Express Scripts Service Agreeme
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MEMORANDUM
December 14, 2004
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Administrative Services Agreement between the City of Dubuque and
Express Scripts, Inc.
Personnel Manager Randy Peck recommends City Council approval of an agreement
with Express Scripts, Inc. to be the City of Dubuque's pharmacy benefit manager
effective August 18, 2004, and effective for an initial term of three - one year terms.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Mich el C. Van Milligen
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Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
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Memorandum
December 14, 2004
TO:
FROM:
Michael C. Van Milligen
City Manager
Randy Peck .o{J
Personnel Manager r~
SUBJECT: Administrative Services Agreement between the City of Dubuque and
Express Scripts, Inc.
The Health Care Committee participated in an RFP process for pharmacy benefit
managers, sponsored by the Iowa Employer Coalition and conducted by Gallagher, Inc.,
our benefit and actuarial consultant. The Iowa Employer Coalition is a coalition of other
Iowa cities and counties. There was no cost to the City to participate in the RFP
process. The proposal process is completed and the selection has been made.
Express Scripts, our current pharmacy benefit manager, was selected as the pharmacy
benefit manager for the Iowa Employer Coalition. Based on the projections prepared by
Gallagher, Inc., our annual savings, assuming there is no increase in the number of
prescriptions dispensed, will be $28,800. The savings comes primarily from a reduction
in the claims processing fee, higher formulary rebates and lower dispensing fees.
The Agreement is effective on August 18, 2004 and will remain in effect for an initial
term of three - one year terms. Bill Robinson of Gallagher, Inc., our benefit and
actuarial consultant, has reviewed the Agreement and finds the terms acceptable.
Barry Lindahl has reviewed the indemnity provisions and has found the language
acceptable. I request that the City Council approve a motion authorizing you to sign the
Agreement.
If you have any questions, please feel free to call.
RP:bf
cc:
Barry Lindahl, Corporation Counsel
Health Care Committee
EXPRESS SCRIPTS,INC.
PHARMACY BENEFIT MANAGEMENT AGREEMENT
THIS PHARMACY BENEFIT MANAGEMENT AGREEMENT ("Agreement") made to be effective
August 18, 2004 ("Effective Date"), is entered into by and between EXPRESS SCRIPTS, INC., on behalf
of itself and its subsidiaries (collectively referred to as "ESI"), and CITY OF DUBUQUE, a municipality
organized under the laws of the State of Iowa ("Sponsor") for the purpose of setting forth the terms on
which ESI will provide pharmacy benefit management services to Sponsor. The parties agree as follows:
SECTION I - DEFINITIONS
The following terms shall have the meanings set forth below:
"Copaymenf' means that portion of the charge for each Covered Drug dispensed to the Member that is
the responsibility of the Member (e.g., copayment, coinsurance and/or deductible) as indicated on the
EBD.
"Covered Drug(s)" means those prescription drugs, supplies, Specialty Products (if applicable), and other
items that are covered under the Plan, as indicated on the EBD.
"CuraScript" means a duly licensed pharmacy owned or operated by ESI or its subsidiaries where
Specialty Products are dispensed for, and delivered to, Members.
"EBD" means a prescription drug benefit summary form ESI has provided to Sponsor which, when
completed and approved by Sponsor, will describe the essential features adopted by Sponsor for the
prescription drug components of its Plan(s}.
"Eligibility Files" means the list submitted by Sponsor to ESI in reasonably acceptable on-line, FTP, or
eiectronic format indicating persons eligible for drug benefit coverage services under the Plan. Non-
conforming formats shall be subject to additionai charge as set forth in Exhibit A.
"Formulary" means the list of FDA-approved prescription drugs and supplies developed by ESl's
Pharmacy and Therapeutics Committee and/or customized by Sponsor, which is selected and adopted by
Sponsor.
"HIPAA" shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.
"Implementation SOW" means a form completed and signed by Sponsor prior to implementation that
contains the material elements of Sponsor's eligibility set-up, Including processing fields, indemnity and
termination rules, file layout and alternative ID numbers, etc.
"ID Card" means ESl's standard single purpose (NCPDP format) printed identification card containing the
applicable ESI logo or other mutually acceptable method of identifying ESI as the provider of pharmacy
benefit services.
"Mail Service Pharmacy" means a duly licensed pharmacy operated by ESI or its subsidiaries, other than
CuraScript, where prescriptions are filled and delivered to Members via the mail service.
"Member" means each person who is eligible, as determined solely by Sponsor, to receive prescription
drug benefits as indicated in the Eligibility Files.
"Member Submitted Claim" means (i) a paper claim submitted by a Member for Covered Drugs dispensed
by a pharmacy other than a Participating Pharmacy; (ii) a paper claim submitted by a Member for
This Agreement is confidential and may not be disclosed to any other party
without the express written consent of both parties.
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Covered Drugs for which the Member paid cash; or (iii) subrogation claims submitted by the United States
or any state under Medicaid or similar government health care programs.
"Participating Pharmacy" means any licensed retail pharmacy with which ESI has executed an agreement
to provide Covered Drugs to Members.
"Pharmacy" or "Pharmacies" refers from time to time to any or all Participating Pharmacies, Mail Service
Pharmacy, or CuraScript as the context of the provision dictates.
"Plan" means Sponsor's applicable welfare benefit plan(s) that contains a prescription drug benefit.
"Prescription Drug Claim" means a Member Submitted Claim or claim for payment submitted to ESI by a
Pharmacy as a result of dispensing Covered Drugs to a Member.
"Protected Health Information" or "PHI" shall have the meaning ascribed to it under HIPAA.
"Rebates" means retrospective rebates that are paid to ESI pursuant to the terms of a rebate contract
negotiated independently by ESI with a pharmaceutical manufacturer, and directly attributable to the
utilization of certain pharmaceuticals by Members. Rebates do not include administrative fees paid by
pharmaceutical manufacturers to ESI.
"Specialty Products" means those biotech and other injectable prescription drug products requiring
special handling and Member services.
"UM Company" means an independent, third party utilization management company with which ESI
contracts to provide appeal services at Sponsor's option, as further described in Section 3.2(d).
SECTION II - ESTABLISHMENT OF THE PRESCRIPTION DRUG PROGRAM
2.1 Exclusivity. At all times while this Agreement is in effect, Sponsor shall use ESI as the exclusive
provider of pharmacy benefit management services for all of its self-funded welfare benefit Plans offering
a prescription benefit, including, but not limited to, pharmacy network management, claims processing,
Mail Service Pharmacy, Specialty Products, Formulary development and Rebate management.
Pharmacy reimbursement rates, administrative fees and Rebates are conditioned on ESl's exclusive
status hereunder.
2.2
Eliqibilitv.
(a) ESI shall implement the Eligibility Files and Sponsor's set up in accordance with the
Implementation SOW. Any changes to the Implementation SOW must be documented on ESl's form of
amendment to Implementation SOW and signed both by Sponsor and ESI.
(b) The timing of loading full Eligibility Files will be determined upon consultation with the
Sponsor. Clean changes only files shall be loaded within an average of two (2) days. Sponsor shall
provide Eligibility Files for monthly reconciliation until such time that ESI determines that quarterly
reconciliations are adequate. ESI shall not be responsible for Prescription Drug Claims for retroactively
termed Members, although ESI will maintain updated Eligibility Files with the termed information.
Sponsor shall be responsible for all Prescription Drug Claims during the period of the Member's eligibility
as indicated on the Eligibility File, except in the event of ESI's negligence.
2.3 Benefit Desiqn Form. Prior to the provision of any services under this Agreement, Sponsor will
submit a completed EBD. By signing the EBD, Sponsor certifies that the EBD accurately depicts the
pharmacy benefit provisions of the Plan. Sponsor is solely responsible for timely communication of the
terms of and changes to the Plan to its Members prior to the effective date of such provisions. Sponsor
shall notify ESI in the event of change to benefit design features of the Plan after initial setup, including
96463v2
2
but not limited to changes in Copayments, Covered Drugs, or prior authorization requirements in writing,
via ESl's standard benefit change forms.
2.4 Implementation Payment. Subject to Section 7.2(e), ESI will pay to Sponsor an implementation
payment equal to $2.50 per Member implemented as of Sponsor's "go live" date, subject to a maximum
payment of $50,000 in the aggregate (the "Implementation Payment"), intended solely to reimburse
Sponsor for the actual, fair market value of expenses to be incurred by Sponsor in transitioning to ESI.
