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SJVIA forms ad hoc committee to re-check PBM proposals, empowers short extension if needed
Summary
The San Joaquin Valley Insurance Authority board authorized an ad hoc committee of two supervisors to work with staff on clarifying pharmacy benefit manager proposals and, if necessary, to authorize up to a six-month extension of the current PBM contract while further review is completed.
The San Joaquin Valley Insurance Authority on Aug. 27 approved forming an ad hoc committee to probe pharmacy benefit manager (PBM) proposals and gave the committee limited authority to seek a temporary extension of the current PBM arrangement if clarifications take longer than expected.
The move followed staff presentations that found inconsistencies and “hidden fees” in finalists’ executable contracts and questioned certain rebate assumptions. Borden Darmakina, a consultant on the marketing process, told the board that finalists’ responses had materially changed as vendors updated formularies and contract language during the review.
Why it matters: Pharmacy spending is a major driver of the SJVIA’s rising costs. Board members said errors and late changes in PBM proposals could cost members and the pooled plan hundreds of thousands of dollars; the timing also overlaps with Tulare County’s open-enrollment printing schedule.
Staff told the board that finalist vendors included CVS Caremark (through a program), Anthem and Empirix, and that proposals initially used sample contracts rather than executable contracts tailored to SJVIA. Keenan Pharmacy Services found billing and rebate assumptions that did not reconcile with market practice; some rebate projections relied on drugs that are no longer rebate-eligible, which inflated projected savings.
Staff recommended delaying any July 1 implementation of a new PBM while vendors provide clarified, executable contracts and while staff and consultants conduct a deeper financial review. Board members pressed for faster timelines; several supervisors volunteered to serve on a small review team so a special meeting can be called quickly if a satisfactory vendor emerges.
Supervisor Brian Magsig moved the ad hoc committee motion, saying he and Supervisor Larry MacCary would serve on the committee; MacCary seconded. The board approved the motion. The committee was empowered to work with staff, call a special meeting to approve a vendor if sufficient clarity appears, and, if necessary, to authorize up to a six-month extension with the current PBM to preserve continuity. The board recorded no immediate change to the incumbent contract but left the option to the committee.
Directors and staff also discussed implementation logistics: most PBMs prefer 90–120 days for plan transitions, ImperialRx (the incumbent) has a fourth-year option that keeps service through Dec. 31, 2025, and any change must preserve rebate reconciliation and performance guarantees. County counsel and consultants said, as of the meeting, they saw no immediate penalty that would forfeit rebates if SJVIA gave a 90‑day termination notice, but staff said they would double-check contract language.
The board asked staff to schedule additional finalist interviews that include a member from each county, and to deliver more standardized, written financial comparisons. Supervisors emphasized the need to start PBM procurement work earlier in future cycles to avoid last-minute decisions that coincide with open enrollment.
The motion passed. The board instructed staff to return the committee’s findings to the full board for a potential special meeting if a vendor is ready for approval.
