Contact: Frank Lester (919) 814-3811



State Health Plan Continues to Push for Transparency, Lower Prices

CVS Caremark Contract Prohibits Gag Clauses Potentially Lowering Drug Prices

(RALEIGH, N.C.) – State Treasurer Dale R. Folwell, CPA, and the State Health Plan announced today that the Plan and its members are not only achieving enhanced transparency for medical services but for prescription drugs as well.

The Plan utilizes a Pharmacy Benefit Manager (PBM), CVS Caremark. CVS Caremark does not allow “gag clauses," which prohibit pharmacists from telling customers that they could save money by paying cash for prescription drugs rather than using their insurance.

The Plan's PBM, CVS Caremark, also does not engage in copay claw backs. For instance, if a Plan member's copay for a drug is greater than the dispensing pharmacy's contracted rate, CVS Caremark does not collect that difference from the pharmacy. Members always get the benefit of the lower of the pharmacy's cash price and the copay.

“We're very pleased that CVS Caremark is partnering with us to help lower prices and keep the Plan on a financially sustainable path," said Folwell. “This is very much in the spirit of our Clear Pricing Project, which promotes greater transparency in all of our health benefits for our hard-working teachers and state employees."

The Patient Right to Know Drug Prices Act was enacted last year, prohibiting insurers and PBMs from restricting a pharmacy's ability to provide drug price information to a plan enrollee when there is a difference between the cost of the drug under the plan and the cost of the drug when purchased without insurance.

The Drug Prices Act, while separate from the Clear Pricing Project (CPP) also announced last year, is part of a growing national movement to push the buying power down to the consumers. Under CPP, the Plan is forming its own North Carolina State Health Plan Network. This new provider network will move away from a commercial-based payment model to a reference-based, transparent pricing model tied to Medicare rates. Health care providers will be reimbursed for their services at Medicare rates plus an average of 82 percent. Under CPP, Plan members will save almost $60 million.

The State Health Plan, a division of the Department of State Treasurer, provides health care coverage to more than 727,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, and their dependents.

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