Blue Shield of California’s Bold Move to Offer Humira for Free
In a groundbreaking initiative, Blue Shield of California is set to offer one of the world’s best-selling drugs, Humira, for free. This move aims to demonstrate that essential medications can be made accessible to Americans without the interference of middlemen, who often inflate prices and complicate the purchasing process.
The Unusual Deal
Blue Shield has struck an unconventional agreement to purchase a lower-cost version of Humira directly from a manufacturer, effectively bypassing the pharmacy benefit managers (PBMs) that typically dictate which drugs are available to millions of Americans. This direct purchasing strategy is a significant departure from the traditional model, which often sees PBMs negotiating rebates that can lead to inflated drug prices.
Humira: A Case Study in High Drug Prices
Humira, manufactured by AbbVie Inc., has long been emblematic of the issues surrounding high drug prices in the United States. Despite losing patent protection, Humira generated a staggering $14 billion in sales last year, even with the introduction of lower-cost alternatives. The drug is primarily used to treat inflammatory diseases such as rheumatoid arthritis, Crohn’s disease, and psoriasis, making its affordability crucial for many patients.
The Role of Pharmacy Benefit Managers
PBMs play a pivotal role in the pharmaceutical supply chain, often negotiating prices and determining which drugs are covered by insurance plans. However, their practices have come under scrutiny. The U.S. Federal Trade Commission (FTC) recently filed a lawsuit against the three largest PBMs, alleging that their rebate systems artificially inflate drug prices for patients. In the case of Humira, many drug plans initially favored the brand-name version and higher-priced alternatives that came with substantial rebates, further complicating the pricing landscape.
Blue Shield’s Vision for Transparency
Matt Gibbs, vice president of pharmacy transformation at Blue Shield of California, has been vocal about the need for change in the current system. “We don’t want rebates. We don’t want middlemen. We don’t want people dipping their hands in,” he stated. Blue Shield aims to present clear pricing to its members, allowing them to make informed choices about their medications. This transparency is a critical aspect of their strategy to improve access to essential drugs.
Financial Implications for Blue Shield
The financial motivations behind this initiative are significant. Blue Shield currently spends over $100 million annually on Humira, making it the most expensive drug in their portfolio. By negotiating lower prices and eliminating middleman fees, the company anticipates saving around $20 million over three years—an estimate that executives believe may be conservative.
A Competitive Pricing Strategy
Starting next year, Blue Shield will pay approximately $525 per month for Humira, a figure that is notably lower than what they currently pay after rebates. This price point is also more competitive than the offerings from the largest PBMs, which have been criticized for their pricing strategies. For instance, CVS Health’s version of Humira is priced at around $1,315 per month, while Cigna and UnitedHealth Group’s offerings are similarly high.
The Broken Market and Legislative Scrutiny
The pricing discrepancies highlight the dysfunction within the pharmaceutical market. Lawmakers have begun to take notice, with Senators Mike Braun and Elizabeth Warren urging the FTC to investigate PBMs for their practices that prioritize profits over patient affordability. The senators expressed concern that PBMs are favoring their own branded biosimilars while neglecting lower-cost alternatives that could benefit patients.
The Challenge of High Prices
Despite the claims of PBMs that they pass on rebates to clients, the reality is that many patients still face high out-of-pocket costs. The prices charged by PBMs for their biosimilars often exceed the $525 per month that Blue Shield has negotiated. For example, Cigna’s biosimilars are priced around $1,038, while UnitedHealth’s offerings start at approximately $1,177.
Innovative Solutions from Other Players
Blue Shield is not alone in its efforts to challenge the status quo. The Mark Cuban Cost Plus Drug Company has introduced a version of Humira priced at $584 for cash-paying customers, while GoodRx offers a biosimilar for $550. These initiatives aim to expose the inflated prices often perpetuated by middlemen and demonstrate that lower-cost options are viable.
A New Approach to Drug Purchasing
Blue Shield’s innovative approach involves working with Evio Pharmacy Solutions, a company owned by Blue Shield and other Blue-branded health plans. Unlike traditional PBMs, Evio operates on a flat fee basis, allowing Blue Shield to negotiate directly with drug manufacturers without the complications of rebate structures. This model has the potential to reshape how health plans manage their drug benefits.
A Shift in the Industry Landscape
By breaking away from the conventional PBM model, Blue Shield has sent shockwaves through the pharmaceutical industry. The insurer’s decision to diversify its drug benefit management among various vendors, including CVS and Amazon Pharmacy, is expected to yield significant savings—potentially up to $500 million annually. This shift not only positions Blue Shield as a leader in the movement for drug price transparency but also sets a precedent for other health plans to follow suit.
The Future of Drug Pricing
As Blue Shield of California embarks on this ambitious journey, the implications for the broader healthcare landscape are profound. By prioritizing direct contracts with manufacturers and eliminating the middlemen, Blue Shield is paving the way for a more transparent and affordable approach to prescription drug pricing. The success of this initiative could inspire other health plans to adopt similar strategies, ultimately benefiting millions of Americans in need of affordable medications.