A committee that manages insurance benefits for state, local education and local government health plans recently awarded Caremark its pharmacy contract for Tennessee employees. Caremark offered the most in potential cost savings, including discounts on drugs, said Laurie Lee, the state’s executive director of benefits administration.

From now on, the pharmacy benefits arm of CVS Caremark will be the primary pharmacy benefits manager for the 275,000 state employees as well as to those who are covered under the state’s health insurance plans. CatalystRx, CIGNA and RxSolutions also bid for the contract which was actually handled by three separate insurers before. The consolidation into a single contract should save the state $33.7 million a year or $168 million over five years, Lee said.

“It’s just good to see them getting back on the track of winning contracts,” said Jeff Jonas, an analyst at Gabelli & Co. in Rye, N.Y., which owns shares in CVS Caremark on behalf of clients. “They’re certainly going to be competitive on the price, given their size and the purchasing contracts they get from drug companies. I think it’s just a matter of marketing and presenting it correctly to the client.”

With Caremark, the state expects to spend $1.38 billion on prescription drugs over the next five years. That cost would have been more or less $1.56 billion under the current arrangement.