Sponsor represents and warrants that: (i) it will only use the Implementation Payment as reimbursement
for its actual implementation expenses incurred in transferring to ESI; (ii) the amount of the
Implementation Payment is equal to or less than the fair market value of the actual implementation
expenses to be incurred by Sponsor in transitioning to ESI; and (iii) the expenses for which Sponsor is
receiving the Implementation Payment are reasonable and consistent with the fair market value
associated with such expenses in an arm's length transaction. ESI intends to amortize the
Implementation Payment over the Initial Term of the Agreement on a straight-line basis, unless otherwise
required by law or accepted accounting principles. Sponsor shall notify and disclose the amount and the
terms of the Implementation Payment to Members and other third parties to the extent appropriate under,
or required by, applicable laws and regulations and that it will only use such Implementation Payment in a
manner consistent with the applicable law. Implementation Payments are not payable until this
Agreement is executed.
SECTION 111- PBM SERVICES
3.1
Pharmacy Services.
(a) Participatinq Pharmacies. Upon presentation of an ID Card, Members may obtain
prescriptions for Covered Drugs through a Participating Pharmacy network. ESI will make available an
updated list of Participating Pharmacies in such network(s) on-line. Participating Pharmacies will
dispense prescriptions to Members in a quantity not to exceed a 34-day supply unless otherwise specified
in the EBD. ESI shall direct Participating Pharmacies to charge and collect the applicable Copayment
from Members for each Covered Drug dispensed; provided, a Member's Copayment charged for a
Covered Drug shall be the lesser of the applicable Copayment or the U&C.
(b) Mail Service Pharmacy. Members may have prescriptions filled through the Mail Service
Pharmacy. Subject to flPplicable law, ESI may communicate with Members regarding benefit design, cost
savings, availability and use of the Mail Service Pharmacy, as well as provide web-based refill and related
service features. Prescriptions will be dispensed in a quantity not to exceed a 90-day supply, unless
otherwise specified in the EBD. If the prescription and applicable law do not prohibit substitution of a
Generic Drug equivalent, to the prescribed drug, or if the Mail Service Pharmacy obtains the consent of
the prescriber, the Mail Service Pharmacy shall dispense the Generic Drug substitute to the Member.
(c) Specialty Products. Members may have Specialty Products filled through CuraScript as
set forth on Exhibit A.
(d) Requirements for Participation. ESI shall require each Participating Pharmacy to meet
ESI's participation requirements, including but not limited to, licensure, insurance and provider agreement
requirements. ESI does not direct or exercise any control over the professional judgment exercised by
any pharmacist in dispensing prescriptions or otherwise providing pharmaceutical related services at a
Participating Pharmacy. Participating Pharmacies are independent contractors of ESI, and ESI shall
have no liability to Sponsor, any Member or any other person or entity for any negligent act or omission of
any Participating Pharmacy or their or its agents or employees.
(e) Audits of Participatinq Pharmacies. ESI shall maintain criteria, which it may amend from
time to time, to establish when and how a Participating Pharmacy shall be audited to determine
compliance with its agreement with ESI. Audit criteria are available upon request. The audit may be
conducted by ESI's internal auditors or its outside auditors, and at the pharmacy or at ESI by a review of
electronically transmitted claims. To compensate ESI for the cost of conducting such audits, ESI shall
96463v2
retain an audit fee from any recovered overpayment of the reimbursement Fees paid to ESI and
attributable to the Plan detected in the audit in the amount set forth in Exhibit A. Any balance of
recovered overpayments will be paid to Sponsor. ESI shall attempt recovery of overpayments through
offsets or demand of amounts due. ESI shall not be required to institute litigation to recover any
overpayments.
(f) Pharmacy Help Desk. ESI will provide 24-hours a day, 7-days a week toll-free telephone
support and Internet site to assist Pharmacies with Member eligibility yerification and questions regarding
reimbursement, Covered Drug benefits under the Plan or other related concerns.
3.2
Claims ProcessinQ.
(a) On-Line Claims Processinq. ESI will perform claims processing services for Covered
Drugs dispensed by a Pharmacy. Such services include (i) verifying eligibility; (ii) performing DUR; (iii)
calculating benefits in accordance with the EBD; (iY) enabling Pharmacies and physicians to verify
eligibility, Formulary, utilization history and benefit design; and (v) adjudicating the claims. Sponsor or its
third party designee (as applicable) shall have the final responsibility for all decisions with respect to
coverage of a Prescription Drug Claim and the benefits allowable under the Plan, including determining
whether any rejected or disputed claim shall be allowed.
(b) Member Submitted Claims. If provided on the EBD, ESI shall process Member
Submitted Claims. The Member (or Medicaid agency, as the case may be) shall be responsible for
submitting such claims directly to ESI on a form proYided by ESI within the time period set forth on the
EBD. ESI shall reimburse such Member or agency on behalf of Sponsor, the lesser of the amount
invoiced or the amount ESI would have reimbursed the applicable Member for such claim in accordance
with the applicable EBD.
(c) Prior Authorization. Subject to the fees set forth on Exhibit A (if applicable), ESI shall
provide prior authorization ("PA") services, including exception reviews and overrides for quantity limits,
nonformulary determinations and benefit exclusions as specified and directed by Sponsor for drugs
designated on the EBD. Prior authorized drugs must meet Sponsor-approved guidelines ("Guidelines")
before they are deemed to be Covered Drugs. Sponsor authorizes coverage for an otherwise excluded
use in the event of co-morbidities, complications and other factors not otherwise expressly set forth in the
Guidelines, unless Sponsor directs that Sponsor be provided such issue for determination. Sponsor
acknowledges that PA programs are based on objective criteria and the limited amount of patient
information available to ESI. In determining whether to authorize coverage of such drug under the PA
Program, ESI shall apply only the Guidelines and may rely entirely upon information about the Member
and the diagnosis of the Member's condition proYided to it from sources deemed reliable to ESI. ESI shall
not undertake, and is not required hereunder, to determine medical necessity to make diagnoses or
substitute ESl's judgment for the professional judgment and responsibility of the physician.
(d)
Claims for Benefits.
(i) Processinq. ESI agrees that if Sponsor is subject to Employee Retirement
Income Security Act, as amended, the processing of initial "claims for benefits" for Member
Submitted Claims and PA requests shall be conducted in a manner consistent with the
requirements for claim processing set forth in 29 CFR Part 2560 (as published in the Federal
Register, November 21, 2000), except that Sponsor shall be responsible for ensuring compliance
with any aspect of the requirements relating to functions performed or materials prepared by
Sponsor or any other third party.
(ii) Appeals. ESI will not conduct any appeals of denied "claims for benefits." If
Sponsor does not desire to conduct appeals itself, Sponsor may elect to have ESI facilitate
appeals through the UM Company (for as long as ESI has a contract with a UM Company) for the
fees set forth in Exhibit A. ESI will route to UM Company Member appeals properly sent to ESI's
designated address. The UM Company will be responsible for conducting the appeal on behalf of
96463v2
4
Sponsor in accordance with applicable law, and if an appeal is denied, the UM Company will be
responsible for sending a denial letter to the Member in accordance with applicable law. Sponsor
acknowledges and agrees that: (A) the UM Company, and not ESI, will be conducting appeals on
behalf of Sponsor; (B) the UM Company is an independent contractor of ESI, and ESI does not in
any way control or direct the UM Company with respect to appeals conducted by the UM
Company; (C) ESI is not acting as a fiduciary in connection with the appeals being conducted by
the UM Company, and ESI shall not be named by Sponsor as a fiduciary in connection with such
appeals; (D) ESI shall not be responsible for overseeing the UM Company's appeal process
(except that ESI shall require the UM Company to contractually agree that it will conduct appeals
in accordance with applicable law and Sponsor's plan), and ESI shall not be liable for any injury
or damages arising as a result of the UM Company's negligence or otherwise; (E) the UM
Company shall have full authority and full discretion to conduct appeals for which it has been
designated by Sponsor and shall have full authority and full discretion to interpret the terms of
Sponsor's plan with respect to those appeals and to make all findings of fact with respect to those
appeals and the UM Company's determination on appeal shall be final and legally binding on all
parties; and (F) Sponsor will forward to the UM Company all relevant plan language necessary for
the UM Company to conduct appeals.
(e) Druq Utilization Review (DUR). ESI shall perform a standard concurrent DUR analysis of
each prescription submitted for processing on-line by a Pharmacy in order to assist the dispensing
pharmacist and prescribing physician in identifying potential drug interactions, incorrect prescriptions or
dosages, and certain other circumstances that may be indicative of inappropriate prescription drug usage.
