Healthcare company, CVS Health (NYSE: CVS) plunged in trading on Thursday following a Wall Street Journal report that its pharmacy benefit manager, Caremark, could be dropped. The report stated that the major health insurer, Blue Shield of California would stop working with Caremark. Caremark negotiates drug prices and also provides other services, such as a mail-order pharmacy.
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Instead, Blue Shield, a nonprofit health plan with nearly 5 million members, will work with a host of companies as partners. These include Amazon’s (AMZN) home drug delivery service, retail pharmacies, and the Cost Plus Drug Co., which is backed by entrepreneur Mark Cuban, through which it will provide access to low-cost medications. Meanwhile, Blue Shield’s drug claims will be processed by another company, Abarca.
Blue Shield told WSJ that by doing this, it aims to have “a simple net price structure that is supposed to eliminate rebates and hidden fees.”
Analysts are bullish about CVS stock with a Strong Buy consensus rating based on 12 Buys and two Holds.