CVS Health's Caremark to Lead CalPERS' PBM Vision: What's at Stake?

Rising prescription drug costs remain a top healthcare concern, with pharmacy benefit managers (PBMs) facing heightened scrutiny for their role in managing prescription drug benefits for insurers and health plans. CVS Health’s CVS Caremark business recently secured a new pharmacy benefits contract with The California Public Employees’ Retirement System (CalPERS) — the largest public pension fund in the United States. The five-year agreement replaces OptumRx, UnitedHealth Group’s UNH PBM, which had served CalPERS members over the past nine years.Starting Jan. 1, 2026, Caremark will provide outpatient prescription drug benefits to nearly 587,000 members enrolled in Basic or Medicare HMO and PPO plans, which is roughly 40% of CalPERS’ 1.5 million beneficiaries. CVS will also work closely with CalPERS to develop a range of options for managing formulary changes that could affect copays or require switching to an equally effective alternative.Essentially, CVS Caremark was selected over other vendors for its ability to deliver more affordable drug benefits, and its commitment to strong contract terms around accountability, transparency and groundbreaking financial guarantees. The company puts $250 million at risk if it fails to meet targets for controlling pharmacy benefit costs and delivering clinical quality outcomes tied to improving care for high blood pressure and diabetes. The contract positions CVS Caremark at the forefront of CalPERS’ efforts to create a model that can serve as “a blueprint for purchasers nationwide”.This year, CVS Health also opted to prefer Wegovy over Zepbound on its commercial template formularies. The move is designed to promote competition in reducing drug costs and enable broader, more affordable coverage for weight management medications. Clients using CVS Caremark’s template formularies could save 10-15% annually in the anti-obesity medication space as a result of this strategic change. Updates From CVS Health’s PBM PeersThe global PBM market is expanding, with CVS Caremark, OptumRx and Express Scripts (Cigna) dominating the market. Other prominent players include Elevance Health ELV, which offers pharmacy services through its CarelonRx unit. ELV had just released its second quarter-2025 earnings results, with higher CarelonRx product revenues driving a 33% year-over-year increase in Carelon operating gains. The growth in CarelonRx operating revenues was mainly due to higher prescription volume from rising pharmacy membership and contributions from recent acquisitions.Humana HUM, too, operates a PBM business under its Insurance segment. Humana recently announced a partnership with healthcare software company Epic, becoming the first health insurer to integrate health plan information directly into the MyChart accounts. This enables Humana Medicare Advantage members to access their insurance details, such as vital coverage information, benefits, contacts and other resources, in the same platform where they manage the rest of their care.CVS’ Price Performance, Valuation and EstimatesIn the past year, CVS Health shares have risen 6.3% against the industry’s 17.7% fall.Image Source: Zacks Investment ResearchCVS shares are trading at a forward one-year price-to-earnings ratio of 9.60 compared to the industry average of 14.00. The stock carries a Value Score of A.Image Source: Zacks Investment ResearchAnalyst estimates for the company’s 2025 and 2026 earnings are showing an upward trend.Image Source: Zacks Investment ResearchCVS stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Humana Inc. (HUM): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report Elevance Health, Inc. (ELV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks