Title:
Consider and take action on a resolution authorizing a three-year contract for Pharmacy Benefit Management (PBM) Services to Employers Health - CVS in an amount not to exceed $1,500,000 (Director of Human Resources and Civil Service)
Background:
Approval of this item will authorize a new three-year agreement for pharmacy benefit management services with Employers Health - CVS effective October 1, 2025.
The City of League City’s current pharmacy benefits are administered by Express Scripts through a carve-out arrangement with RxBenefits. A formal RFP process (RFP 25-019) was conducted with assistance from HUB International to evaluate options for PBM services. Several vendors responded, but only those compatible with TXHBP/BCBS and offering real-time accumulation connections were considered.
Employers Health - CVS submitted a proposal that resulted in the lowest net plan cost of all qualified respondents, with an estimated annual cost ranging between $1,207,874 and $1,500,000 depending on actual rebates received. While other vendors (such as Navitus and OptumRx) offered slightly lower gross ingredient costs, the overall savings from CVS were greater due to higher rebate values and competitive admin fees. Compared to the current provider, the CVS proposal is projected to yield an annual savings of approximately $327,302, or 21.3%, under current rebate projections.
The CVS proposal also includes a one-time implementation credit of $17,248 and $4,312 Pharmacy Management Fund (PMF) credit. Disruption to members is modest, with only 2.73% of total claims affected under CVS's formulary transition.
CONTRACT ORIGINATION: Agreement has been reviewed by the City Attorney’s Office.
Attachments:
1. Proposed Resolution
2. RFP 25-019 PBM Services Analysis and Summary
3. RFP Rebate Comparison
4. RFP Formulary Disruption Summary
FUNDING
{x} Funds are available from the Employee Benefit Fund 4030, Health Insurance Account #40301650-54650, upon Council's approval of the FY2026 budget.
STRATEGIC PLANNING
{x } NOT APPLICABLE