CalPERS approves CVS Caremark contract for pharmacy benefits from 2026 to 2030

CalPERS has taken significant steps to enhance healthcare benefits for its members during the Board of Administration meeting held on July 15, 2025. The board approved a new pharmacy benefit manager contract with CVS Caremark, set to begin on January 1, 2026, and run through December 31, 2030. This decision is expected to save CalPERS and its members over $600 million in drug costs over the five-year period.

The new contract aims to improve affordability, ensure access to safe medications, and enhance transparency in the relationship between CalPERS and its pharmacy benefits provider. CVS Caremark's proposal includes strong financial guarantees, with $250 million at risk tied to cost trends and quality performance, a first in the industry. This innovative approach is designed to align the interests of the pharmacy benefit manager with those of CalPERS members, focusing on both cost control and improved health outcomes.

In addition to the pharmacy contract, the board reviewed and approved the 2026 health premiums for HMO and PPO plans. The average increase for HMO premiums is 6.5%, while PPO premiums will see an increase of just over 12%. Overall, CalPERS' premium increase for 2026 stands at 8.21%, reflecting a 2.6% improvement from the previous year.

The meeting also highlighted ongoing efforts to improve health outcomes for members with chronic diseases and expand access to behavioral health services. A session on the potential impact of artificial intelligence in the healthcare industry was included in the agenda, indicating CalPERS' commitment to exploring innovative solutions for its members.

As CalPERS moves forward with these initiatives, members can expect enhanced communication and support during the transition to CVS Caremark, including outreach efforts to ensure a smooth changeover in pharmacy benefits. The board's decisions are poised to significantly benefit California's public employees and retirees, reinforcing CalPERS' dedication to providing quality healthcare services.