May 18, 2016

Communications & Stakeholder Relations
(916) 795-3991
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer
newsroom@calpers.ca.gov

SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) today announced that it selected OptumRX as its new Pharmacy Benefits Manager (PBM). The company will administer prescription drug benefits for nearly 486,000 members and their dependents enrolled in all of CalPERS' health plans with the exception of the Kaiser and Blue Shield of California Health Maintenance Organization (HMO) plans.

The five-year contract – worth an estimated $4.9 billion – takes effect January 1, 2017, and ends December 31, 2021. It will cover pharmacy benefits for members enrolled in CalPERS' self-funded PERS Select, PERS Choice, and PERSCare Preferred Provider Organization health plans, as well as for those enrolled in the Anthem Blue Cross, HealthNet, Sharp, and UnitedHealthcare HMO plans.

OptumRx, a subsidiary of UnitedHealth Group, is headquartered in Eden Prairie, Minnesota, and has connections to more than 67,000 pharmacies nationwide. It will replace CalPERS' current PBM, CVS Caremark, whose contract expires December 31, 2016. CVS has held the PBM contract since January 1, 2012.

OptumRx was one of three finalists in a competitive bid process for the PBM contract. In addition to CVS, the other bidder was Express Scripts, Inc.

The CalPERS Board of Administration awarded the PBM contract to OptumRx based on the results of its final bid submission.

"The finalists and their bid responses went through a thorough vetting during the review, from their customer service and mail order processes to their pricing and cost-control measures," said CalPERS Board of Administration President Rob Feckner. "OptumRx had the strongest bid submission. We are confident that the company will successfully meet the needs of our members and our staff will work with OptumRx and CVS Caremark to ensure that the transition for our members and physicians will be as smooth as possible."

This is the first time CalPERS has negotiated and secured contractual agreements before the PBM contract was awarded, and the first time it has negotiated a full five-year PBM contract at one time.

"We placed a lot of emphasis in this solicitation on the company's ability to deal with the increasingly high cost of prescription drugs, and OptumRx presented a very strong proposal," said Priya Mathur, chair of the CalPERS Pension and Health Benefits Committee. "In addition to being concerned about the health and safety of our members, we wanted to ensure the company we selected would be as committed as we are to continually develop strategies to mitigate the impact of those rapidly rising costs on our members."

Contract terms require that the PBM provide drugs of the highest quality and value, based on sound clinical evidence. It also requires transparency and full disclosure of the financial relationships between the PBM and drug manufacturers.

All of the bidders for the PBM contract were evaluated on their strategies for price controls, sustained affordability, pricing, innovation, mail order networks, formularies, drug utilization programs, utilization management, and customer service.

For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.8 million members in the CalPERS retirement system and administers benefits for more than 1.4 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $291 billion. For more information, visit www.calpers.ca.gov.

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