ESl's DUR processes are not intended to substitute for the professional judgment of the prescriber, the
dispensing pharmacist or any other health care professional providing services to the Member. ESI will
not be liable for any damages arising from the use, or lack of use of the DUR process by Pharmacies,
except that ESI shall be responsible for proper maintenance and updates of the DUR system and
processes. Nothing in this Section shall operate to relieve ESI of the customary professional obligations
of the dispensing pharmacists at its Mail Service Pharmacy or CuraScript.
(f) Call Center. ESI will provide 24-hours a day, 7-days a week toll-free telephone, IVR and
Internet support to assist Sponsor, Sponsor's agents and Members with Member eligibility and benefits
verification, location of Pharmacies or other related Member concerns.
Formularv SuPPort and Rebate Manaqement.
(a) Clinical Proqrams. Subject to applicable law and the terms of the Business Associate
Agreement between the parties, ESI may inform Pharmacies, Members and physicians regarding
therapeutic substitution opportunities for both preferred brand and generic drugs. The prescribing
physician always shall have final authority over the drug that is dispensed to the Member. In addition,
upon written election of Sponsor, ESI may provide clinical programs identified on Exhibit A, or such other
programs as ESI may introduce from time to time, some of which may require payment of additional fees.
ESI is expressiy permitted to contact Members, Members' physicians, Sponsor case managers and
Pharmacies to perform the services provided by ESI hereunder.
3.3
(b)
Rebate Proqram. ESI will pay to Sponsor Rebates as set forth on Exhibit B.
3.4
Proqram Operations.
(a) Proqram ReportinQ. ESI shall make available to Sponsor ESI's on-line standard
management information reporting applications. At the request of Sponsor, ESI may develop special
reporting packages at ESI's standard hourly rate for such services, as set forth in Exhibit A. Sponsor
shall make its personnel available to define the scope of Sponsor's reporting needs and to participate in
the testing and validation of any such projects.
(b) Claims Data Feeds. Upon Sponsor's written request, ESI shall provide regular
prescription claims data in ESl's standard format(s) for no additional charge to Sponsor vendors for
disease management, flexible savings account and other "payment," "treatment" and "healthcare
96463v2
operations" purposes (as defined under HIPAA). ESI maintains thirty (30) months of claims data in a data
warehouse; requests for retrieval of data from prior to thirty (30) months is subject to the hourly charge as
set forth in Exhibit A. ESI disclaims any liability or responsibility related to the disclosure to, and use of
such claims data by, any such vendor.
(c) De-Identified Claims Data. Sponsor grants ESI permission to use both during and after
the term of this Agreement and/or transfer to third parties the anonymized PHI (de-identified in
accordance with HIPAA) drug and related medical data collected by ESI or provided to ESI by Sponsor
for research, provider profiling and other databases for benchmarking, drug trend, cost analyses, cost
comparisons or other business purposes of ESI and its affiliates. ESI shall retain full ownership rights
over ali compilations, analyses and reports prepared by ESI other than those reports prepared specificaliy
for Sponsor under this Agreement.
(d) Claims Data Retention. ESI will maintain Sponsor's claims data supporting invoices for
Covered Drugs adjudicated by ESI during the term of this Agreement for a period of twenty-four (24)
months in their original forms, and thereafter on microfilm, microfiche or other form determined by ESI for
an additional five (5) years. ESI shali use reasonable efforts to cooperate with Sponsor for purposes of
meeting Sponsor's retention obligations under applicable law; provided that after expiration of the
retention period, ESI shall dispose of such data in accordance with its standard policies and practices and
applicable state and federal law.
(e) Sponsor Audits. Provided that this Agreement has been duly executed by Sponsor and
Sponsor's account does not reflect a delinquent balance at the commencement or during an audit,
Sponsor may audit the prescription management services provided under this Agreement consistent with
the Audit Protocol set forth in Exhibit C. Sponsor shall bear its own costs associated with any audit.
Sponsor may use an independent auditor ("Auditor"), so long as such auditor does not haye a conflict of
interest with ESI, as reasonably determined by ESI. If Sponsor selects an Auditor that also has been
appointed by ESI's shareholders to conduct the independent audit of ESI; then such firm must provide to
ESI a letter stating that such engagement performed on behalf of Sponsor shali in no way infringe upon
said firm's independence with respect to ESl's audit. Such letter must be signed by the audit firm and
approved by the engagement audit partner performing the ESI audit. Auditors must execute ESl's
standard Confidentiality Agreement (substantially in the form attached as APpendix 1 to Exhibit C) prior to
commencement of the audit. Any requests by Sponsor to permit an Auditor to perform an audit shali
constitute Sponsor's direction and authorization to ESI to disclose Member information to the Auditor.
Except as otherwise provided in Exhibit C, audit materials and documentation provided by ESI will be
limited to Sponsor-specific information. Contractual information (e.g., reimbursement rates, fees and
acquisition costs) concerning Pharmacies and other providers of products and services, which is
proprietary and confidential to ESI, will not be disclosed to Sponsor or Auditor. Nothing in this Agreement
shall preclude or conflict with Sponsor's compliance with the auditing requirements of federal or state law.
(f) Liability Insurance. Each party shall maintain such policies of general liability,
professional liability and other insurance of the types and in amounts customarily carried by their
respective businesses. Proof of such insurance shall be available upon request. ESI agrees, at its sole
expense, to maintain during the term of this Agreement or any renewal hereof, commercial general
liability insurance, pharmacists professional liability insurance and managed care liability with limits,
excess of a self insured retention, in amounts of not less than $2,000,000 per occurrence, and
$4,000,000 in the aggregate. ESI does not maintain liability insurance on behalf of any Participating
Pharmacy, but does contractually require such pharmacies to maintain a minimum amount of commercial
liability insurance or, when deemed acceptable by ESI, to have in place a self-insurance program. Exhibit G
SECTION IV - FEES; BILLING AND PAYMENT
4.1
Billinq and Payments.
(a) Billinq. ESI will bill Sponsor twice per month for all applicable fees and other amounts
due hereunder as specified herein and the attached Exhibits (coliectively "Fees").
96463v2
6
(b) Payment. Sponsor agrees to pay ESI by wire, ACH transfer within seven (7) days from
the date of Sponsor's receipt of the ESI invoice. Sponsor shall be responsible for all costs of collection,
and agrees to reimburse ESI for such costs and expenses, including reasonable attorneys' fees. Any
amounts not paid by the due date thereof shall bear interest at the rate of eighteen percent (18%) per
annum or, if lower, the highest interest rate permitted by law. In addition to any rights under Section 7.2,
ESI may apply Rebates otherwise owed to Sponsor against any unpaid Fees. If Sponsor disputes any
item on an invoice, Sponsor shall state the amount in dispute in writing within thirty (30) days of the date
of the invoice. Sponsor shall pay the full amount invoiced and shall notify ESI of the disputed amount.
Sponsor and ESI agree to negotiate and make good faith efforts to expeditiously resolve any disputes
regarding Fees.
(c) Deposit. In the event the (i) Sponsor is delinquent in payment of Fees for two (2)
consecutive billing cycles, or (ii) ESI has reasonable grounds for insecurity as to the ability of Sponsor to
meet its financial commitments because of Sponsor's published financial data, or state or federal
regulatory agency statements, findings or notice, then ESI shall have the sole option to require that the
Sponsor provide to ESI a deposit in an amount equal to the average of the last three (3) months of billing
history or, if three (3) months billing history is not available, the most recent month of billing history will be
the basis. ESI shall retain the deposit until the earlier of (y) termination of this Agreement (following any
run-off period), or (z) six (6) consecutive months of timely payments of all Fees following submission of
the deposit, and may apply the deposit to unpaid balances of Fees until return of the deposit.
(d) Payment by Member for Mail and Specialty Pharmacy Services. Members shall pay their
applicable Copayments to ESI prior to the dispensing of a prescription through the Mail Service Pharmacy
and CuraScript. ESI may suspend Mail Service Pharmacy and/or Specialty Pharmacy services to a
Member who is in default of payment of any Copayments owed the applicable pharmacy.
(e) Consultant/Broker Arranqements. The terms and conditions concerning any payments to
a third party consultant or broker are as set forth in Exhibit F.
SECTION V - HIPAA; PROPRIETARY INFORMATION
5.1 PHI. The parties agree that as relates to use and disclosure of PHI, electronic transaction
standards and security of electronic PHI under HIPAA, they are subject to the terms of the Business
Associate Agreement set forth in Exhibit D.
