HomeMy WebLinkAboutPrescription Drug Program INTEGRATED
PRESCRIPTION DRUG PROGRAM
AGREEMENT
THIS AGREEMENT is entered into as of the first day of Jannary, 2001, (the "Effective Date") between Systemed,
L.L.C., located at 100 Parsons Pond Drive, Franklin Lakes, New Jersey 07417 ("SYSTEMED") a subsidiary of
Medco Health Solutions, Inc. ("Medco Health") and City of Oshkosh, located at 215 Church Street, Oshkosh,
Wisconsin 54901 ("OSHKOSH").
WHEREAS, SYSTEMED; through its affiliate PAID Prescriptions, L.L.C. ("PAID") provides proscription chug
benefits programs and, in connection therewith, PAID has established networks of participating retail pharmacies
and has developed and operates a system for the processing, fulfillment and payment of claims for prescription
drugs furnished by such pharmacies; and
WHEREAS, Merck-Medco Rx Services of Fairfield ("Rx SERVICES") is a licensed pharmacy affiliated with
SYSTEMED which provides prescription drugs via mail service; and
WHEREAS, OSHKOSH desires to retain the services of SYSTEMED to provide a prescription drug benefit
program (the "Program") including, but not limited to, retail and mail service pharmacy services for eligible persons,
point-of-care, physician office communications and cost containment initiatives developed and implemented by
SYSTEMED which may include communications with prescribers, patients and/or participating pharmacies, and
financial incentives to participating pharmacies for their participation in such initiatives (collectively, "PBM
Services").
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto
agree as follows:
1. DEFINITIONS
"AWP" means the average wholesale price of the Covered Drag, as set forth in the current price
list in recognized sources such as First DataBank's National Drag Data File, or other nationally
reco~ized pricing source determined by SYSTEMED, or the d/rect cost listed in those instances
in which only the direct cost is listed. Under the Retail Pharmacy Program, AWP is based on the
package size submitted. Under the Mail Service Program, AWP is based on package sizes of 100
units for capsules and tablets and 16 oz. quantities for hqnids (or smaller quantities if such
quantities are not available), and all other Covered Drugs will be priced as individual units or
smallest package size available (e.g., per vial, per suppository, etc.). If First DataBank or other
applicable pricing source changes the methodology for calculating AWP in a way that materially
changes the economics of the Program, the parties agree to modify the Program Pricing Terms to
preserve the parties' relative economics before such changed methodology.
1.2.
"Brand Name Drugs" means single or multisource brand chugs as set forth in First Databank's
National Drug Data File (or such other nationally recogn'tzed pricing source reasonably
determined by SYSTEMED), but excluding those drugs billed as generics under the Agreement.
1.3.
"Contract Quarter" means the full three (3) month period commencing on the Effective Date, and
each full consecutive three (3) month period thereafter that this Agreement remains in effect.
1.4.
"Contract Year" means the full twelve (12) month period commencing on the Effective Date and
each full consecutive twelve (I2) month period thereafier that this Agreement remains in effect.
1.5.
"Copayment" and/or "Coinsurance" means the amount to be paid by an Eligible Person for each
prescription as determined in accordance with the Plan Design(s).
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1,6,
1.7.
1,9,
i. I0.
1.I1.
1.12.
1.13.
1.14.
1.15.
1.16.
1.17.
1.18.
1.19.
"Covered Drags" means all chugs which, under state or federal law, require a prescription.
Excluded from Covered Drags are (i) cosmetic drags, (ii) appliances, devices, bandages, heat
lamps, braces, splints, and artificial appliances, and (iii) health and beauty aids, cosmetics and
dietary supplements ("Exclusions"). Additional Covered Drags and/or Exclusions applicable to
any individual Group will be designated by OSHKOSH in the applicable Plan Design.
"Dispensing Accuracy Rate" means (i) the number of all proscriptions dispensed by P,x
SERVICES in a Contract Year less the number of those prescriptions dispensed by Rjr SERVICES
in such Con~'act Year which are reported to Rx SERVICES and verified by Rx SERVICES as
having been dispensed with the incorrect drag or strength, divided by (ii) the number of all
prescriptions dispensed by Rx SERVICES in such Contract Year.
"Dispensing Fee" means the amount payable by OSHKOSH pursuant to Section 1.1 or 3.2 of
Schedule A of this Agreement to dispense a prescription to an Eligible Person by a Participating
Pharmacy or ILx SERVICES.
"Eligible Person" means each employee and retiree of OSHKOSH and their qualified dependents
as determined to be enrolled by the OSHKOSH and communicated to SYSTEMED.
"Generic Drag" means a multisource generic drug as set forth in First Databank's National Dmg
Data File (or such nationally recognized pricing source reasonably determined by PAID), as well
as all drags billed as generic drugs under the Agreement.
"Integrated Program" means a program in which Eligible Persons enrolled in such program may
have prescriptions dispensed either (i) by a Participating Pharmacy under the Retail Pharmacy
Program, or (ii) by Rx SERVICES under the Mail Service Program. Reference to the Retail
Pharmacy Program, and/or Mail Service Program herein will include services performed by PAID
and Rx SERVICES for Eligible Persons enrolled in the Integrated Program.
"MAC or the "Maximum Allowable Cost" consists of a proprietary list of off-patent drugs subject
to maximum allowable cost payment schedules developed by Merck-Medco. The payment
schedules specify the maximum unit ingredient cost payable by OSHKOSH for drugs on the MAC
list. The MAC list and payment schedules are frequently updated.
"Mail Service Program" means the program described in Section 4 in which Eligible Persons may
submit a prescription along with the applicable Copayment/Coinsurance to Rx SERVICES for
dispensing via mail service.
"Memk-Medco Managed Care, L.L.C." or "Medco" means the parent company of SYSTEMED,
PAID and/or Rx SERVICES.
"Minimum Enrollment" means an emollment of not less than 500 Eligible Persons excluding their
quahfied dependents.
"Participating Pharmacy" means a retail pharmacy that has entered into an arrangement with PAID
to participate in PAID's network of pharmacies servicing OSHKOSH's Program.
