CalPERS Implements Reference-Pricing for Dozens of Drug Classes

By Brett Johnson
Nov. 20, 2018

At its Nov. 14 board meeting, CalPERS’ Pension and Health Benefits Committee directed its staff to move forward with a Request for Information (RFI) to implement a Full Reference Pricing Program, expanding from their currently proposed three drug class pilot (nasal corticosteroids, thyroid medications, and oral estrogens) to cover up to 70-80 drug classes.

The Committee chose to pursue the Full Reference Pricing Program over options including on the top ten most costly drug classes and a simple continuation of the three drug class pilot. The Full Reference Pricing Program is projected to save CalPERS $34 million, which was more than twice that of the top ten proposal ($15 million) and more than ten times that of the three class pilot ($2.5 million).

Staff stated that certain drug classes would be excluded from even the expanded program due to patient safety concerns. Those classes include: Insulins, miscellaneous skin and mucous membrane agents, anticonvulsants, corticosteroids, and atypical antipsychotics.

Staff described the reference pricing program working as follows: If a member currently uses a prescription drug on the Reference Pricing List, the member can choose one of three options:

  1. Ask their doctor to switch to a lower cost prescription,
  2. Ask their doctor to request a medical necessity exception, or
  3. Continue to use their current prescription and pay the cost difference [between the desired prescription and the lower cost prescription].

The Full Reference Pricing Program would replace the current Member Pays the Difference (MPD), meaning this change would impact all CalPERS plans with pharmacy benefits currently administered by OptumRx under the CalPERS contract. This would include plan options like PERSCare, the Basic HMO plans, and the Medicare Part D supplemental CalPERS prescription coverage. The Basic HMO Plans include an extensive array of plans, such as:

  • Anthem Blue Cross: Traditional and Select HMO,
  • Anthem EPO Basic,
  • Health Net of California: SmartCare and Salud y Más,
  • Sharp Performance Plus,
  • UnitedHealthcare SignatureValue Alliance HMO, and
  • Western Health Advantage HMO.

The CalPERS staff report and supporting documents can be found under Item 7(b) here.

CLSA will continue monitoring CalPERS’ RFI process and note any concerns for our membership. Any CLSA members who would like to provide input or would like further information on the CalPERS proposal discussed herein are asked to reach out to Oliver Rocroi ( or Brett Johnson (