From: John Curry
To: John Lazares, Dennis Leone, Steve Buser
Sent: Thursday, March 2, 2006
Subject: Transparency (?), Caremark and STRS
John Bos sent this to me to share.
Months ago, John gave a presentation to two associates of STRS, Dr. Buser, Dr. Asbury, and CORE member (witness) Liz Ebbing. His presentation involved a concept of open (to the public) and transparent bidding for PBM (Pharmacy Benefits Manager) contracts by STRS rather than the current method by which STRS chooses a PBM. Currently, the details and dollar amounts of our contract with Caremark remain secret because of the terms of our current contract with Caremark. STRS members as well as the public have no opportunity to view any audits of this contract due to the secrecy involved. It should be noted that PBMs aren't necessarily the pinnacle of ethical business in our contemporary world and are no strangers to both state and federal courts for unethical business practices - many "out of court" settlements will attest to this.
If these details are not open to the public, then how can we really know whether or not we, in fact, saved $7.3 million dollars by renewing our contract with Caremark? We are not able to see the bids. There is no transparency here. We are at the mercy of what we are told and are unable to see for ourselves.
John, a Proud CORE member
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Letter from Sandra Knoesel to John Bos, January 24, 2006:
Dear Mr. Bos:
Please accept my sincere apology for not responding directly to your suggestion to use a different method to select the prescription drug manager. Unfortunately, I was unable to attend the meeting when you discussed your ideas with Dr. Buser. I was under the impression that your questions had been answered during that meeting.
I am afraid I have to disagree with your opinion about the open bid process that was used to select AdvancePCS, now Caremark, when STRS Ohio discontinued its contract with Medco Health Solutions. As you are aware, STRS Ohio joined with the other Ohio retirement systems to leverage its bargaining strength. This process resulted in a savings of more than $27 million during the first three years of the contract. In previous correspondence, we have also provided you with information about the additional $7.3 million savings STRS Ohio realized by renewing its contract with Caremark while at the same time it was suing Medco Health Solutions. As you are aware, the outcome of this lawsuit was a $7.8 million judgment in STRS Ohio’s favor.
We appreciate you sharing ideas to help maintain the viability of the STRS Ohio Health Care Program. We will keep your ideas as well as others in mind as we consider our next steps with the PBM contract in 2007.
Sincerely,
Sandra L. Knoesel
Deputy Executive Director
Member Benefits
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