CalPERS Awards 5-Year Pharmacy Contract to CVS Caremark Covering 587,000 Members

CalPERS, the largest public pension fund in the U.S., has awarded a major five-year pharmacy benefits contract to CVS Caremark, replacing UnitedHealth's OptumRx starting January 1, 2026. The contract covers outpatient prescription drug benefits for approximately 587,000 members, about 40% of CalPERS enrollees, with CVS committing $250 million at risk if cost control and quality targets are not met. CalPERS selected CVS due to its competitive pricing, strong clinical standards, and a commitment to transparency, audit, and oversight provisions. This strategic move comes as UnitedHealth faces operational challenges and declining stock value, while CVS has shown strong financial performance and stability in 2025. Most CalPERS members will keep their current pharmacies, though some may see formulary changes affecting copays or medication substitutions. Additionally, CalPERS announced an overall health plan premium increase of 8.21% for 2026, driven mainly by rising pharmacy and medical service costs.