"Plan Design" means Program drug coverage, days supply limitation, Copayment/Coinsurance,
Formulary and other Program specifications applicable to the Program set forth in this Agreement
or otherwise agreed to, in writing, between the parties.
,,primary Eligible Participant" means each Eligible Person, excluding Eligible Persons who are
qualified dependents.
"Program Pricing Terms" means the financial or pricing terms set forth in this Agreement.
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1.20.
"Retail Pharmacy Program" means the program described in Section 3 in which Eligible Persons
may purchase Covered Drags from a Participating Pharmacy upon verification of Program
eligibility and payment of the apphcable Copayment/Coinsurance, and the claim is subm/tted by
the Participating Pharmacy to PAID for payment in accordance with this Agreement and the
applicable PAID Participating Pharmacy Agreement.
1.21. "TelePAID® System" or "TelePAID®" means PAID's real time, on-line system for adjudicating
prescription drug claims subm/tted by Participating Pharmacies.
1.22.
"TelePAID System Availability Rate" means the percentage of normal operating hours that the
TelePAID System is operational, excluding scheduled maintenance time, measured on an annual
basis.
1.23.
"Telephone Abandonment Rate" means (i) the number of incoming telephone calls received by the
customer service telephone line during a Contract Year which are abandoned by the caller after
twenty (20) seconds, divided by (ii) the total number of incoming telephone calls received by the
customer service telephone line during such Contract Year.
OSHKOSH FURNISHED INFORMATION
OSHKOSH will promptly furnish to SYSTEMED, in a format acceptable to SYSTEMED, all information
necessary for SYSTEMED to render the services set forth herein. Such information will include, but is not
Iirn/ted to:
2. i,
A list of Eligible Persons, and subsequent timely additions and deletions to such file as changes
occur. SYSTEMED will enter all eligibility information received from OSHKOSH within two (2)
business days of receipt. OSHKOSH shall pay for any Covered Drag dispensed to a person
reported by OSHKOSH as no longer an Eligible Person if such notification as noted above is not
received by SYSTEMED at least two (2) full business days prior to the dispensing date of such
prescription.
2.2. Designation, in writing, of those Plan Design features to be determined by OSHKOSH.
2.3.
The reimbursement terms applicable to direct reimbursement claims submitted by Eligible Persons
under the Retail Pharmacy Program.
2,4.
The type, number and description of PAID identification cards ("Identification Cards") required
for the Retail Pharmacy Program.
RETAIL PHARMACY PROGRAM
The specific features of the Retail Pharmacy Program are as follows:
Program Coverage - The Program coverage (Covered Drags/Exclusions) and days supply limitation
applicable to the Retail Pharmacy Program as designated by OSHKOSH are set forth in Schedule A-
l.
3.2.
Participating Pharmacy Networks - SYSTEMED, through PAID will maintain a Participating
Pharmacy Network reasonably necessary to provide services under the Retail Pharmacy Program.
3.3.
Identification Cards - SYSTEMED will (i) produce Identification Cards promptly upon
notification for those Ehgible Persons designated by OSHKOSH with an accompanying
explanatory brochure, and (ii) make direct reimbursement claim forms available through the
www.medeohealth.com interact site for use by Eligible Persons who have not received their
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Identification Cards, or have had them lost or stolen. SYSTEMED will distribute Identification
Cards and claim forms to OSHKOSH for distribution by OSHKOSH to Ehgible Persons. All
costs associated with distributing and/or mailing such materials are the responsibility of
OSHKOSH:
3.4.
Claim Adjudication - SYSTEMED will adjudicate claims for prescription drug benefits in
accordance with PAID's TelePAID System and pay approved claims in accordance with the
applicable Plan Design. Disapproved claims will be transmitted to the submitting pharmacy with
a brief explanation of the cause or causes for disapproval for delivery to the Eligible Person, and
as may be otherwise required under federal or state law.
Claim Disputes - Any questions involving Program procedures or relating to applicable benefits
will be resolved prior to payment by SYSTEMED, and payment may be delayed following receipt
ora claim pending resolution of such questions. Subject to the terms and conditions herein,
OSHKOSH will make the fmaI determination regarding payment of ail submitted claims. Should
OSHKOSH determine that a previously disapproved claim should be paid, and so direct
SYSTEMED, payment of such claim will be accomplished promptly by SYSTEMED.
SYSTEMED will promptly refer to OSHKOSH all non-routine inquiries by insurance
departments, attorneys, claimants, or other persons following the denial of any claims.
3.6.
Adm/instrative Services - SYSTEMED will provide, as applicable, the Base Administrative
Services and the Additional Administrative Services set forth in Schedule B.
3.7.
Pricing -The Program Pricing Terms applicable to the Retail Pharmacy Program are set forth in
Schedule B, in addition to the Benefit Management Payment set forth in Section 6.3 of this
Agreement.
MAIL SERVICE PROGRAM
4.1. Program Coverage
4.1.1. The Program coverage (Covered Drugs/Exclusions) and days supply limitation applicable
to the Mail Service Program as designated by OSHKOSH are set forth in Schedule A-2.
4.1.2.
A 90 day supply of Covered Drugs per prescription or refill may be dispensed by P,x
SERVICES subject to the professional judgment of the dispensing pharmacist, limitations
imposed on controlled substances and manufactarer's recommendations. Prescriptions
may be refilled providing the prescription so states. Prescriptions will not be filled (i)
more than 12 months after issuance, (ii) more than 6 months after issuance for controlled
drug substances, or (iii) if prohibited by applicable law or regulation.
4.2. Dispensing Procedures
4.2.1.
Rx SERVICES will dispense Covered Drugs to Eligible Persons, and dispense generic
drags when authorized, in accordance with (i) applicable law and regulations in the state
in which Rx SERVICES' pharmacy is located, and (ii) the terms of this Agreement and
Plan Design.
4.2.2. All matters pertaining to the dispensing of Covered Drugs or the practice of pharmacy in
general are subject to the professional judgment of the dispensing pharmacist.
