BCBSA Federal Employee Program Awards Pharmacy Benefit Management Contracts To Caremark, Inc. ™ And Medco Health Solutions Inc. ™

June 6, 2007

WASHINGTON – The Blue Cross and Blue Shield Association's (BCBSA) government-wide Service Benefit Plan, also known as the Federal Employee Program™ (FEP), today announced that it has awarded administration of the retail pharmacy program and clinical services program to Caremark; and Medco was awarded the mail service prescription drug program, including specialty pharmacy, effective January 1, 2008.  The base term of the contracts for both vendors is January 1, 2008, through December 31, 2010.

Following a competitive procurement process, BCBSA determined that the combination of Caremark and Medco to manage the pharmacy benefits program offered the best value to FEP and its roughly 4.7 million members.  Since 2005, Caremark has been the pharmacy benefit manager (PBM) for both FEP's mail and retail prescription benefit services and has been the PBM for the retail prescription benefit since 1993.

Caremark will retain sole responsibility for the retail pharmacy program that is available to both Standard and Basic Option FEP members.  Under this program, Standard and Basic Option members can choose from over 60,000 preferred pharmacies in the Caremark network.  During the first quarter of 2007, the retail pharmacy program processed approximately 1.2 million prescriptions per week.

Starting January 1, 2008, Medco will administer the mail service prescription drug program, available only to FEP's Standard Option members.  The mail order pharmacy filled about 220,000 prescriptions per week in the first quarter of 2007.

"The decision to award separate PBM contracts to Caremark and Medco is in the best interest of both FEP members and the FEP program.  Under this new arrangement, FEP members will retain the highest overall value and superior access to pharmaceutical services, with continued high quality of service," said Stephen W. Gammarino, BCBSA's senior vice president, National Programs.  "In addition, we are confident that Caremark's and Medco's experience and knowledge of the FEP program will result in a seamless transition and a successful mail service prescription drug program that is responsive to our members' needs."

Members who use the mail service prescription drug program will receive additional information about the changes prior to the 2007 Open Season.  All existing mail order refills at Caremark, with the exception of compound and controlled substances, will be automatically transferred to Medco so they are available to members on January 1, 2008.  Members who currently receive specialty medication through mail order will receive additional information about the change in vendors and the handling of their prescriptions in October 2007.

Members can continue to contact the customer service units (mail service program 1.800.262.7890 and retail pharmacy program 1.800.624.5060) and access the mail service pharmacy Web site to obtain estimated co-insurance costs for retail purchases and co-payment charges for mail order.  The Web site is accessible through www.fepblue.org under "Pharmacy Programs."  In addition, members with questions or concerns can call FEP at 202.942.1000 for more information.

The Blue Cross and Blue Shield government-wide Service Benefit Plan, or FEP, has been part of the Federal Employees Health Benefits Program (FEHBP) since its inception in 1960.  FEP covers roughly 4.7 million federal employees, retirees and their families who receive their benefits through FEHBP.  BCBSA works with the Office of Personnel Management to administer the Service Benefit Plan on behalf of the 39 independent Blue Cross and Blue Shield Plans.  For more information on the Blue Cross and Blue Shield Federal Employee Program, visit www.fepblue.org.