5.2 Proprietary Information. Each party agrees that information of the other party, including, but not
limited to the following, shall constitute confidential and proprietary information ("Proprietary Information")
unless otherwise public: (a) with respect to ESI: reporting and system applications and formats, web-
based applications, databases, clinical or formulary management operations or programs, information
concerning Rebates, prescription drug evaluation criteria, drug pricing information, and Participating
Pharmacy and Specialty Network Pharmacy agreements; and (b) with respect to Sponsor: Sponsor and
Member information files, business operations and strategies. Neither party shall use the other's
Proprietary Information, or disclose it or this Agreement to any third party, at any time during or after
termination of this Agreement, except as specifically contemplated by this Agreement or upon prior
written consent, which shall not unreasonably be withheld. Upon termination of this Agreement, each
party shall cease using the other's Proprietary Information, and all such information shall be returned or
destroyed upon the owner's direction.
5.3 Trademarks. Each party acknowledges each other party's sole and exclusive ownership of its
respective trade names, commercial symbols and trademarks (collectively "Marks"). No party shall use
the other party's Marks in advertising or promotional materials or otherwise without the owner's prior
written consent; provided, however, that the parties may publicize the fact that ESI provides prescription
drug benefit management services to Sponsor.
96463v2
7
SECTION VI . COMPLIANCE WITH LAW; ERISA; FINANCIAL DISCLOSURE
6.1 Compliance with Law. Each party shall be responsible for ensuring its compliance with any laws
and regulations applicable to its business, including maintaining any necessary licenses and permits.
Sponsor shall be responsible for any governmental or regulatory charges and taxes imposed upon benefit
management services and Covered Drugs provided hereunder, other than taxes based on the net income
of ESI. If ESI's performance of its duties under this Agreement is made materially more burdensome or
expensive due to a change in federal, state or local laws or regulations or the interpretation thereof, the
parties shall negotiate an appropriate adjustment to the Fees paid to ESI. If the parties cannot agree on
adjusted Fees, then either party may terminate the Agreement on thirty (30) days' prior written notice to
the other.
6.2 Sponsor acknowledges and agrees that it is responsible for disclosing to Members any and all
information reiating to the program as required by law to be disclosed, including any information relating
to the calculation of Copayments, and any other program coverage and eligibility requirements in
connection with the program, and any other information concerning commissions, rebates, discounts or
provider discounts referred to in Section 6.3 hereof. In providing services under this Agreement, Sponsor
acknowledges and agrees that ESI is not acting as a fiduciary (as defined in Section 3.21(a) of ERISA) of
Sponsor's Plan, and Sponsor shall not name ESI as a plan fiduciary. ESI has no power to make any
decisions as to Plan policy, interpretations, practices or procedures, but rather provides ministerial
services within a framework of policies, guidelines, interpretations, rules, practices, and procedures
chosen by Sponsor. Sponsor acknowledges that ESI does not have discretionary authority or control
respecting management of the Plan and does not exercise any authority or control respecting
management or disposition of the plan assets of the Plan, if any exist. Sponsor further acknowledges that
all such discretionary authority is retained by Sponsor or some other person or entity.
6.3 Disclosure of Certain Financial Matters. In addition to the administrative fees paid to ESI by
Sponsor, if any, ESI derives margin from fees and revenue in one or more of the ways as further
described in the Financial Disclosure to ESI PBM Clients set forth in Exhibit E hereto ("Financial
Disclosure"). In negotiating any of the fees and revenues described in the Financial Disclosure or in this
Agreement, ESI acts on its own behalf, and not for the benefit of or as agent for Sponsor, Members or the
Plan. ESI retains all proprietary rights and beneficial interest in such fees and revenues described in the
Financial Disclosure and, accordingly, Sponsor acknowledges for itself, its Members and the Plan that
neither it, any Member, nor the Plan, has a right to receive, or possesses any beneficial interest in, any
such fees or revenues; provided, that ESI will pay Sponsor amounts equal to the Rebate amounts
expressly set forth on Exhibit B.
SECTION VII - TERM AND TERMINATION; DEFAULT AND REMEDIES
7.1 Term. This Agreement will remain in effect for an initial term of three (3) one year terms
commencing from the Effective Date, and may be terminated earlier or extended in accordance with the
terms hereof ("Initial Term"). Thereafter, this Agreement shall automatically renew with the same terms
and conditions as set forth herein for successive one (1) year renewal terms, subject to the right of
termination as otherwise provided herein.
7.2
Termination.
(a) Non-Renewal Upon Notice. Not less than ninety (90) days prior to the end of a term year
or any renewal term of this Agreement either party may notify the other party in writing that it desires to
terminate this Agreement effective as of the end of the then current term. Notwithstanding any provision
in this Agreement to the contrary, in no event will this Agreement be terminable "without cause" prior to
the expiration of a term year by either party.
(b) Breach or Default. Either party may give the other written notice of a material, substantial
and continuing breach of this Agreement. If the breaching party has not cured said breach within thirty
(30) days from the date such notice was sent, this Agreement may be terminated at the option of the non-
96463v2
breaching party. If the amount of time commercially reasonable for the breach to be cured is longer than
thirty (30) days, this Agreement may not be terminated by the non-breaching party pursuant to this
provision until such commercially reasonable period of time has elapsed; provided, however, that in no
event shall such period exceed sixty (60) days.
(c) Non-Payment. Notwithstanding anything to the contrary herein, ESI may terminate or
suspend its performance hereunder and cease providing or authorizing provision of Covered Drugs to
Members upon forty-eight (48) hours written notice if Sponsor fails to pay ESI or provide a deposit, if
required, in accordance with the terms of this Agreement. ESI also may apply Rebates to any unpaid
Fees.
(d) Insolvency. To the extent permitted by applicable law, ESI may terminate this
Agreement, or suspend performance hereunder, upon the insolvency of Sponsor, and Sponsor may
terminate this Agreement upon the insolvency of ESI. The "insolvency" of a party shall mean the filing of
a petition commencing a voluntary or involuntary case (if such case is an involuntary case, then only if
such case is not dismissed within sixty (60) days from the filing thereof) against such party under the
United States Bankruptcy Code; a generai assignment by such party for the benefit of creditors; the
inability of such party to pay its debts as they become due; such party's seeking or consenting to, or
acquiescence in, the appointment of any trustee, receiver or liquidation of it, or any material part of its
property; or a proceeding under any receivership, composition, readjustment, liquidation, insolvency,
dissolution, or like law or statute, which case or proceeding is not dismissed or vacated within sixty (60)
days.
(e) Reimbursement of Implementation Payment. In the event of a termination of this
Agreement for any reason other than ESI's uncured material breach of this Agreement prior to the
expiration of the Initial Term, Sponsor will reimburse ESI an amount equal to the unamortized portion of
the Implementation Payment. Any payment made to ESI by Sponsor pursuant to this Section will not be
in lieu of any other rights or remedies ESI may have in connection with the termination of this Agreement,
inciuding monetary or other damages.
(f) Obliqations Upon Termination. Sponsor shall notify Members of the timing of any
transition to a successor pharmacy benefit manager at least thirty (30) days prior to the effective date of
such termination. Sponsor or its agent shall pay ESI in accordance with this Agreement for all claims for
Covered Drugs dispensed and services provided to Sponsor and Members on or before the effective date
of termination ("Termination Date"). ESI shall continue filing for Rebates for claims incurred prior to the
Termination Date and shall pay Sponsor Rebates for such claims in accordance with the Rebate payment
schedule set forth in Exhibit B. Claims submitted by Pharmacies or Member-Submitted Claims filed with
ESI after the Termination Date shall be processed and adjudicated in accordance with a mutually
determined run-off plan. Notwithstanding the preceding, ESI may require that Sponsor pay a reasonable
deposit in the event ESI is requested to process after the Termination Date claims incurred on or prior to
such date.
7.3
Remedies.
(a) Remedies Not Exclusive. A party's right to terminate this Agreement under this Section
VII shall not be exclusive of any other remedies available to the terminating party under this Agreement or
otherwise, at law or in equity.
(b) Force Maieure. Neither party shall be liable in any manner for any delay to perform its
obligations hereunder which are beyond a party's reasonable control, inciuding, without limitation, any
delay or failure due to strikes, labor disputes, riots, earthquakes, storms, floods or other extreme weather
conditions, fires, explosions, embargoes, war or other outbreak of hostilities, government acts or
reguiations, or the failure or inability of carriers, suppliers, delivery services, or telecommunications
providers to provide services necessary to enable a party to perform its obligations hereunder.
(c)
Limitation of Liability.
Except for the indemnification obligations set forth in Section
96463v2
9
7.3(d), each party's liability to the other hereunder shall in no event exceed the actual proximate losses or
damages caused by breach of this Agreement. In no event shall either party or any of their respective
affiliates, directors, employees or agents, be liable for any indirect, special, incidental, consequential,
exemplary or punitive damages, or any damages for lost profits relating to a relationship with a third party,
however caused or arising, whether or not they have been informed of the possibility of their occurrence.