4.2.3.
Any drag which cannot be dispensed in accordance with Rx SERVICES' dispensing
protocols, or which requires special record-keeping procedures, may be excluded from
coverage by Rx SERVICES.
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4.2.4.
If it becomes impracticable, for reasons of a force majeure or otherwise, for Rx
SERVICES to dispense prescriptions to Eligible Persons under the Program, Rx
SERVICES will use reasonable efforts to have Program prescriptions dispensed fi'om an
affiliated marl service pharm~acy, subject to applicable laws and regulations.
4.3.
Pricing - The Program Pricing Terms apphcable to the Mail Service Program are set forth in
Schedule B, in addition to the Benefit Management Payment set forth in Section 6.3 of this
Agreement.
PERFORMANCE STANDARDS AND PENALTIES
5.1. The following performance standards will apply during the Initial Term of this Agreement:
5.1. I. SYSTEMED will supply OSHKOSH with pre-addressed forms and envelopes for use by
Eligible Persons in mailing their prescriptions to Rx SERVICES.
5.i.2.
The TelePAID System Availability Rate for each Contract Year will be 99.5% or greater.
OSHKOSH may assess a penalty against SYSTEMED in the mount of 5% of the Base
Administrative Fee for each Contract Year that the TelePAID System Availability Rate
averages less than 99.5% for a Contract Year.
5.1.3.
The Dispensing Accuracy Rate for each Contract Year will be 99.99% or greater.
OSHKOSH may assess a penalty against SYSTEMED in the amount of 5% of the Base
Administrative Fee for each Contract Year that the Dispensing Accuracy Rate avorages
less than 99.99% for a Contract Year.
5.1.4.
SYSTEMED will make available a toll-free customer service telephone line for use by
Eligible Persons. The target Average Speed of Answer ("ASA") of the customer service
telephone line each Contract Year will be thirty (30) seconds or less fi.om the initial ring.
OSHKOSH may assess a penalty against SYSTEMED for failure to meet this standard in
the amount of 5% of the Base Administrative Fee for each Contract Year that is standard
is not met measured on a Contract Year basis.
5.1.5.
The Telephone Abandonment Rate of the customer service telephone line will be 5% or
less of all incoming calls received during each Contract Year. OSHKOSH may assess a
penalty against SYSTEMED in the amount of 5% of the Base Administrative Fee for
each Contract Year that this standard is not met measured on a Contract Year basis.
5.1.6.
SYSTEMED will respond (mail a check or reject notice) to at least 97% of direct
reimbursement paper claims received each Contract Year fi.om Eligible Persons within an
average of five (5) business days following receipt. All such claims for each Contract
Year will be responded to ~vithin an average often (10) business days following receipt
by SYSTEMED. OSHKOSH may assess a penalty against SYSTEMED in the amount of
5% of the Base Administrative Fee for each full Contract Year that these rates are not met
measured on a Contract Year basis. This Section 5.1.6 is subject to a maximum penalty
of 5% of the Base Administrative Fee per Contract Year.
5.1.7.
OSHKOSH may assess a penalty in the amount of 5% of the Base Administrative Fee per
Contract Year if, after the first Contract Year and each successive Contract Year, those
OSHKOSH employees ~vho are members of the OSHKOSH benefits staff do not rate the
SYSTEMED account team's performance for such Contract Year an average of 3 or
better on a scale of 1 to 5 (5 being the best) based on a range of performance criteria
agreed to between OSHKOSH and SYSTEMED at the beginning of such Contract Year.
Additional OSHKOSH staff members may be included in the survey at the request of
SYSTEMED.
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Notwithstanding anything to the contrary, SYSTEMED's collective maximum liability under this
Section 5 for any Contract Year will not exceed 30% of the total Base Administrative Fees paid to
SYSTEMED by OSHKOSH during such Contract Year.
5.3.
Within thirty (30) days after the end of the Contract Year, OSHKOSH will give SYSTEMED
written notice pursuant to Section 15.4 of the A~'eement of any facts giving rise to OSHKOSH's
right to assess a penalty against SYSTEMED pursuant to Section 5.1 above. Within thirty (30)
business days after OSHKOSH receives performance results from SYSTEMED. OSIIKOSH may
elect to assess such penalty against SYSTEMED. Any penalties assessed against SYSTEMED
pursuant to this Agreement, will be credited against furore billings to OSHKOSH under the
OSHKOSH Program in accordance with SYSTEMED's standard procedures. In the event of
termination of this Agreement in accordance with Section 10.1 of this Agreement, any penalty
amounts due to OSHKOSH will be paid by check.
FORMULARY
OSHKOSH will be a participating plan sponsor in MERCK-Medco Health's Preferred Prescriptions®
Formulary administered as an open formulary as set forth below for the term of this Agreement.
6.1.
Preferred Prescriptions Formulary - The Preferred Prescriptions Formulary is a prescription drag
formulary administered by PAID which lists FDA approved drugs that have been evaluated for
inclusion on the Preferred Prescriptions Formulary. The drags included on the Preferred
Prescriptions Formulary will be modified by PAID from time to time as a result of factors
including, but not limited to, medical appropriateness, manufacturer rebate arrangements and
patent expirations. SYSTEMED will implement PAID's formulary management programs, which
may include cost containment initiatives, communications with Eligible Persons, Participating
Pharmacies and/or physicians (including communications regarding generic substitution
programs), and financial incentives to Participating Pharm2tcies for their participation.
Compliance with the Preferred Prescriptions Formulary and PAID's formulary management
program will result in the Benefit Management Payment as set forth below. PAID reserves the
right to modify or replace the Preferred Prescriptions Formulary (including any modification or
replacement, the "Formulary") and formulary compliance methods and cost containment
initiatives consistent with good pharmacy practice. OSHKOSH agrees that SYSTEMED will be
the exclusive formulary administrator for OSHKOSH's prescription drag benefit programs during
the term of the Agreement. OSHKOSH is authorized to use the Formulary only for its own
Eligible Persons and only as long as the Program is in effect and administered by SYSTEMED.
6.2.
