharmacy arrangement went live for clients in 2025 with the company claiming $500 million in annual savings. Blue Shield restructured into the Ascendiun parent company on 1 January 2025, launched Stellarus, and named Lois Quam CEO; the direct-to-drugmaker approach continued with the Fresenius Humira biosimilar deal in October 2024.