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Caremark Wins Pharmacy Contract For Tennessee Employees:
and RxSolutions also submitted bids for the contract, which represents a carving out of work that was handled by three insurers previously. The deal covers pharmacy benefits for state workers, their dependents, and local government and education workers on the state's insurance plans. The consolidation into a single contract should save the state $33.7 million a year or $168 million over five years, Lee said.
Caremark will receive up to $17.5 million in administrative fees over five years. Winning the award has implications beyond dollars and cents as the nation's largest purchaser of drugs attempts to rebound from recent contract losses in other states and with other customers here.
"It's just good to see them getting back on the track of winning contracts," said Jeff Jonas, an analyst at Gabelli & Co. in Rye, N.Y., which owns shares in CVS Caremark on behalf of clients. "They're certainly going to be competitive on the price, given their size and the purchasing contracts they get from drug companies. I think it's just a matter of marketing and presenting it correctly to the client."
Including discounts that Caremark would pass along, and the company's administrative fees, the state expects to spend $1.38 billion on prescription drugs over the next five years. That cost would have been roughly $1.56 billion under the current arrangement.
"Those savings are significant," Lee said, shortly before members of three state insurance oversight committees voted on the award.
Under the contract, Caremark would be required to pass discounts on drug purchases to plan members. Before this action, Caremark already managed pharmacy benefits for 80,000 members in BlueCross BlueShield of Tennessee's preferred provider plan statewide.Under the new Caremark contract, 95 percent of members will have the same or lower co-pays for the drugs that they take. That's the lowest rate of disruption among the four bidders, state officials said.State employees also will be able to get their drugs at other non-CVS drugstores that are part of CVS Caremark's network of more than 1,600 pharmacies statewide.
"We're disappointed that CVS Caremark was selected despite its troubling track record," said Nell Geiser, coordinator of pharmacy initiatives with the Change to Win group. "We hope the state carefully monitors this contract going forward."
, Jonas, countered that the unions are attacking the pharmacy benefits arm's reputation because they were unable to unionize employees of CVS' retail drugstores. A state attorney general's review found no reason to block or delay the contract award, Lee said. She said language would be included in the contract outlining remedies that could include termination if misconduct were found by Caremark in the FTC investigation or otherwise.