Formulary Savings - MERCK-Medco Health and its subsidiaries receive Formulary Rebates from
certain &rug manufacturers as a result of the inclusion of those manufacturers' branded products on
the Formulary ("Formulary Rebates"). MERCK-Medco Health also conducts therapeutic
interchange programs for formulary drags which will lead to cost savings, measured on a
discounted AWP basis ("AWP Savings"). MERCK-Medco Health also receives and retains
additional rebates and/or fees from certain m~tnufactorers which may take into account various
factors including the utilization of certain drugs within their respective therapeutic categories for
MERCK-Medco Health's book of business in aggregate as a result of various comnfitments,
services and programs including, but not limited to, formnlaries.
6.3.
Benefit Management Payment - After each full Contract Quarter, SYSTEMED will calculate a
Benefit Management Payment that shall be equal to the sum of(i) $0.65 times the total number of
brand name and generic prescriptions billed and paid for under OSHKOSH's Retail Pharmacy
Program during such Contract Quarter, plus (ii) $2.10 times the total number of brand name and
generic prescriptions billed and paid for under OSHKOSH's Mail Service Program during the
same Contract Qnarter (collectively the "Benefit Management Payment"). This Benefit
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Management Payment shall be paid or credited to OSHKOSH within ninety (90) days of the end
of each Calendar Quarter.
6.4.
If a government action, change in law or regulation, change in the interpretation of law or
regulation or action by any drug manufacntrer or by OSHKOSH has a material adverse affect on
the availability of Formulary Savings or the Benefit Management Payment, MERCK-Medco
Health may modify the Program Pricing Terms.
BILLING/PAYMENT
7.1.
SYSTEMED will provide OSHKOSH with a bi-weekly consolidated invoice for services provided
by SYSTEMED under the Program, in accordance with the Program Pricing set forth in Schedule
B. All invoices will be paid in full by OSHKOSH within six (6) business days of receipt by wire
transfer, electronic debit or other method approved by SYSTEMED in writing.
7.2.
OSHKOSH will pay SYSTEMED for administrative products and services provided by
SYSTEMED under the Program in accordance with the Administrative Fee provisions set forth in
Schedule B. SYSTEMED will provide OSHKOSH with an Administrative Fee invoice in
accordance with SYSTEMED's four (4) week Administrative Fee cycle. There is a minimum
charge of $250.00 per Administrative Fee invoice. OSHKOSH will pay Administrative Fee
invoices in full within fifteen (15) days of the invoice date.
SYSTEM~D may revise the Program Pricing Terms during the term of this Agreement upon sixty
(60) days prior written notice to OSHKOSH. If any such Program Pricing Terms revision is
unacceptable to OSHKOSH, OSHKOSH will notify SYSTEMED, in writing, within fifteen (15)
days of OSHKOSH's receipt of notice of the pricing revision. If the parties are unable to agree on
acceptable pricing, either party may terminate this Agreement upon sixty (60) days prior written
notice to the other party, provided such notice is given prior to the effective date of the proposed
pricing revision.
7.4.
Failure by OSHKOSH to make any payments in accordance with the terms of this Agreement will
constitute a payment default. Notwithstanding Section 10.2 of this Agreement, if OSHKOSH fails
to cure any such payment default within two (2) days, in addition to other available remedies,
SYSTEMED may terminate this Agreement upon notice to OSHKOSH. There will be a late
payment fee of 1% per month on the balance due on all late payments over ftve (5) days past due.
OSHKOSH will reimburse SYSTEMED for all collection costs incurred by SYSTEMED as a
result of any payment default by OSHKOSH under this Agreement.
RECORDS
8.1.
SYSTEMED will maintain all claims and eligibility records relating to services performed under
this Agreement as required by apphcable law. Such claims records will be in their original form,
on microfilm, microfiche or other form determined by SYSTEMED in a manner as to be
admissible as evidence in a court of law. The claims records may be examined and audited by
OSHKOSH or its representative approved by SYSTEMED, subject to execution of a
coxffidentiality agreement, throughout the calendar year in which they are established and for a
period of one (1) calendar year thereafter, subject to applicable confidentiality provisions and legal
requirements. Access to records older than the above may involve a fee. Subject to Section 9.2,
SYSTEMED may retain copies of such claims records for their own use. Any audit by
OSHKOSH may be conducted annually upon adequate prior written notice, and during regular
business hours.
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CONFIDENTIAL INFORMATION
9.1.
Each party will not disclose any information or knowledge concerning any other party's operations
or procedures, which is hereby deemed confidential information, except as otherwise required by
law. Each party also will keep the terms of this Agreement confidential, except as otherwise
required by law. If confidential information of a party is disclosed to or otherwise acquired by
another parry, such information will be held in confidence and surrendered by the acquiring party
to the disclosing party upon the termination of this Agreement or upon prior written request by the
disclosing party. Neither OSHKOSH nor SYSTEMED, will utilize the service marks, trademarks
or tradenames of the other party to this Agreement, or any service marks, trademarks or
tradenames so similar as likely to cause confusion, without express written approval of such other
party. The programs implemented by SYSTEMED will remain the sole property of SYSTEMED,
and will only be used by OSHKOSH in connection with the Program and so long as SYSTEMED
administers the Program.
9.2.
SYSTEMED and OSHKOSH will comply with all applicable laws and regulations regarding
patient confidenfiahty. SYSTEMED will not furnish any patient identifiable or OSHKOSH
identifiable data or information to any third party without the written consent of OSHKOSH,
except as reasonably necessary to implement and operate the Program and fulfill its obhgations
pursuant to this Agreement or as required by applicable law. The restrictions set foist in this
Section 9 will not apply to non-OSttKOSH identifiable and non-patient identifiable claims data or
information on an aggregated basis for statistical and reporting purposes.
9,3.
