CalPERS Awards $575M Annual Contract to CVS Caremark for Rx Benefits
On Monday, CalPERS announced that it has signed a $575 million annual contract with CVS Caremark to provide prescription drug benefits to about 346,000 members, the Los Angeles Times reports (Lifsher, Los Angeles Times, 6/21).
CalPERS said the three year contract, which takes effect Jan. 1, 2012, will have the option of two one-year extensions (Rauber, San Francisco Business Times, 6/20).
Medco Health Solutions previously held the drug benefits contract. However, CalPERS canceled negotiations with the company in March after an internal investigation found that Medco allegedly paid more than $4 million in bribes to win a CalPERS contract in 2006.
CalPERS then began negotiations with Caremark, which is being sued by several former employees who claim the company defrauded CalPERS of tens of millions of dollars when it held the drug benefits contract between 2003 and 2006 (Los Angeles Times, 6/21). In the whistle-blower lawsuit, the former employees alleged that Caremark falsified records, improperly switched patients to less-expensive prescriptions and shipped drugs that had been returned to the warehouse.
Caremark has denied wrongdoing. According to a Caremark spokesperson, the company has entered into settlement discussions with the former employees.
CalPERS said it is aware of the allegations against Caremark, but does not consider the lawsuit a serious issue.Brad Pacheco, spokesperson for CalPERS, said the pension system established safeguards in the new contract, such as quarterly reviews, noncompliance penalties and performance guarantees (Kasler, Sacramento Bee, 6/21). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.