CVS Secures CalPERS Pharmacy Contract, Beating UnitedHealth in Major PBM Deal

CVS Health has secured a multi-year pharmacy benefits contract with CalPERS, outbidding UnitedHealth. The deal marks a significant win for CVS's Caremark unit and could shift competitive dynamics in the pharmacy benefits management market. CalPERS cited CVS's more competitive pricing and strong commitment to managing pharmacy costs and upholding high clinical standards. The five-year deal will give outpatient prescription drug coverage to around 587,000 CalPERS members.

CVS Health's Caremark unit has secured a significant multi-year pharmacy benefits contract with the California Public Employees' Retirement System (CalPERS), effectively outbidding UnitedHealth's OptumRx. The five-year agreement, announced on July 15, 2025, marks a notable win for CVS and could significantly influence competitive dynamics in the pharmacy benefits management (PBM) market. The deal will provide outpatient prescription drug coverage to approximately 587,000 CalPERS members, representing about 40% of the 1.5 million members who receive health care benefits through CalPERS [1].

The contract, which begins on January 1, 2026, is designed to address the rising costs of prescription drugs, a growing concern for CalPERS. The pension fund's total outpatient pharmacy spend reached almost $2.4 billion in 2023, up 36% from just three years prior. Drug costs now account for more than one-fifth of the fund's healthcare premiums [2]. CalPERS chose CVS Caremark due to its more competitive pricing and strong commitment to managing pharmacy costs and upholding high clinical standards.

A key aspect of the contract is the inclusion of performance guarantees that hold CVS accountable for meeting cost and quality targets. CVS has agreed to put $250 million at risk over the term of the contract, contingent on controlling drug costs and improving the health of CalPERS members. The clinical guarantees align with CalPERS' Quality Alignment Measure Set for improving care for high blood pressure and diabetes [1]. Additionally, CVS has agreed to keep drug cost trends to 6.5% over the five years, which is significantly lower than the 8% increase in prescription drug costs employers faced in 2023 [2].

The contract also includes increased transparency, audit, and oversight provisions, which were key factors in CalPERS' decision to part ways with OptumRx. CalPERS cited CVS's strong financial offer, solid transition plan, and alignment on contract terms as reasons for choosing CVS Caremark [2]. The new agreement reflects CalPERS' ongoing commitment to affordability and quality for its members and aims to serve as a model for other purchasers across the nation [1].

References:
[1] https://www.calpers.ca.gov/newsroom/calpers-news/2025/calpers-announces-new-pharmacy-benefits-contract-with-cvs-caremark-to-foster-affordability-and-improve-quality
[2] https://www.tradingview.com/news/DJN_DN20250715009312:0-cvs-calpers-ink-pharmacy-benefits-contract/