MERCK-Medco Health's agreements with pharmaceutical manufacturers are subject to
confidentiality agreements. Any audit ofMERCK-Medco Health's agreements with
pharmaceutical manufacturers conducted pursuant to Section 8.1 above, will be conducted by (i) a
Big 5 public accounting firm approved by SYSTEMED whose audit department is a separate
stand alone function of its business, or (ii) a national CPA firm approved by SYSTEMED whose
audit department is a separate stand alone function of its business. The orgahization that will be
performing the audit must carry insurance for professional malpractice of at least $2,000,000,
subject to execution of MERCK-Medco Health's confidentiality agreement, and will include only
those portions of such pharmaceutical manufacturer agreements as necessary to determine
SYSTEMED's compliance with Section 6 above in respect to Formulary Rebates.
10. TERM OF AGREEMENT
10.1.
This Agreement will remain in effect for an initial term from January 1, 2001 through December
31, 2004 (the "Initial Term") and thereafter will automatically renew for successive one (1) year
terms unless either party gives written notice, at least one hundred eighty (180) days prior to the
end of any such term, to the other party of its intent to terminate this Agreement as of the end of
the then current term. Notwithstanding the termination of this Agreement, SYSTEMED agrees to
continue to render services hereunder and OSHKOSH agrees to pay for services of SYSTEMED
in accordance with the terms of this Agreement for any claims incurred for prescription drag
benefits by Eligible Persons while this Agreement was in force.
10.2.
In the event of a material breach of this Agreement, the party alleging such breach will give
written notice thereof to the other parties. If such breach is not cured within sixty (60) days of
receipt of such notice, the non-breaching party may terminate this Agreement upon written notice
to the other party.
11. FORCE MAJEURE
Neither SYSTEMED nor OSHKOSH will be deemed to have breached this Agreement or be held table for
any failure or delay in the performance of all or any portion of its obligations under this Agreement if
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prevented from doing so by a cause or causes beyond its control. Without limiting the generality of the
foregoing, such causes include acts of God or the public enemy, fires, floods, storms, earthquakes, riots,
strikes, boycotts, lock-outs, wars and war-operations, restraints of government, power or communications
hne failure or other circumstances beyond such party's control, or by reason of the judgment, ruling or
order of any court or agency of competent jurisdiction or change or interpretation of law or regulation or
change in the interpretation thereof subsequent to the execution of this Agreement.
12. INDEMNIFICATION/LIMITATION OF LIABILITY
12.1.
SYSTEMED, on behalf of itself and its affiliates, will indemnify and hold OSHKOSH, its
officers, d/rectors and employees (each an "Indemnified Party") harmless fi.om claims, causes of
action, or other penalties or damages, including reasonable fees for related legal services, asserted
against an Indemnified Party arising fi.om services rendered by SYSTEMED pmsuant to this
Agreement to the extent the claim or cause of action arises out of SYSTEMED's negligence or
willful misconduct, or noncomphance with a law or regulation provided that (a) OSHKOSH has
given reasonable notice to SYSTEMED of the claim or cause of action, or other penalties or
damages and (b) no Indemnified Party has, by act or failure to act, compromised SYSTEMED's
position with respect to the resolution or defense of the claim or cause of action.
12.2.
OSHKOSH will indemnify and hold SYSTEMED, its affiliates, and their respective officers,
directors and employees (each an "Indemnified Party") harmless from claims or causes of action
or other penalties or damages, including reasonable fees for related legal services asserted against
an Indemnified Party arising from (i) neghgence or willful misconduct or noncompliance with a
law or regulation of OSHKOSH, including without limitation, the disclosure and/or use of
Program data or information provided by SYSTEMED to OSHKOSH, except as otherwise
mqu/red by law, (ii) the provision of patiant identifiable data by MERCK-Medco Health or its
subsidiaries to OSHKOSH or OSHKOSH's designees, or (iii) OSHKOSH's release of patient
identifiable information to MERCK-Medco Health or MERCK-Medco Health's use of the
information to offer, implement and administer the Health Management Programs set forth in
Section 14, provided that (a) the Indemnified Party has given reasonable notice to OSHKOSH of
the claim or cause of action, and (b) no Indemnified Party has, by act or failure to act,
compromised OSHKOSH's position with respect to the resolution or defense of the claim or cause
of action.
12.3.
SYSTEMED will maintain, during the term of this Agreement, liabihty coverage with limits not
less than $1,000,000 per occurrence and in the aggregate per policy year, with excess liability
coverage in an amount not less than $5,000,000 per policy year. Evidence thereof will be
furnished to OSHKOSH upon request.
12.4.
Except as provided in Section 12.1 above, SYSTEMED or any affiliated company, or their
directors, officers or employees, will not be responsible for any claim, loss or damage sustained as
a result of the provision of or failure to provide pharmaceutical goods or services or any other
action or failure to act by any retail pharmacy or pharmaceutical providers pursuant to this
Agreement.
12.5. Neither SYSTEMED nor OSHKOSH will not be liable to each other for incidental, consequential
or exemplary damages.
13. EXCLUSIVITY
SYSTEMED will be the exclusive providers and administrators ofPBM Serviees to OSHKOSH and its
subsidiaries while this Agreement is in effect. Nothing contained herein, however, will prohibit
SYSTEMED or any affiliated entity fi.om providing or administering PBM Services and related programs
and services to any other entity while this Agreement is in effect.
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14. HEALTH MANAGEMENT PROGRAMS
14.1.
MERCK-Medco Health Pro,rams - OSHKOSH hereby retains MERCK-Medco Health to make
available, implement and administer MERCK-Medco Health's Health Management Programs (current
programs referenced in Schedule C) as agreed from time to time between MERCK-Medco Health and
OSHKOSH (the "Health Management Programs") to Eligible Persons. MERCK-Medco Health may,
from lime to time, modify the Health Management Programs as MERCK-Medco Health determines is
in the best interests of Health Management Progran~ enrollees.
14.2. Cooperation
14.2.1.
Promptly following the date that a particular Health Management Program is agreed to
between MERCK-Medco Health and OSHKOSH and from time to time thereafter,
OSHKOSH will provide such assistance as MERCK-Medco Health may reasonably
request in connection with MERCK-Medco Health's offer, implementation and
administration of the Health Management Program, including, without limitation,
assisting in the identification and contacting of Eligible Persons with medical conditions
addressed by the Health Management Program and otherwise providing assistance in
making the Health Management Program available to appropriate Eligible Persons.