(d)
Indemnification.
(i) ESI will indemnify and hold Sponsor harmless from and against any loss, cost,
damage, expense or other liability, including, without limitation, reasonable costs and attorney fees
("Costs") incurred in connection with any and all third party claims, suits, investigations or
enforcement actions, including claims of infringement of any intellectual property rights ("Claims")
which may be asserted against, imposed upon or incurred by Sponsor and arising as a result of (A)
ESI's negligent acts or omissions or willful misconduct, (B) ESI's breach of this Agreement, or (C)
Sponsor's authorized use of ESI's Marks, or use of or access to any ESI proprietary reporting and
system applications, unless Sponsor has modified or altered such applications without ESI's
written consent.
(ii) Sponsor will indemnify and hold ESI harmless from and against any Costs for
Claims which may be asserted against, imposed upon or incurred by ESI and arising as a result
of (A) Sponsor's negligent acts or omissions or willful misconduct, benefit design and coverage
decisions, or breach of this Agreement, (B) any improper use Sponsor or Auditor may make of
PHI provided to Sponsor or Auditor by ESI, or (C) ESl's authorized use of Sponsor's Marks in
connection with the services hereunder.
(Hi) As a condition of indemnification, the party seeking indemnification shall notify
the indemnifying party in writing promptly upon learning of any Claim for which indemnification
may be sought hereunder, and shall tender the defense of such claim to the indemnifying party.
No party shall indemnify the other with respect to any claim settled without the written consent of
the other.
7.4 Survival. The parties' rights and obligations under the last sentences of subsections 3.1(d) and
3.2(d), Sections IV and V; and subsections 6.1, 7.2(e) and (f), 7.3, and 7.4 shall surviye the termination of
this Agreement for any reason.
SECTION VIII - MISCELLANEOUS
8.1 Notice. Any notice or document required or permitted to be delivered pursuant to this Agreement
must be in writing and shall be deemed to be effective upon mailing and must be either (a) deposited in
the United States Mail, postage prepaid, certified or registered mail, return receipt requested, or (b) sent
by recognized overnight delivery service, in either case properly addressed to the other party at the
address set forth below, or at such other address as such party shall specify from time to time by written
notice delivered in accordance herewith:
Express Scripts, Inc.
Attn: President
13900 Riverport Drive
Maryland Heights, Missouri 63043
With copy to Legal Department
Fax No. (314) 702-7120
City of Dubuque
Attn: Randy Peck, Personnel Manager
City Hall, 50 West 13th Street
Dubuque, Iowa 52001
Fax No. (563) 690-6025
96463v2
10
8.2 Independent Parties. No provision of this Agreement is intended to create or shall be construed
to create any relationship between ESI and Sponsor other than that of independent entities contracting
with each other solely for the purpose of effecting the provisions of this Agreement. Neither party, nor
any of their respective representatives, shall be construed to be the partner, agent, fiduciary, employee,
or representative of the other and neither party shall have the right to make any representations
concerning the duties, obligations or services of the other except as consistent with the express terms of
this Agreement or as otherwise authorized in writing by the party about which such representation is
asserted.
8.3 Successors and Assiqns. This Agreement will be binding upon, and inure to the benefit of and be
enforceable by, the respective successors and permitted assigns of the parties hereto; provided that this
Agreement may not be assigned by Sponsor without the prior written consent of ESI, which consent shall
not unreasonably be withheld after a standard credit evaluation. ESI may assign this Agreement or
delegate any rights or obligation hereunder to a wholly-owned subsidiary of ESI, provided however, that
ESI retains full responsibility and liability for the performance of the Agreement.
8.4 Inteqration: Amendments. This Agreement and any Exhibits hereto constitute the entire
understanding of the parties hereto and supersedes any prior orai or written communication between the
parties with respect to the subject matter hereof. If there is a separate Business Associate Agreement
between the parties, such an agreement shall be incorporated herein for all applicable purposes. No
modification, alteration, or waiver of any term, covenant, or condition of this Agreement shall be valid
unless in writing and signed by both parties or the agents of the parties who are authorized in writing.
8.5 Choice of Law. This Agreement shall be construed and governed in all respects according to the
laws in the State of Iowa, without regard to the rules of conflict of laws thereof.
8.6 Waiver. The failure of either party to insist upon the strict observation or performance of this
Agreement or to exercise any right or remedy shall not be construed as a waiver of any subsequent
breach of this Agreement or impair or waive any availabie right or remedy.
8.7 Third Party Beneficiary Exclusion. This Agreement is not a third party beneficiary contract, nor
shali this Agreement create any rights on behalf of Members as against ESI. Sponsor and ESI reserve
the right to amend, cancel or terminate this Agreement without notice to, or consent of, any Member.
8.8 Freedom of Information Act I"FOIA"). ESI acknowledges that Sponsor, as a public entity, may be
subject to the applicable FOIA laws and must, upon request, disclose such materials as are covered by
and not exempted from such laws. Pursuant to Section 5.2 hereof, Sponsor acknowledges that certain
information contained herein or subject to this Agreement is proprietary and confidential to ESI and shall
be exempt from that Act to the fullest extent permitted by law. Sponsor agrees to give ESI notice and a
reasonable amount of time to oppose any FOIA request pertaining to this Agreement or any proposal
related hereto.
96463v2
11
IN WITNESS WHEREOF, the undersigned have executed this Pharmacy Benefit Management
Agreement as of the day and year below set forth.
EXPRESS SCRIPTS, INC.
CITY OF DUBUQUE, IOWA
By:
Printed Name: Mi rh"", 1 (' \7",n Mi 11 igen
Title: Ci ty IVI;m"g"r
Phone: "h' "FIg 411h
Fax: 563-589-4149
FederallD Number: 42-6004596
By:
Printed Name:
Title:
Date:
Date:
96463v2
12
EXHIBIT A
PHARMACY REIMBURSEMENT
Sponsor shall pay to ESI the amounts set forth below, net of applicable Copayments. Sales or
excise tax or other governmental surcharge, if any, shall be the responsibility of Sponsor. If ESI pays a
particular Participating Pharmacy a higher rate because Sponsor has requested such pharmacy be
included in the network, the rate charged to Sponsor shall be the net ingredient cost plus the dispensing
fee paid by ESI to such pharmacy, plus applicable sales or excise tax or other governmental surcharge, if
any.
If any change in Federal or applicable state law or regulation (including the interpretation of
existing laws or regulations by a court or administrative agency or extension of a prescription drug benefit
under Medicare) occurs during the term of the Agreement, and in consequence thereof ESI increases
payments for Covered Drugs to Participating Pharmacies in the applicable jurisdiction under its provider
agreements, the Prescription Drug Program fees set forth below wlli be increased by the same amount.
ESI maintains multiple networks, and periodically consolidates networks, or migrates clients to
other networks, in order to capitalize on certain operational efficiencies and other benefits associated with
a streamlined network offering. Existing networks may fluctuate from time to time. Sponsor
acknowledges and consents to the same, provided that Member access is not materially disrupted as a
result of such fluctuations, consolidations or transitions. ESI will notify Sponsor of any changes that
would materially adversely affect Member access to Participating Pharmacies and work with Sponsor in
good faith to mitigate any such affects.
ESI shall have the right to make equitable modifications to the reimbursement rates,
administrative fees and/or Rebates, as appropriate to the extent Sponsor elects to use on-site clinics or
pharmacies to dispense prescription drugs to Members and such use materially reduces (a) Rebates
generated by Sponsor hereunder, (b) the number of Covered Drug claims submitted on-line, and/or (c)
Fomnulary compliance.
For purposes of this Exhibit A, the terms:
"Average Wholesale Price" or "AWP" means the average whoiesale price of a prescription drug
as identified by drug pricing services such as First Data Bank or other source nationally recognized in the
retail prescription drug industry selected by ESI for all clients. The applicabie AWP for prescriptions filled
in the Mail Service Pharmacy will be the AWP for the lesser of: (i) the NDC code for the package size
from which the prescription drug was dispensed or (ii) package sizes of 100 units or 16 ounce quantities,
or the next larger quantity if such specified quantities are not available.
"Compound Drugs" means a customized medication derived from two or more raw chemicals,
powders and devices, of which at least one ingredient is a federal legend drug, prepared by a pharmacist
according to a doctor's specifications.
"Generic Drug" means a prescription drug, whether identified by its chemical, proprietary, or non-
proprietary name, that is therapeutically equivalent and interchangeable with drugs having an identical
amount of the same active ingredient. For purposes of pricing, the designation of a product as "brand" or
"generic" and/or subject to MRA is determined by ESI under its standard policies which take into account
various factors, including but not limited to, the pricing differential between AWP and wholesaie
acquisition cost ("WAC"), availability and price of therapeutically equivalent drugs and generic exclusivity
periods. Single source generic drugs ordinarily will be treated as brands, unless the WAC discount off of
AWP reflects a generic profile.
"Maximum Reimbursement Amount" or "MRA" means the maximum price for the particular
Generic drug, as specified on ESl's MRA list. The MRA list is structured with the intent that the weighted
average MRA discount for the entire MRA list is equivalent to a discount off of AWP with a range of 50% -
96463v2
13
60%, but Sponsor's actual weighted average MRA discount may vary within or beyond this range
depending upon Sponsor's actual generic drug mix and utilization and Sponsor's plan design. ESI
periodically updates the MRA to reflect changes in generic drug availability and prices.
"Network Access Program" means a program in which Members obtain prescriptions through
Participating Pharmacies and bear the full cost of the Covered Drugs and mayor may not be entitled to
reimbursement of a portion of the cost from Sponsor.
"Usual and Customary Price" or "U&C" means the retail price charged by a Participating
Pharmacy for the particular drug in a cash transaction on the date the drug is dispensed as reported to
ESI by the Participating Pharmacy.
The rates set forth below are conditioned on the adoption by Sponsor of the specific Copayment
structure and Formulary:
I.
ParticiDatina Pharmacy Reimbursement Rates (No SDecialty Products)
Network Access Program 2-Tier Plan Design 3-Tler Plan Design
(100% CoDay) ESI Formulary with a minimum
ESI Formulary $15 CoDay Differential
ESI National Preferred Formulary
PERxCare Network PERxCare Network
PERxCare Network
:~~~~~:~ C~:~eric) The lower of AWP - 14%, MRA, or The lower of AWP - 15%, MRA, or The lower of AWP - 15%, MRA, or
U&C U&C U&C
Ingredient Cost Lesser of U&C or combined AWP Lesser of U&C or combined AWP Lesser of U&C or combined AWP
(Compound Druas\
Brand $2.50 1" year: $2.00 $1.70
Dispensing Fee/Rx 2"" year: $1.90
3rd'vear $1.70
Generic $2.50 1" year: $2.25 $1.90
Dispensing Fee/Rx 2"" year: $2.05
3"vear: $1.90
Administrative $0.90 $0.00 $0.00
Fee/Rx
II. Generic Guarantee
ESI guarantees a minimum average generic discount of AWP- 49% on Generic Drugs that are Covered
Drugs dispensed through Participating Pharmacies, to be applied, measured and reconciled in the
aggregate on an annual basis within ninety (90) days of the end of the Sponsor's contract year.
The overall generic guarantee is based on the actual drug specific eleven (11) digit National Drug Code
(NDC) submitted by a Participating Pharmacy at the time of adjudication. All Zero Balance Claims (ZBCs)
wiil be excluded from the guarantee. (ZBCs are claims that are equal to or less than a Member's copay.)
U&C claims greater than the Member's copay will be excluded from the guarantee. Specific 11 digit multi-
source drug claims when brand drugs are dispensed will be excluded from the guarantee. Specific 11
digit multi-source drug claims when the actual Generic Drug is dispensed will be excluded from the
guarantee only for the first four (4) months from the day the Generic Drug comes to market if there is only
one Generic Drug manufacturer (single-source drug). If more than one pharmaceutical manufacturer is
providing a generic product then those generic ciaims will be included in the overall guarantee
96463v2
14
immediately. The financial impact (difference in cost between the brand and Generic Drug plus copay) of
additional Member payments that apply to multi-source drug claims due to specific Dispense As Written
(DAW) codes will be excluded from the guarantee, but the ciaims and actual discount on the Generic
Drug claims will be included.
The guarantee is further subject to the following:
The generic guarantee is offered based on the plan design assumptions provided by the
Sponsor in the RFP. To the extent the assumptions are incorrect as of the implementation date of
this Agreement, or Sponsor changes its benefit design or Formulary during the term of the
Agreement, the guarantee will be equitably adjusted if there is a material impact on the generic
discount achieved.
III.
Mail Service Pharmacy PricinQ (No Specialty Products)
Network Access Program 2.Tier Plan Design 3.Tler Plan Design
PERxCare
1.34 35.90 1.34 35-90 1.34 35-90
Day Supply Day Supply Day Supply Day Supply Day Supply Day Supply
AWP AWP AWP
Brand Ingredient AWP-15% 1" year: -22% AWP-15% 1" year: -22% AWP-15% 1" year: -23%
Cost 2" year: -23% 2"" year: -23% 2" year: -24%
3" vear: -24% 3" vear: -24% 3" vear: -24%
AWP AWP AWP AWP AWP AWP
Generic 1"year: -53% 1"year: -53% 1" year: -53% 1" year: -53% 1" year: -53% 1" year: -53%
Ingredient Cost 2"" year: -53% 2" year: -53% 2" year: -53% 2" year: -53% 2" year: -54% 2" year: --54%
3" year :-55% 3" year: -55% 3" vear: -55% 3" vear: -55% 3" vear: -55% 3" vear: -55%
Compound Drug Combined AWP pius applicable service fee
Ingredient Cost
Brand 1"year:-$2.00 $0.00 1"year: $2.00 $0.00 $1.70 $0.00
Dispensing 2" year: -$1.90 2"'year: $1.90
Fee/Rx 3"vear:-$1.70 3"vear: $1.70
Generic 1"year:-$2.25 $0.00 1" year: $2.25 $0.00 $1.90 $0.00
Dispensing 2" year: -$2.05 2" year: $2.05
Fee/Rx 3" vear :-$1.90 3"vear: $1.90
Administrative $0.00
FeelRx
Minimum $8.99
RatelRx
IV.
Specialty Proqram Fees
All Specialty Product pricing is based upon the discount off of AWP for each Specialty Product, as
published by First Data Bank or other nationally recognized AWP source selected by ESI, on the date
of dispensing. Pricing also is based on electronic claims adjudication through ESI, using a National
Council for Prescription Drug Programs format. Sponsor shall pay ESI for the Specialty Products
dispensed by CuraScript, in accordance with the payment terms described in the Agreement. In no
event shall Mail Service Pharmacy or non-Specialty Participating Pharmacy pricing be applied to the
Specialty Products.
96463v2
15
The list of Specialty Products is subject to modification from time to time upon mutual agreement, as
other Specialty Products become available.
Services inciude the prescribed Specialty Product(s), delivery and the ancillary supplies necessary to
administer the Specialty Products.
Some Specialty Products may be subject to availability from the pharmaceutical manufacturer or
because they are in short supply, subject to recall or allocation. Efforts will be made to find
alternative supply channels or pharmacies and the above pricing may need to be modified until the
short supply situation is corrected.
Rebates are not payable on CuraScript claims due to the deeper discount offered.
If a Client desires to include Specialty Products under its Prescription Drug Program, it should
select one of the following:
Option 1 - CuraScript Exclusive Option: (pricing below is conditioned on CuraScript being the
exclusiye Specialty Product pharmacy)
CursScript CuraScript CuraScript
Product %OFFAWP Product % OFF AWP Product % OFF AWP
ACTHAR -17% FERTINEX -18% ONXOL -17%
ADRUCIL -17% FLUDARA -17% OVIDREL -18%
ADYATE -25% FOLLISTIM -18% PACLITAXEL -17%
ALDURAZYME -17% FORTAZ -17% PAMIDRONATE -17%
ALFERON -17% FORTEO -17% PANGLOBULIN -30%
ALiMTA -17% FRAGMIN -17% PARAPLATIN -17%
ALKERAN -17% FUDR -17% PEGASYS .17%
ALOXI -17% FUZEON -17% PEG-INTRON -17%
ALPHANATE -32% GAMIMUNE -30% PERGONAL -18%
ALPHANINE -32% GAMMAGARD .30% PLENAXIS -17%
AMEVIVE -17% GAMMAR-P -30% POLYGAM -30%
ANTAGON .18% GAMUNEX -30% PREGNYL -18%
ANZEMET -17% GEMZAR -17% PROCRIT -17%
ARANESP -17% GENOTROPIN -18% PROFASI -18%
AREDIA -17% GEREF -18% PROFILNINE -25%
ARIXTRA -17% GONAL-F -18% PROGESTERONE -18%
AUTOPLEX -29% HALDOL -17% PROLEUKIN -17%
AVASTIN -17% HELIXATE -30% PROLIXIN -17%
AVONEX -17% HEMOFiL -35% PROPLEX -5%
BAYHEP 8 -17% HEMOFIL-M -35% PROTROPIN -18%
BAYRHO-D -25% HERCEPTIN -17% PULMOZYME -17%
BEBULIN -9% HUMATE-P -32% RAPTIVA -17%
BENEFIX -20% HUMATROPE -18% REBETOL -17%
BETASERON -17% HUMEGON -18% REBETRON -17%
BICILLIN -17% HUMIRA -17% REBIF -17%
BICNU -17% HYALGAN -17% RECOMBINATE -31%
BOTOX -17% HYCAMTIN -17% REF ACTO -17%
BRAYELLE -18% IFEX -17% REMICADE -17%
CALCIJEX .17% IMITREX .17% REPRONEX -18%
CALCIMAR -17% INFERGEN -17% RHOGAM .25%
96463v2
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CursScript CuraScript CuraScript
Product % OFF AWP Product % OFF AWP Product % OFF AWP
CAMPATH .17% INTRON A -17% RIBAVIRIN -35%
CAMPTOSAR .17% IVEEGAM -30% RIMSO-50 -17%
CARIMUNE .30% KINERET -17% RiSPERDAL CONSTA -17%
CAVERJECT -17% KOATE-DVI .37% RITUXAN -17%
CERElYME -5% KOGENATE -38% ROCEPHIN -17%
CETROTIDE -18% KYTRIL .17% ROFERON-A -17%
COPAXONE -17% LEUKINE -17% SAIZEN -18%
COPEGUS -17% LEUSTATIN -17% SANDIMMUNE -17%
CYTOXAN -17% LOVENOX -17% SANDOSTATIN -17%
DDAVP -17% LUPRON -17% SENSIPAR -17%
DELA TESTRYL -18% LUPRON DEPOT -17% SEROSTIM -25%
DELESTROGEN -18% LUPRON DEPOT.PED -17% SOMAVERT -18%
DEPO-ESTRADIOL -18% MESNEX -17% SUPARTZ .17%
DEPO.PROYERA -17% MONARC-M -37% SYNAREL -17%
DEPO-TESTADIOL -18% MONOCLATE-P -27% SYNVISC -17%
DEPO-TESTOSTERONE -18% MONONINE -27% TAXOTERE -17%
DESFERAL -17% MUSTARGEN -17% THALOMID -17%
DOXIL -17% MYLOTARG .17% THERACYS -17%
EDEX -17% MYOBLOC -17% THYROGEN -17%
ELiGARD -17% NABi-HB -17% TICE -17%
ELLENCE -17% NAVELBINE -17% TOBI -17%
ELOXATIN -17% NEULASTA -17% VELCADE -17%
ELSPAR -17% NEUMEGA -17% VENOGLOBULlN-S -30%
ENBREL -17% NEUPOGEN -17% WINRHO -30%
ENGERIX -17% NIPENT -17% XOLAIR -17%
EPOGEN -17% NORDITROPIN -18% ZANOSAR -17%
ERBITUX -17% NOVANTRONE -17% ZAVESCA -17%
ETHYOL -17% NOVAREL -18% ZINECARD -17%
ETOPOPHOS -17% NOVOSEVEN -37% ZOFRAN -17%
ETOPOSIDE -17% NUTROPIN -18% ZOLADEX .17%
FABRAlYME -17% ONCASPAR -17% ZOMETA -17%
FACTREL -18% ONTAK -17% ZORBTIVE -18%
FEIBA -37%
OPTION 2 - Participating Pharmacy Network and CuraScript
Soeciallv Products. ODen Dispensing
InDredient Cost. % Off AWP Fee Rebates
Same as non-Specialty Products
Participating Pharmacies See Table below $2.75 dispensed through Participating
Pharmacies
CuraScript See Table below $0.00 $0.00
Participating Participating Participating
Product Pharma""- CuraScriot Product Pharmacy - CuraScriDt Product Pharmacy CuraScriot
ACTHAR -13% -15% FERTINEX -13% -15% ONXOL -13% -15%
ADRUCIL -13% -15% FLUDARA -13% -15% OVIDREL -13% .15%
96463v2
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Participating CuraScrio! Participating Participating
Product Pharmacy Product Pharmacy ~ CuraScript Product Pharmacy CuraScrip!
ADVATE -13% -25% FOLLISTIM -13% -15% PACLITAXEL -13% .15%
ALDURAZYME -13% -15% FORTAZ -13% -15% PAMiDRONATE -13% .15%
ALFERON -13% -15% FORTEO -13% -15% PANGLOBULIN -13% -25%
ALiMTA -13% -15% FRAGMIN -13% -15% PARAPLATIN -13% -15%
ALKERAN -13% -15% FUDR -13% -15% PEGASYS -13% -15%
ALOXI -13% .15% FUZEON -13% -15% PEG-INTRON -13% -15%
ALPHANATE .13% -32% GAMIMUNE -13% -25% PERGONAL .13% .15%
ALPHANiNE -13% -32% GAMMAGARD -13% -25% PLENAXIS -13% .15%
AMEVIVE -13% -15% GAMMAR-P -13% -25% POLYGAM -13% ~25%
ANTAGON -13% -15% GAMUNEX -13% -25% PREGNYL -13% -15%
ANZEMET -13% -15% GEMZAR -13% -15% PROCRIT -13% ~15%
ARANESP -13% -15% GENOTROPIN -13% .15% PROFASI -13% .15%
AREDIA -13% -15% GEREF -13% -15% PROFILNINE -13% -25%
ARIXTRA -13% -15% GONAL-F -13% -15% PROGESTERONE -13% -15%
AUTOPLEX -13% -29% HALDOL -13% -15% PROLEUKIN -13% -15%
AVASTIN -13% -15% HELIXATE -13% -30% PROLIXIN -13% -15%
AVONEX .13% -15% HEMOFIL -13% -35% PROPLEX -5% -5%
8AYHEP B -13% -15% HEMOFIL-M -13% -35% PROTROPIN -13% -15%
BAYRHO-D -13% -25% HERCEPTIN -13% -15% PULMOZYME -13% -15%
BEBULIN -9% .9% HUMATE-P -13% -32% RAPTIVA -13% -15%
BENEFIX -13% -20% HUMATROPE -13% -15% RE8ETOL -13% .15%
BETASERON -13% -15% HUMEGON -13% -15% REBETRON -13% -15%
BICILLIN -13% -15% HUMIRA -13% -15% REBIF -13% -15%
BICNU -13% .15% HYALGAN -13% -15% RECOMBINATE -13% -31%
BOTOX -13% -15% HYCAMTIN -13% -15% REFACTO -13% -17%
BRAVELLE -13% -15% IFEX .13% -15% REMICADE -13% -15%
CALCIJEX -13% -15% IMITREX -13% -15% REPRONEX -13% -15%
CALCIMAR -13% -15% iNFERGEN -13% -15% RHOGAM -13% -25%
CAMPATH -13% -15% INTRON A -13% -15% RiBAVIRIN -13% -30%
CAMPTOSAR -13% -15% IVEEGAM -13% -25% RIMSO-50 -13% -15%
RISPERDAL
CARIMUNE -13% -25% KINERET -13% -15% CONSTA -13% -15%
CAVERJECT -13% -15% KOATE-DVI -13% -37% RITUXAN -13% -15%
CEREZYME -5% -5% KOGENATE -13% -38% ROCEPHIN .13% -15%
CETROTIDE -13% -15% KYTRIL -13% -15% ROFERON-A -13% -15%
COPAXONE -13% -15% LEU KINE -13% -15% SAIZEN -13% .15%
COPEGUS -13% -15% LEUSTATiN -13% -15% SANDIMMUNE -13% .15%
CYTOXAN -13% -15% LOYENOX -13% -15% SANDOSTATIN -13% -15%
DDAVP .13% -15% LUPRON -13% .15% SENSIPAR -13% -15%
LUPRON
DELATESTRYL -13% -15% DEPOT -13% -15% SEROSTIM -13% -15%
LUPRON
DELESTROGEN -13% -15% DEPOT-PED -13% -15% SOMAYERT -13% -15%
DEPO-
ESTRADIOL -13% -15% MESNEX -13% -15% SUPARTZ -13% .15%
DEPO-PROVERA -13% -15% MONARC~M .13% -37% SYNAREL -13% -15%
DEPO-
TESTADiOL -13% -15% MONOCLATE-P -13% -27% SYNVISC .13% -15%
DEPO-
TESTOSTERONE -13% -15% MONONINE -13% -27% TAXOTERE -13% -15%
DESFERAL -13% -15% MUSTARGEN -13% -15% THALOMID -13% -15%
96463v2
18
Participating Participating Participating
Product Pharmacv- CuraScriot Product Pharmacv - CuraScriot Product Pharmacv- CuraScriot
DOXIL -13% -15% MYLOTARG -13% -15% THERACYS -13% .15%
EDEX -13% -15% MYOBLOC -13% -15% THYROGEN -13% .15%
ELiGARD -13% -15% NA81-HB -13% -15% TICE -13% -15%
ELLENCE -13% -15% NAVELBINE -13% -15% TOBI -13% -15%
ELOXATIN -13% -15% NEULASTA -13% -15% VELCADE -13% .15%
ELSPAR -13% -15% NEUMEGA -13% -15% VENOGLOBULlN-S -13% -25%
ENBREL -13% -15% NEUPOGEN -13% -15% WINRHO -13% -25%
ENGERIX -13% -15% NIPENT -13% -15% XOLAIR .13% -15%
EPOGEN -13% -15% NORDITROPIN -13% -15% ZANOSAR -13% -15%
ERBITUX -13% -15% NOVANTRONE -13% -15% ZAVESCA -13% -15%
ETHYOL -13% -15% NOYAREL .13% -15% ZINECARD .13% -15%
ETOPOPHOS -13% -15% NOVOSEVEN -13% -37% ZOFRAN -13% -15%
ETOPOSIDE -13% -15% NUTROPIN -13% -15% ZOLADEX -13% .15%
FABRAZYME -13% -15% ONCASPAR -13% .15% ZOMETA -13% -15%
FACTREL -13% -15% ONTAK -13% -15% ZORBTiVE -13% -15%
FEIBA -13% -37%
v.
