In an ongoing struggle to safeguard the financial interests of its state employees and retirees, the North Carolina Department of State Treasurer released a sobering update regarding its contract negotiations with CVS Caremark. As reported by the Department of State Treasurer, the pharmacy benefit manager has failed to remit rebates totaling tens of millions of dollars since 2023, putting a considerable strain on the State Health Plan's resources.
Further complicating the fiscal outlook for the Plan, which currently serves over 750,000 individuals, is CVS Caremark's insistence on contract revisions that would seemingly prioritize its profitability over the needs of the Plan’s members – including state employees, teachers, and retirees. Treasurer Brad Briner articulated this challenge, "We have been working hard to address the $500 million deficit the State Health Plan is facing since my first day in office," also stressing the importance of cooperative partnerships that don't jeopardize the Plan by raising premiums due to unmet contractual terms, as per the Department of State Treasurer.
The current impasse has necessitated an evaluation of potential measures to recoup the funds owed, and the Plan's future relationship with CVS Caremark remains uncertain. As the existing contract is set to run until the end of 2027, State Health Plan Executive Administrator Thomas Friedman emphasized, "Our continued hope is that Caremark will honor its contract as written." According to the press release from the Department of State Treasurer, tensions stem from the necessity of the Plan to counteract the risk of insolvency and prevent steep premium hikes for its members should CVS Caremark fail to address the issues.
Despite the burgeoning financial concerns, the State Health Plan assures its members there would be no immediate negative consequences on their pharmacy benefits. The Executive Director of the State Employees Association of North Carolina, Ardis Watkins, commended the efforts of the Treasurer and the State Health Plan's Administrator for their stand against Caremark, recognizing the need for transparency in drug costs that are, "already sky high." As the Department of State Treasurer continues its pursuit of accountability and diligence, it pledges to maintain open communication with its stakeholders about any developments in this matter.