14.2.2.
OSHKOSH acknowledges and agrees that the Health Management Programs may include
communications with Eligible Persons, Participating Pharmacies and/or physicians,
including mailings, interviews and other communications, before, during and following
an Eligible Person's enrollment in a Program. In connection with MERCK-Medco
Health's offer, implementation and administration of the Health Management Programs,
OSHKOSH agrees that MERCK-Medco Health may use OSHKOSH's name and indicate
that OSHKOSH has sponsored participation in the Health Management Programs when
contacting Eligible Persons and physicians.
14.3. Information
14.3.1.
Promptly following the date that a particular Health Management Program is agreed to
between MERCK-Medco Health and OSHKOSH, OSHKOSH will finnish or cause to be
furnished to MERCK-Medco Health, in a format compatible with MERCK-Medco
Health's data processing system, all information necessary for MERCK-Medco Health to
administer the Health Management Program to Eligible Persons. Such information will
include, but is not limited to, complete and accurate eligibility data and medical claims
data for the periods and in accordance ~vith the specifications established by MERCK-
Medco Health. OSHKOSH will timely update such data, not less frequently than
quarterly, as necessary to remain current.
I4.3.2.
The foregoing information may be used by MERCK-Medco Health to profile patients, to
offer, implement and administer the Health Management Program, to assess patterns of
care and outcomes measurements, to provide opportunity analysis for interventions,
adherence analysis, Formulary compliance and other managed care programs and in
administering, evaluating and improving its health management programs and other
managed care programs. OSHKOSH acknowledges that MERCK-Medco Health may
also aggregate such information and other information collected in the administration and
implementation of the Health Management Programs on a patient non-identifiable basis
with data from other sources for the purpose of perforating outcomes and/or opportunity
analyses, assessing the effectiveness ofMERCK-Medco Health's managed care programs
and supporting a secondary research data base, which may be provided by MERCK-
Medco Health to other clients or potential clients or healthcare organ/zations, including
pharmaceutical manufacturers.
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33458.1
14.4. Charges - OSHKOSH's participation in the Health Management Programs will be free of charge
during the Initial Term of this Agreement.
14.5.
Pro~ram Ownership - It is agreed that the Health Management Programs, including all
correspondence, protocols and other materials relating to the Health Management Programs, will
be and remain the exclusive property of MERCK-Medco Health and, if disclosed to or otherwise
acquired by OSHKOSH, will be held in confidence by OSHKOSH as provided in this Agreement.
15. GENERAL
15.1. Independent Contractor - The relationship between SYSTEMED and OSHKOSH will solely be
that of independent contractors engaged in the operation of their own respective businesses.
15.2.
Assignment - This Agreement may not be assigned by any party without the express prior
approval of the other parties provided, however, that services to be performed by SYSTEMED
hereunder may be performed by their subsidiaries, affiliates and/ur designees.
I5.3.
No Third Party Baneficiary - This Agreement has been entered into solely for the benefit of
OSHKOSH and SYSTEMED, and is not intended to create any legal, equitable or beneficial
interest in any third party or to vest in any third party any interest as to enforcement or
performance.
15.4.
Notices - Ali notices required under this Agreement will be in writing and sent by certified mail,
return receipt requested, hand delivery or overnight delivery by a nationally recognized service
addressed as follows:
If to OSHKOSH:
City of Oshkosh
215 Church Street
Oshkosh, WI 54901
Attention: Jolm Fitzpatrick
If to SYSTEMED:
Systemed, L.L.C.
100 Parsons Pond Drive
Franklin Lakes, NJ 07417
Attention: Thomas M. Moriarty
Vice President and Counsel
15.5. Amendments - This Agreement may be amended only in writing when signed by a duly
authorized representative of each party.
15.6.
Financial Responsibility - If SYSTEMED has reasonable grounds to believe that OSHKOSH may
not meet its payment obligations under this Agreement as they become due, SYSTEMED may
request information and/or reasonable assurances (including a deposit) from OSHKOSH as to its
financial responsibility. If the information or assurances are not furnished to SYSTEMED within
five (5) days, or are not satisfactory in SYSTEMED's reasonable judgment, SYSTEMED may
immediately terminate this Agreement.
15.7.
SYSTEMED Account Management shall meet on a mutually convenient site and time to review
on a quarterly basis to review Program performance and available drug trend information for the
Program.
15.8.
Plan Design - The Program Pricing Terms set forth in this Agreement are based upon the Plan
Designs, Minimum Enrollment and Program specifications agreed to between the parties as
reflected in this Agreement and as otherwise hereafter a~'eed to by the parties in writing. Any
modification or failure to maintain Minimum Enrollment may result in a retroactive modification
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33458.1
15.9.
15.10.
15.11.
15.12.
15.13.
15.14.
15.15.
15.16.
15.17.
by SYSTEMED of the Program Pricing Terms OSHKOSH will provide Eligible Persons with
notice of approved Plan Design changes.
Interpretation of Plan- OSHKOSH will not name or represent that MERCK-Medco Health,
PAID, Rx SERVICES or SYSTEMED is, and MERCK-Medco Health, PAID, Rx SERVICES or
SYSTEMED will not be, a Plan Adrdinstxator or a named fiduciary of OSHKOSH's prescription
drug benefit plan (the "Plan") as those terms are used in the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. § § 1001 et seq., and the regulations promulgated under
ERISA. OSHKOSH will have complete discretionary, binding and final authority to construe the
terms of the Plan, to interpret ambiguous Plan language, to make factual determinations regarding
the payment of claima or provisions of benefits, to review denied claims and to resolve complaints
by Eligible Persons.
Tax - Any sales, use or other tax imposed on items dispensed, or services provided hereunder, will
be the sole responsibility of OSHKOSH.
Govemin~ Law - This Agreement will be construed and governed in accordance with the laws of
the State of Wisconsin. However, all matters relating to the operations of Rx SERVICES will be
governed by the laws of the state in which Rx SERVICES' pharmacy is located.
