LANSING - State Representative Thomas F. Stallworth III (D-Detroit) today questioned the legitimacy of Detroit Emergency Manager Kevyn Orr’s recent signing of a $60 million contract with Caremark to cover pharmacy benefits for city of Detroit employees. Stallworth questioned why a proposal that would have saved the city money while delivering a better benefit to employees was passed over in favor of a more expensive proposal that offered less in benefits.
“Kevyn Orr unilaterally awarded a $60 million no-bid contract to Caremark that seemingly mocks the contract-bidding process,” said Stallworth. “There are serious questions about whether or not the city and its workers got the best deal that both saves money while still providing better benefits.”
As part of cost savings in Detroit’s bankruptcy proceedings, the company Jones Day, Ernst and Young and Milliman designed a new health care benefit for city employees. That plan was approved by Orr and lists Caremark as the pharmacy benefit manager. Caremark has Jones Day as its outside council, Ernst and Young as its outside audit firm, and Caremark is a business partner with a Milliman product called Intelliscript.
An alternative proposal for a pharmacy benefit manager was submitted to the emergency manager by ScriptGuide that generated a greater savings, and a better benefit for city workers, than the Caremark proposal. ScriptGuide is also owned by a Detroit resident.
“Mr Orr was brought to Detroit to solve financial issues and choosing Caremark raises more questions than it answers,” said Stallworth. “We don’t know why a more expensive proposal was chosen rather than one that would have saved the city more money. Mr. Orr talked to the Detroit Police Lieutenants and Sergeants Association to determine if greater cost savings could be negotiated that he could then take to other city employees. He had such a proposal, but when the final decision was made, he chose Caremark, the more expensive plan that offered less coverage to employees. A more expensive plan is not the best choice for Detroit and state taxpayers, and not the best decision for a city facing bankruptcy.”