CVS Caremark chosen by CalPERS for Affordability, Improving Quality as its Pharmacy Benefits Manger (PBM)

President of CVS Caremark, Ed DeVaney, said, “CVS Caremark is honored to enter a contract with CalPERS to be its new pharmacy benefits manager in January 2026. 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. 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. We are committed to building a strong, collaborative relationship with CalPERS to deliver affordable coverage and expand access to high-quality health care for their plan members.”

CalPERS announced its new 5-year pharmacy benefits contract with CVS Caremark (CVS) Friday, July 18th. The PBM contract is designed to address rising costs of prescriptions while ensuring access to safe and effective medications for members. The contract includes financial terms for controlling drug costs and improving the health of CalPERS members.

“This new contract reflects CalPERS’ ongoing commitment to affordability and quality for our members,” said Ramón Rubalcava, chair of the CalPERS Board of Administration Pension and Health Benefits Committee. “By putting CalPERS’ values in the driver’s seat, we’re ensuring that our members and their families have access to the medications and support they need to manage their health.”

The contract with CVS will provide outpatient prescription drug benefits for approximately 587,000 members enrolled in Basic or Medicare HMO and PPO plans. This represents about 40% of the 1.5 million members who receive health care benefits through CalPERS.

CalPERS agreed to contract with CVS Caremark instead of other vendors because of its demonstrated ability to deliver more affordable drug benefits and its commitment to performance guarantees in key areas such as managing pharmacy cost trends and ensuring clinical quality. The contract also provides for increased transparency, audit, and oversight provisions throughout the five years of the contract. CVS will begin providing benefits for CalPERS members starting on January 1, 2026, replacing OptumRx.

A Model for Innovation

The new PBM contract, according to CalPERS statement, builds on broader efforts to align health care affordability with quality and equity, aligning these pharmacy benefits with our overall health care goals, CalPERS aims to create a model that can serve as a blueprint for purchasers across the nation.

“This agreement represents a significant step forward in addressing one of the most pressing challenges in health care today — the rising cost of prescription drugs,” said CalPERS Chief Medical Officer Dr. Julia Logan. “CalPERS is demonstrating that it’s possible to achieve affordability, quality, and transparency through terms that put our members’ and our public employers’ interests at the forefront of this multi-year arrangement with CVS.”

A TY to OptumRx

CalPERS officials also expressed gratitude to leaders and teams at OptumRx. “We thank OptumRx for providing pharmacy benefits to our members over the past nine years,” Moulds said. “We look forward to building on that foundation with CVS to deliver continued value and service across PPO and HMO plans.”

About CVS Health^®

CVS Health is a leading health solutions company building a world of health around every consumer it serves and connecting care so that it works for people wherever they are. As of September 30, 2024, the Company had more than 9,000 retail locations, more than 900 walk-in medical clinics, more than 225 primary care medical clinics, a leading pharmacy benefits manager with approximately 90 million plan members and expanding specialty pharmacy solutions, and a dedicated senior pharmacy care business serving more than 800,000 patients per year. The Company also serves an estimated more than 36 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan. The Company is creating new sources of value through its integrated model allowing it to expand into personalized, technology driven care delivery and health services, increasing access to quality care, delivering better health outcomes and lowering overall health care costs.

CVS PBM, also known as CVS Caremark, is a pharmacy benefit manager (PBM) that manages prescription drug benefits for various clients, including health insurers, medicare Part D plans, and large employers. Essentially, they act as an intermediary between drug manufacturers, pharmacies, and plan sponsors to negotiate drug prices and manage prescription drug coverage.

About CalPERS

For more than nine decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 2 million members in the CalPERS retirement system, making us the largest defined-benefit public pension in the nation. We also administer health benefits for more than 1.5 million members and their families, making CalPERS the nation’s largest purchaser of public employee health services behind the U.S. government.