The U.S.'s largest public pension fund said Monday it picked CVS
Caremark Corp. (CVS) to administer prescription-drug benefits to
more than 346,000 of its members in a contract worth about $565
million in yearly drug spending.
The deal marks another competitive win for CVS Caremark, which
in the past years has struggled with the integration of the CVS
drugstore chain with the Caremark PBM company since their merger in
2007.
The California Public Employees' Retirement System, popularly
known as Calpers, said CVS would administer prescription-drug
benefits to members in three of its preferred provider organization
programs. Ann Boynton, a Calpers benefit-programs official, said in
release that it was "confident that Caremark will meet the needs"
of Calpers members.
CVS is succeeding Medco Health Solutions Inc. (MHS) in the
Calpers contract. In March, Calpers told Medco that it wouldn't
renew its contract when it expires at the end of the year. CVS's
three-year contract begins Jan. 1.
In May, CVS beat Medco for another three-year contract to
provide mail-order-drug services for the Federal Employee Program,
which generates about $3 billion in annual revenue.
The CVS contract with Calpers comes amid a trial in a
long-running whistle-blower lawsuit alleging the company defrauded
Calpers while overseeing the pension fund's drug plan from 2003 to
2006. Boynton said Monday that "neither Calpers nor any of our
officers or employees are party to the action," adding that Calpers
carefully considered it throughout contract negotiations.
Messages left with CVS and Medco seeking comment weren't
immediately returned.
CVS shares were down 5 cents at $37.44 in after-hours
trading.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com