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CalPERS signs pharmacy benefits deal with CVS Caremark

The three-year contract, valued at $575 million each year, comes after Caremark settled a whistle-blower lawsuit alleging fraud in earlier contracts involving the California pension fund.

June 21, 2011|By Marc Lifsher, Los Angeles Times

Reporting from Sacramento

The California Public Employees' Retirement System signed a $575 million-a-year contract with CVS Caremark Corp. to provide prescription drug benefits to 346,000 members.

The contract, announced Monday, came more than two weeks after Caremark settled a whistle-blower lawsuit alleging fraud in earlier contracts involving CalPERS and pension funds in other states.

CalPERS negotiated the new three-year agreement with Caremark after the fund's board canceled negotiations in March with a competitor, Medco Health Solutions Inc. An internal investigation revealed that Medco allegedly had paid more than $4 million in bribes to win an earlier contract in 2006.

CalPERS, the largest buyer of healthcare benefits after the U.S. government, said it is confident that the Caremark agreement will meet the needs of its members for mail-order and pharmacy-delivered prescription drugs.

Caremark of Woonsocket, R.I., provided a similar service to CalPERS from 2003 through 2005. The new contract takes effect Jan. 1.

Caremark, one of the nation's largest pharmacy benefits providers, had been a defendant in a whistle-blower lawsuit alleging that the company defrauded CalPERS of tens of millions of dollars.

The lawsuit accused Caremark of endangering CalPERS members by making unauthorized and illegal changes to prescriptions submitted from 2003 to 2006. The suit was settled June 2 in Los Angeles County Superior Court as part of a multistate agreement, according to a clerk for the judge.

CalPERS said it had "carefully considered" the allegations in the lawsuit as part of its contract negotiations with Caremark.

marc.lifsher@latimes.com

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