Blue Shield decided to pull coverage of Avastin after an FDA panel found that the drug was not effective enough against breast cancer to risk its potentially dangerous side effects.
"Blue Shield's decision follows an FDA advisory panel's unanimous determination in June that Avastin is ineffective and unsafe for advanced breast cancer," the insurer said in a statement.
People already on Avastin will still be covered, and exceptions could be made for individual cases reviewed by a panel of cancer experts.
The FDA has not made a final decision on whether to follow the panel's advice.
With 3.2 million members, Blue Shield appears to be the largest health insurer so far to stop covering Avastin for breast cancer. Three smaller insurers also no longer cover Avastin for breast cancer, according to a spokeswoman for Genentech Inc., which developed and makes the drug as a unit of Swiss pharmaceutical giant Roche AG.
Avastin, Roche's bestselling drug, brought nearly $6.5 billion in sales last year. The company stands to lose an estimated $1 billion if the FDA follows the panel's recommendation.
The Associated Press contributed to this story.