Louisiana Shifts Away from CVS Health for State Employee Health Insurance

Strategic Insights -

Louisiana has taken a step towards distancing itself from CVS Health, partially moving its state worker health insurance plans away from the pharmacy giant. The state has approved contracts with two new pharmacy benefit managers, Southern Scripts and SilverScript, to handle commercial and Medicare Part D prescription plans, respectively. This shift aims to address concerns about CVS Caremark's contract with the Office of Group Benefits, which has been criticized for favoring chain pharmacies owned by CVS Health.

Key Takeaways:

  • The state of Louisiana has shifted one of its two large pharmacy benefits contracts for state employees away from CVS Health, with the Office of Group Benefits now using two pharmacy benefit managers.
  • The new contracts were enacted on an emergency basis for 2026 and include the possibility of extensions for 2027.
  • The state faced challenges finding a company not owned by CVS to cover its Part D enrollees due to federal regulations limiting contract negotiations.
  • The new PBM contracts are expected to provide more transparency on drug pricing and allow the state to determine what is driving up drug prices.
  • The state does not expect to save money from switching pharmacy benefit managers, according to CEO Heath Williams of the Office of Group Benefits.
  • The new contracts still have limitations, with SilverScript being another CVS Health affiliate and still favoring chain pharmacies owned by the company.
  • The state's experience with seeking out a new pharmacy benefits manager indicates the difficulty of moving away from CVS Health.

Statistics:

  • The new contract with Southern Scripts pays $390.6 million to handle commercial insurance plans for the Office of Group Benefits.
  • The contract with SilverScript pays $748.8 million to manage Medicare Part D prescription plans.
  • The state has approximately 212,000 public employees, teachers, and retirees with state health coverage.
  • CVS Health owns over 100 pharmacy locations throughout Louisiana, in addition to Caremark and SilverScript.
  • The new PBM contracts are expected to end up costing the state a few million dollars more than staying with CVS Caremark.

Sources:

  • Marty Schladen, Ohio Capital Journal
  • (https://www.nytimes.com/2024/10/19/business/drugstores-closing-pbm-pharmacy.html)
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