The California Public Employees’ Retirement System (CalPERS) has a new pharmacy benefits contract with CVS Caremark, the group announced Tuesday.
Prescription drug benefits will be available for 587,000 members enrolled in basic or Medicare HMO and PPO plans starting in 2026, according to a release. That totals 40% of the 1.5 million CalPERS enrollees receiving healthcare benefits.
The announcement comes a year after the retirement system named Blue Shield of California as the only health plan in its preferred provider organization, following two decades of choosing Anthem Blue Cross.
“This new contract reflects CalPERS’ ongoing commitment to affordability and quality for our members,” Ramón Rubalcava, chair of the CalPERS Board of Administration Pension and Health Benefits Committee, said in a statement.
Under the contract, CVS agreed to certain risk-based terms. If they do not meet goals for controlling pharmacy costs and ensuring quality outcomes, $250 million is at risk. These guarantees apply to improved care metrics for high blood pressure and diabetes.
CalPERS chose Caremark, the retirement system said, due to the PBM’s commitment to “performance guarantees in key areas.” The group also stressed their contract promises “increased transparency, audit and oversight provisions.”
“Every day we work to negotiate the lowest net cost for medications, identify safe and clinically effective therapies and support the unique needs of our customers,” Ed DeVaney, president of CVS Caremark, said. “Through innovation and a relentless focus on improving the member experience, we are driving better health outcomes and lowering out-of-pocket costs for consumers.”
While CalPERS said most enrollees will fill prescriptions at the same pharmacy they use today, there may be some formulary changes impacting copays for some members. Other members may be forced to switch to similar medications.
“By holding the PBM accountable for delivering results, we’re aligning their interests with those of our members and their public sector employers,” said Don Moulds, CalPERS' chief health director. “This contract is designed to ensure that every dollar spent on prescription drugs delivers value for our members and ensures the sustainability of our program.”
Pharmacy benefit managers have been under fire from legislators and policy experts for their role in the country’s ongoing crisis of rising drug prices.