Louisiana partially breaks from CVS Health as pharmacy middleman for state workers

(Louisiana Illuminator) — Louisiana has shifted one of its two large pharmacy benefits contracts for state employees away from CVS Health, but Gov. Jeff Landry and state lawmakers kept the most lucrative agreement with that pharmacy giant in place.

The state Office of Group Benefits will now use two pharmacy benefit managers for its health insurance plans that cover state government employees, public school teachers, local government workers, retirees and their families. Previously, it had only used the CVS Caremark, a subsidiary of CVS Health.

Louisiana lawmakers signed a new arrangement Thursday with Southern Scripts, owned by Louisiana-based Liviniti LLC, that pays the company $390.6 million to handle commercial insurance plans for the Office of Group Benefits. They also approved a contract with SilverScript, another CVS Health affiliate, for $748.8 million to manage Medicare Part D prescription plans, which many retired state workers use.

The contracts were enacted on emergency bases for 2026 with the possibility of extensions for 2027. 

For years, lawmakers have been upset with CVS Caremark, the state’s current pharmacy benefit manager. The company’s contract with the Office of Group Benefits made it difficult for independent pharmacies to serve the 212,000 public employees, teachers and others with state health coverage. 

Governments and private employers hire pharmacy benefit managers, also called PBMs, to oversee prescription medication benefits for their health insurance plans. But independent pharmacists say PBMS are driving them out of business by undercutting their reimbursement rates and favoring chain pharmacies the PBM parent companies own. 

For example, CVS Health owns Caremark, SilverScript and well over 100 pharmacy locations throughout Louisiana.

The state’s new arrangement with Liviniti should allow more independent pharmacists to start serving those enrolled in commercial state health insurance plans. The Louisiana Independent Pharmacies Association endorsed the contract a few days before lawmakers approved it. 

The state’s experience with seeking out a new pharmacy benefits manager over the past few months indicates how difficult it has been to move away from CVS Health however.

The state approached six companies about taking over its business, said Heath Williams, CEO of the Office of Group Benefits. Three were not interested and none could provide a contract proposal for Medicare Part D enrollees that was financially competitive with CVS. Only Livinti offered a deal that could go up against CVS for commercial insurance plans.

By switching to Livinti and SilverScript, enrollees in commercial plans should have more options for pharmacies they can use, but the Office of Group Benefits will end up spending a few million dollars more than it would have if it had stayed only with CVS Caremark. 

“You are not going to save money from moving from one to PBM to another,” Williams told lawmakers Thursday.

Louisiana faced more challenges finding a company not owned by CVS to cover its Part D enrollees because federal regulations place restrictions on how the state can negotiate that contract, he said. 

The state does expect more transparency about drug pricing as a result of the new PBM contracts. Williams said it should be easier for the state to determine what is driving up drug prices and whether rebates, which can financially benefit  PBMs, are to blame.   

“You want full transparency on rebates,” he said. 

The new PBM contracts come a few months after a dramatic showdown between the governor and the Louisiana Senate. 

During the last few days of a two-month legislative session in June, Landry pushed lawmakers to pass a law banning Louisiana pharmacy benefit managers from also owning in-state pharmacies as CVS does. The Senate refused to go along with Landry’s demands and killed the proposal, saying such a drastic move required more study before lawmakers voted on it.

At the time, CVS claimed such a ban would force it shut down its brick-and-mortar locations in Louisiana. They exerted pressure on legislators by sending emails and texts to thousands of Louisiana residents, implying they could potentially lose access to their medications at CVS if the bill passed.

The mass text and email campaign prompted Attorney General Liz Murrill to file three lawsuits against CVS on behalf of the state, including one regarding the text messages.

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