Enforceability - The invalidity or unenforceability of any of the terms or provisions hereof will
not affect the vahdity or enforceability of any other term or provision.
Section Headings - Section headings are inserted for convenience only and will not be used in any
way to construe the terms of this Agreement.
Waiver - The ;vaiver of any breach or violation of any term or provision hereof will not constitute
a waiver of any subsequent breach or violation of the same or any other term or provision.
Approvals - Whenever approval of any party is required under this Agreement, such approval will
not be unreasonably withheld.
Entire Agreement - This Agreement, together with the Schedules hereto, embodies the entire
understanding of the patties in relation to the subject matter hereof, supersedes any prior
agreement among the parties in relation to the subject matter hereof, and no other agreement,
understanding, or representation, verbal or otherwise, relative to the subject matter hereof exists
among the parties at the time of execution of tkis Agreement.
Survival - The provisions of Sections 7.4, 9, 12 and the last sentence of 10.1 will survive the
termination of this Agreement.
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33458.l
IN WITNESS WHEREOF, the parties have executed this Agreement on the date indicated below.
NAME:
SYSTEMED, L.L.C.
BY:
Thomas M. Moriartv
TITLE: Vice President and Counsel
DATE: [O( 1 (. 6.2,
33458.1 (7/23/02) efs
Original 30130.1 (11/14/01) efs
-/- / (si"gnatare)
NAME: Richard A. Wollangk, City Manager
TITLE: City Manager
Pamc~l~a ~R.' Ubrig, C~tY CIOt~ / \
APPROVED
- 13-
33458.1
SCHEDULE A-1
RETAIL PHARMACY PROGRAM
COVERED DRUGS/EXCLUSIONS
[TO BE PROVIDED]
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33458.1
SCHEDULE A-2
MAIL SERVICE PROGRAM
COVERED DRUGS/EXCLUSIONS
[TO BE PROVIDED]
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33458.1
SCHEDULE B
PROGRAM PRICING TERMS
OSHKOSH will pay SYSTEMED for services provided by SYSTEMED under the Program as follows:
RETAIL PHARMACY PROGRAM CLAIMS - osm~osH will pay SYSTEMED
for Covered Drags dispensed by Participating Pharmacies and submitted via TelePAID under the Retail
Pharmacy Program in an amount equal to the lowest of(i) the pharmacy's usual and customary price, as
submitted ("U&C"), (ii) the maximum allowable cost ("MAC"), where applicable, plus the Dispensing Fee
set forth below, or (ii) an average annual AWP discount of minus (-)13%, plus the Dispensing Fee set forth
below. Payment by OSHKOSH is subject to the applicable Copayment/Coinsurance amount set foi~ch
below:
Dispensing Fee - The Dispensing Fee per prescription or authorized refill will average $2.00 for
Brand Name Drugs and will average $2.50 for Generic Drags.
1.2.
Copayment/Coinsurance - The Copayment/Coinsurance amount for each prescription or refill
dispensed by a Participating Pharmacy under the Retail Pharmacy Program will be as designated
for each Group in the applicable Plan Design(s).
1.3.
Minimum Charge at Retail -Notwithstanding the pricing set forth above, in order to maintain
reasonable access to retail pharmacies, SYSTEMED may find it appropriate during the tema of the
Agreement to negotiate the following modification to the pricing terms above with certain retail
pharmacies to obtain or maintain their participation in PAID's Participating Pharmacy Network.
When the discounted AWP pricing or MAC pricing, as applicable, set foxth above for a Covered
Drag plus the Dispensing Fee is less than both (a) the U&C, and (b) the applicable copayment, the
Eligible Person's copayment for such Covered Drug will be the lower of(y) the U&C, or (z) the
applicable copayment, and there will be no charge to OSHKOSH under this Section 1.
2. RETAIL NETWORK COMPONENT DISCOUNT GUARANTEE
2.1.
2.2.
SYSTEMED guarantees that as a result of the PAID network management programs, for all
Covered Drugs (exclusive of Specialty Drugs) dispensed by Participating Pharmacies in the
CCNIII Network and submitted via TelePAID, in the aggregate, for each full Contract Year during
the Initial Term, (a) the average Ingredient Cost AWl> discount will be minus (-) i4% for Brand
Name Drags and minus (-) 50% for Generic Drugs (the "Guaranteed Ingredient Cost Discounts"),
and (b) the average Dispensing Fee will be $2.25 (the "Guaranteed Dispensing Fee"). The
Guaranteed Ingredient Cost Discounts and the Guaranteed Dispensing Fee are calculated by
measmSng the incremental values of: the negotiated network discount; MAC pricing; Usual and
Customary pricing and savings achieved through PAID's pharmacy audit program, against the
AWP of all prescriptions (exclusive of Specialty Drugs) dispensed under the Program and
subrrfitted by Participating Pharmacies in the CCNIII Network via TelePAID. In the event of a
material Plan Design modification, an increase or decrease in the total number of Participating
Pharmacies in the CCNIII Network by greater than five (5%) percent, or a change in ownership of
five (5%) percent or more of Participating Pharmacies in the CCNIII Network, SYSTEMED may
modify the Guaranteed Ingredient Cost Discounts and Guaranteed Dispensing Fee on an equitable
basis.
Within one hundred eighty (I80) days after the end of each full Contract Year during the Initial
Term, SYSTEMED will calculate and report the actual average Ingredient Cost discounts (the
"Actual Ingredient Cost Discounts") and actual average Dispensing Fee ("Actual Dispensing Fee")
achieved for all Brand Name Drugs (exclusive of Specialty Drugs) and Generic Drugs dispensed
by Participating Pharmacies in the CCNIII Network and submitted via TelePAID, in the
aggregate, for such Contract Year. If the aggregated Actual Ingredient Cost Discount for Brand
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33458.1
Name Drugs or Generic Drags for any such Contract Year is less than the corresponding
aggregated Guaranteed Ingredient Cost Discount, or if the aggregated Actual Dispensing Fee for
any such Contract Year is greater than the Guaranteed Dispensing Fee, SYSTEMED will credit
the full dollar amount of such shortfall against future billings to OSHKOSH under the Program.
