Blue Shield seeks to change pharmacy vendor

Blue Shield of California, one of the state’s largest health insurers, said it would drop CVS Health’s Caremark unit as its main pharmacy benefit manager.

The insurer, a nonprofit, said Thursday it expects to save as much as $500 million a year by switching to a group of companies including Amazon.com and an upstart from billionaire Mark Cuban. It’s the biggest win yet for those newcomers trying to upend the existing prescription benefits system and if it works, it could provide a blueprint for other insurers and employers to follow.

The goal is to change the incentives for prescription benefits managers, distributors and pharmacies, said Paul Markovich, chief executive of Blue Shield of California.

“They make more revenue and they make more profit when we sell a higher volume of more expensive drugs,” he said in an interview. “We just need to start over in terms of thinking about this system.”

News of the high-profile experiment sent shares of dominant PBMs down sharply: CVS shares fell as much as 11%, the most intraday since October, and rival Cigna Group fell as much as 8.1%.

Blue Shield may face challenges replacing one vendor for PBM services with five, some with competing interests.

“We’re skeptical this approach is sophisticated enough and practical, yet it bears watching,” Bloomberg Intelligence analysts Jonathan Palmer and Jordan Dahan said.

The insurer is not dropping CVS as Caremark will continue to process more expensive specialty drugs, a profitable and growing market for PBMs.

Companies that provide health benefits long have bemoaned their lack of visibility into how much drug middlemen pay and charge for medicine. The insurer’s move will test whether it can assemble an alternative supply chain involving a mix of companies.

WeWork's durability questioned

WeWork last week sounded the alarm on its ability to stay in business, prompting speculation about the future of the troubled workspace-sharing company.

The New York-based company warned there was “substantial doubt” about its “ability to continue as a going concern,” which is accounting-speak for having the resources needed to operate and stay in business. WeWork pointed to increased member churn, financial losses and the company’s need for cash, among other factors, over the next year.

It isn’t the first time the future of WeWork has been uncertain. The company went public in October 2021 after a spectacular collapse during its first attempt to do so two years earlier, which led to the ouster of its CEO and co-founder, Adam Neumann. WeWork was valued at $47 billion at one point before investors started to drop off because of Neumann’s erratic behavior and exorbitant spending.

WeWork has made notable efforts to turn the company around since Neumann’s departure, with executives pointing to improvements in annual revenue, significant cuts in operating costs and other growth opportunities as workplaces emerge from the COVID-19 pandemic. Still, experts say the risk of bankruptcy is on the table — bringing in questions around implications for the already-weakening world of office real estate.

EV maker VinFast soars in debut

VinFast Auto Ltd. surged in its first day of trading as the Vietnamese electric-vehicle maker looks to raise its profile and take on established car manufacturers.

The company’s shares gained an eye-popping 255% Tuesday in New York, giving it a market value in excess of $85 billion. That’s well above U.S. auto giants such as Ford Motor Co. and General Motors

Co.

VinFast, with its domestic headquarters in Los Angeles, debuted on the Nasdaq Global Select Market under the symbol VFS after completing a merger with blankcheck company Black Spade Acquisition Co. that valued it at $23 billion. The company is backed by Vietnam’s richest man, who added tens of billions of dollars to his net worth with VinFast’s firstday gains.

The listing caps VinFast’s yearslong efforts to become a publicly traded company and puts it in the same arena as Tesla, Lucid Group and Rivian Automotive. A listed status may also pave the way for VinFast to raise more capital as it looks to expand in the U.S.