The California Public Employee Retirement System (CALPERS) has signed a five-year contract with CVS Caremark for its pharmacy welfare manager, the organization announced Tuesday. CVS is replacing OptumRX, which has served CalPers for 9 years.
Calpers is a public pension fund that provides retirement and health benefits to state, school and public institutions members. According to the announcement, CVS will provide outpatient prescription drug benefits to approximately 587,000 members with basic or Medicare HMO or PPO programs, accounting for about 40% of the 1.5 million members who receive health benefits through CALPERS.
The new contract will take effect on January 1, 2026. As part of the contract, the resume will have to meet certain cost and quality goals. If the company does not meet these goals, the company's risk is $250 million, especially related to improving care for hypertension and diabetes.
“By putting PBMs in charge of delivering results, we align their interests with the interests of our members and their public sector employers,” said Don Molds, chief health director of CalPers, in a statement. “The contract is designed to ensure that every dollar spent on prescription medication brings value to our members and ensure the sustainability of our programs.”
In the announcement, Carls said it chose CVS Caremark over other suppliers because it has “proven ability to provide more affordable drug benefits and promises performance assurance in key areas such as managing pharmacy cost trends and ensuring clinical quality.”
CVS said it was an “excellent” to work with Calpers.
“Every day we are negotiating the lowest net cost of medication, identifying safe and clinically effective therapies, and supporting the unique needs of our customers,” CVS Caremark President Ed DeVaney said in an email. “By innovative and relentless focus on improving membership experience, we are driving better health outcomes and reducing out-of-pocket costs for consumers. We are committed to building strong collaborative relationships with Calpers to provide affordable coverage and expanding opportunities for high-quality health care to its program members.”
The contract with CVS is when PBM (particularly the Big Three: CVS Caremark, Optumrx and Express Scripts) faces a lot of scrutiny, their vertical integration with insurers faces a lot of scrutiny and is often blamed for increasing prescription drug costs. These three PBMs control 80% of the prescription drug market.
Just last week, a group of bipartisan lawmakers introduced a bill that would hit PBM. Many other bills have been introduced to address PBM, and Arkansas recently enacted a law that prohibits PBMs from owning pharmacies in the state.
Photo: Megaflopp, Getty Images