However, any shortfall on the Actual Ingredient Cost Discount for Brand Name Drugs or Generic
Drags, or Actual Dispensing Fee, will be offset by any surplus savings available on any of these
three components of this guarantee.
So long as the guarantee set forth in this Section 2 is in effect, SYSTEMED shall have no separate
liability under the Retail Pharmacy Program pricing set forth in Section 1 of this Schedule B.
MAIL SERVICE PROGRAM CLAIMS- OSHKOSH will pay SYSTEMED for
Covered Drugs dispensed by Rx SERVICES under the Mail Service Program in an amount equal to an
Ingredient Cost plus Dispensing Fee for each Covered Drag dispensed, less the applicable
Copayment/Coinsurance amount, as such terms are defined below:
3.1.
Ingredient Cost - The Ingredient Cost is AWP minus (-) 17% for Brand Name Drugs and AWP
n'finus (-) 50% for Generic Drugs.
3.2.
Dispensing Fee - The Dispensing Fee per prescription or authorized refill is $1.00. Dispensing
Fees are inclusive of postage. If postage rates (i.e., U.S. mail and/or applicable commercial
courier services) increase during the term of this Agreement, the Dispensing Fee will be increased
to reflect such increase(s).
Copayment/Coinsurance - The Copayment/Coinsurance amount for each prescription or refill
dispensed by Rx SERVICES under the Mail Service Program will be as designated for each Group
in the applicable Plan Design(s). The Copaymant/Coinsnsance amount will be the rndnimum
charge for the prescription or refill dispensed by Rx SERVICES under the Progran~
SPECIALTY DRUG CLAIMS - Notwithstanding anything to the contrary in Sections 1 and
3 above and elsewhere in the Agreement, OSHKOSH will pay SYSTEMED for Covered Drugs designated
by SYSTEMED as Specialty Drugs on a separate ingredient cost basis phis applicable Dispensing Fee,
subject to the Copayment/Coinsurance in the applicable Plan Design. "Specialty Drugs" will mean single
source Covered Drugs with non-standard pharmaceutical manufacturer discounts and/or additional
handling, storage and/or shipping expenses. SYSTEMED may modify this list of Specialty Drugs and
pricing terms. SYSTEMED will provide its then em'rent list of Specialty Drugs upon OSHKOSH's written
request.
ADMINISTRATIVE FEES
5.1.
OSHKOSH will pay to SYSTEMED a Base Administrative Fee in the amount of $0.48 per paid
retail transaction processed by PAID under the Retail Pharmacy Program for the following Base
Administrative Services, as applicable:
· Administration of eligibility submitted via tape or telecommunication in a SYSTEMED standard
format
· Eligibility maintenance (mira'mum of weekly updates)
· Dependent Eligibility Certification System (DECS)
· SYSTEMED's client support system (CAS) for on-line access to current eligibility (equipment,
installation and line charges are responsibility of OSHKOSH)
· Admirdstratiun of OSHKOSH's Plan Design within MERCK-Medco Health standards
· In-network claims adjudication via TelePAID® on-line claims adjudication system
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33458.1
5.2.
· Coordination of Benefits Level I (when flagged on eligibility records)
· Twelve months on-line claims history retention (for use in claims processing)
· Processing associated with Marl Scawice Program prescriptions
· Announcement letter
· SYSTEMED descriptive brochure
· Pm-addressed mail service order form/envelope
· Patient profile questionnaire card
· One PAID Identification Card per primary Eligible Participant (two per family)
· Information on access to major Participating Pham~acy network chains
· Generic Refill Reminder Program
· Generic Snap Pack Program
· SYSTEMED standard materials including:
· Explanation of Bc~nefits (EOB) for out-of-network claims
· Direct reimbursement claim form
· Coordination of benefits (COB) claim form
· Benefit denial letters for instances where Eligible Person/drug are not covered
· TDD-TTY services for hearing impaired to access Customer Service Department
· Integrated Concurrent Drug Utilization Review 03UR) via TelePAID®
· High Utilization Management program (Identification Module)
· SYSTEM]ED's Health Management Programs
· Access capabilities to CAS to support OSHKOSH managed prior authorization activities
· SYSTEMED StandardPt'us Report Sefies (SPRS)
· Establish, maintain, credential and contract an adequate panel of Participating Pharmacies
· Development and distribution of communication materials to Participating Pharmacies regarding
the Program
· Toll-free access to Help Desk for eligibility/claims processing assistance
· Toll-free access to Participating Pharmacies for DUR assistance
· Toll-free telephone access to voice response unit for location of Participating Pharmacies in zip
code area
· SYSTEMED Pharmacy Audit Program - Level I
· Toll-flee telephone access to Oastomer Service for the program for use by Eligible Persons,
OSHKOSH benefits personnel and physicians
· Gatekeeper program
· 24 hour access to a SYSTEM~D pharmacist via toll-free telephone service
OSHKOSH will also pay for Additional Administrative Services requested by OSHKOSH and
provided by SYSTEMED under the Program as follows:
· Extra Identification Cards
· Direct reimbursement/out-of-network claLms
adjudication
· Coordirmtion of Benefits Level II
· Adjudication of Medicaid subrogation claims (unless
$0.35 per card
$1.50 per claim
$2.50 per claim
$3.00 per claim
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33458.1
responsibility is otherwise assigned by OSHKOSH)
· Hard copy eligibility submission Data entry charges
· Mailings direct to Eligible Persons or OSHKOSH Actual postage charges
location
Charge for additional services not listed above will be determined by SYSTEMED and quoted
upon request.
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33458.1
SCHEDULE C
HEALTH MANAGEMENT PROGRAMS
1. Diabetes Program
2. Digestive Health Program
3. Depression Program
4. Respiratory Program
5. Hypertension Program
6. High Cholesterol Program
7. Hepatitis C Program
8. Multiple Sclerosis Program
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33458.1