Julia Rendleman
Cigna Group (NYSE:CI), which owns pharmacy benefit manager (“PBM”) Express Scripts, is off ~7% Thursday morning as it is apparently feeling the heat from Blue Shield of California’s decision to drop CVS Health’s Caremark (NYSE:CVS) as its PBM.
Earlier Thursday, Blue Shield of California said in 2025, it would use several partners to provide drug services to its members instead of Caremark. The insurer has 3.8M members.
The fear is that other heath insurers could follow Blue Shield’s lead and drop or scale back use of their PBMs as well.
Caremark is the biggest player in the PBM market with a 33% share as of 2022, according to Drug Channels. In second is Cigna (CI), which also runs PBM Evernorth, at 24%.
UnitedHealth’s (UNH) OptumRx has a 22% share. However, that stock is only down ~1%.
Evercore ISI noted that CVS Caremark (CVS) will still be responsible for providing speciality pharmacy services for Blue Shield of California, which is ~50% of member drug spend. The firm sees a $30M-$50M impact to CVS (CVS) in 2025, or $0.02-$0.06 EPS.
JP Morgan also sees a minimal impact, with a -$0.06 EPS impact to CVS (CVS) in 2025.
UBS added that the development will likely have less of an impact on UnitedHealth (UNH) due to their diversification, and doesn’t see any real risk to Elevance Health (ELV), Humana (HUM) or Centene (CNC).