Louisiana Changes Pharmacy Benefit Managers for State Workers
Louisiana has made a significant shift in how it manages health insurance for state employees by moving away from CVS Health for part of its pharmacy benefits. However, the state has decided to keep its most profitable contract with CVS intact.
The state Office of Group Benefits has now engaged two pharmacy benefit managers (PBMs) instead of relying solely on CVS Caremark, a subsidiary of CVS Health. This change comes as lawmakers recognize the challenges faced by independent pharmacies in serving the state’s 212,000 public employees, teachers, and retirees.
On Thursday, lawmakers approved a new contract with Southern Scripts, a company based in Louisiana, which will receive $390.6 million for managing commercial insurance plans. At the same time, they agreed to a $748.8 million contract with SilverScript, another CVS Health affiliate, to manage Medicare Part D prescription plans that many retired state workers rely on.
These contracts were approved on an emergency basis for 2026, with the option to extend into 2027.
For years, the lawmakers have expressed dissatisfaction with CVS Caremark, which has been criticized for making it difficult for independent pharmacies to compete. Local pharmacists argue that PBMs like CVS undercut their reimbursement rates and favor larger chain pharmacies.
Louisiana’s new partnership with Liviniti is expected to give more independent pharmacies a chance to serve people enrolled in the state’s commercial health insurance plans. The Louisiana Independent Pharmacies Association supported this new agreement shortly before it was ratified.
However, lawmakers have noted that transitioning away from CVS Health has been challenging. The state approached six different companies concerning the PBM role, but only Liviniti was able to offer a contract for commercial plans that was competitive with CVS. Other firms either declined to participate or could not present viable options for Medicare Part D enrollees.
While the transition may offer broader pharmacy access, it is expected to cost the state a few million dollars more compared to continuing with CVS Caremark.
“You’re not going to save money by moving from one PBM to another,” said Heath Williams, CEO of the Office of Group Benefits.
Finding a PBM not affiliated with CVS for Medicare enrollees has been particularly tricky due to federal regulations that limit how the state can negotiate. Williams mentioned that the new contracts are anticipated to improve transparency around drug pricing, making it easier for the state to analyze what factors may be driving up costs, including any rebates that benefit the PBMs.
This shift comes after a tense standoff between the governor and the state Senate over a proposed law that would have prohibited PBMs from owning pharmacies in Louisiana, a move CVS opposed strongly. Despite pressure from CVS, the Senate opted to table the proposal for further review, leading to multiple lawsuits from the Attorney General against CVS related to their communications with the public.
As this situation unfolds, the state hopes that these new contracts will better serve its employees and contribute to a more balanced pharmacy market in Louisiana.
