Office of Group Benefits seeks temporary spending authority on Caremark emergency contract; state plans PBM transition to Livinity
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Summary
OGB staff requested increased spending authority to allow CVS Caremark to pay claims through Dec. 31 amid rising drug costs and utilization; OGB said this is a technical spending‑authority change and that active employee PBM services will transition to Livinity in 2026 while Caremark would continue handling retirees.
Division of Administration Commissioner Taylor Barra and Keith Williams of the Office of Group Benefits told the committee they plan to ask in December for approval to increase the maximum payable under the emergency Caremark contract from approximately $890 million to $980 million to cover claims through Dec. 31. Williams emphasized that the amendment is a technical adjustment to contract spending authority and does not change Caremark’s administrative fee.
OGB said an RFP for PBM services was released earlier in 2025 and later rescinded because pending bills on vertical integration could have made the procurement legally vulnerable. The state has since negotiated an emergency contract with Livinity, a Louisiana PBM, to handle active employees starting Jan. 1, 2026, with Caremark continuing to administer retiree drug claims into 2026.
Committee members asked about rebate trends and why another emergency adjustment was needed rather than an immediate RFP award. Keith Williams estimated rebates reduce net spend significantly and projected that net claims cost might land around $600 million after rebates, though OGB said precise net figures will vary with rebates and utilization.
Committee action: members did not authorize immediate cash at the hearing; OGB will return at the Dec. 11 JLCB meeting seeking formal approval to amend the contract authority. The committee noted the planned active‑employee transition to Livinity in 2026.
What’s next: OGB will provide additional documentation and return in December with a formal request for increased contract authority and related procurement details.