Administrative Fees
PBM Services Fee
+ Customer Service for Members No additional fee
+ Eligibility submission
. Electronic/on-line submission No additional fee
. Manual/hardcopy submission $1.00/Member submission
. FSA Feeds No additional fee
+ Software Training for Access to Our On-Line System(s) No additional fee
+ Electronic Claims Processing No additional fee
+ Member Submitted Paper Claims Processing $1.50/claim
+ COB (Coordination of Benefrts)
. Standard Process (reject for primary carrier) No additional fee
. Medicare Coordination (+65 population) $0.06 per claim
+ Plan Setup No additional charge
ParticioatinQ Pharmacies
+ Pharmacy Audit Recoveries 20% of audit recoveries
+ Pharmacy Help Desk No additional fee
+ Pharmacy Network Management No additional fee
+ Pharmacy Reimbursement No additional fee
+ Network Development Upon Request No additional fee
Mail Services
+ Benefit Education No additional fee
+ Prescription Delivery - standard No additional fee
ReoortinQ Services
+ Web-based Client Reporting - produced by Sponsor or No additional fee
TPA
. Web-based Client Reporting - produced by ESI $100 per report
. Ad hoc desk top parametric reports No additional fee
96463v2
19
+ Additional Reports
. Billing Reports No additional fee
. Annual Strateaic Account Plan ReDort No additional fee
+ Custom Ad-Hoc Reporting $150 per hour, with a minimum of $500
+ Claims detail extract file electronic (NCPDP format) No additional fee (avail. upon request)
Formularv SUDDort Services
+ Annual Formulary Communications
. Posted at www.exDress-scripts.com No additional charge
. Mailed to Members' homes Additional charge TBD
Web Site
+ Digital Certificates
. Up to 5 certificates No additional fee
. More than 5 certificates Up to $150 for additional users
+ Express-Scripts.com for Ciients-access to reporting tools, No additional fee
eligibility update capability, contact directory, sales and
marketina information, and benefit and enrollment SUDDort
+ Express-Scripts.com for Members-access to benefit, No additional fee
drug, health and wellness information; prescription ordering
caDabilitv; and customer service
+ Express Choice'm enrollment option-available during No additional fee
open enrollment to enable Members to evaluate
orescriotion benefit olan ootions.
ImDlementatlon Packaae and Member Communications
+ ImDlementation SUDoort No additional charge
+ Member Packets (Includes 2 standard resin ID cards)
. Mailed to Sponsor No additional charge
. Mailed directly to Members $1.00 /Member address + postage
. Replacement Cards $0.25/card
. Customized materials Priced upon request
ADPeals bv UM Company
+ Clinical appeals $350 per review
+ Non-clinical appeals $160 per review
VI.
Clinical ProQrams
Implemented upon Effective Date of Agreement, unless Sponsor opts out:
Drug Choice Management
Support appropriate selection of cost-effective No charge
medications through active interventions.
Prior Authorization-Administrative
Manage plan benefits and drug costs by ensuring No charge
appropriate prescribing and use by Members
. Non-clinical PA
. Lost/stolen overrides
. Vacation supplies
Trend Management Programs
ESI offers two Trend Management program alternatives:
A.
Enhanced Trend Package, which includes a base set of programs that are available individually at
no additional charge, plus an expanded set of programs available for a fee.
96463v2
20
B.
Individual Trend Programs, which permit any combination of programs.
ENHANCED TREND PACKAGE
Basic Trend Programs:
0 Web-Based Member, Physician, and Phannacist
Education
0 Concurrent Drug Utilization Review
0 Mail Service Promotion
0 Prior Authorization - Clinical Base List
0 Drug Choice Management
Prior Authorization - Clinical Supplemental List
Drug Quantity Management
0 Standard per Rx
0 Select per Rx (optional)
0 Select per day supply (optional)
Step Therapy - Enhanced Trend Package Moduies
0 ACE Inhibitors, Angiotensin-2 receptor blockers
(ARBs), COX-2 Inhibitors, Non-steroidal anti-
inflammatory drugs (NSAIDs), Proton Pump
Inhibitors (PPls), Seiective serotonin reuptake
inhibitors (SSRls), Glucophage XR, Leukotriene
Pathway Inhibitors, Straltera, Topical
Immunodilators
RapidResponse Member Support for Step Therapy
Sponsor Fee
$ 0.20 PMPM
Fee
INDIVIDUAL TREND PROGRAMS
Select from individual proorams listed below in alnhabetical order.
Drug Quantity Management
Ensure that the quantity of units supplied in each prescription $0.02 PMPM
remains consistent with clinical dosing guidelines and a Sponsor's
benefit design
. Standard per Rx
. Select per Rx (optional)
. Select per day supply (optional)
Note: List of druos subiect to chanoe at the discretion of ESI
High Utilizer & Case Management Report
Identifies Members who are at high risk for hospitalization or $150/report
increased medical/pharmacy cost. Drug/disease targeting report
includino Member detail
Physician Consultation - Client Specific
Express Scripts pharmacists conduct client-specific one-on-one $100 per targeted
phone consultations with selected physicians. Physician consultation physician with a
focused on Sponsor Formulary brand and generic products. minimum of 100
ohvsicians.
96463v2
21
Prior Authorization - Clinical Base List
Intervene to support appropriate use at the point of service through No additional charge
pre-established clinical criteria.
. Botulinum toxin type A (Botox), Myobloc (botulinum toxin type B)
. Epoetin aWa (Epogen and Procrit), Darbopoetin alfa (Aranesp)
. Somatropin and Somatrem (growth hormone - Humatrope,
Nutropin, Genotropin, Norditropin, Nutropin AQ, Saizen, Protropin,
and Serostim)
. Alpha-1-proteinase inhibitor (Prolastin)
. Tretinoin (Retin-A, Avita, Altinac)
. Becaplermin (Regranex)
. Tazarotene (Tazorac)
Note: List of druGS subiect to chanGe at the discretion of ESI.
Prior Authorization - Clinical Supplemental List
Intervene to support appropriate use at the point of service through $0.05 PMPM
pre-established clinical criteria.
. Antifungals (Diflucan, Lamisil, Sporanox)
. Pen lac
. Wellbutrin SR
. Forteo (teriparatide)
. Amevive (alefacept)
. Remicade (infliximab)
. Raptiva (efalizumab)
. FluMist
. Xolair (omalizumab)
. Topamax (topiramate)
. Zonegran (zonisamide)
Note: List of druGS sub'ect to chance at the discretion of ESI
Prior Authorization - Other Clinical Overrides
(e.g. Non-standard prior authorization medications, medical $20/request
exceptions) $25/physician review
Step Therapy Enhanced Trend Package Modules
Intervene to support use of less expensive and clinically appropriate $0.13 PMPM
medications at the point of service.
,
Or Individual Step Therapy Modules
-ACE Inhibitors and Angiotensin-2 receptor blockers (ARBs) $0.01 PMPM
-Non-steroidal anti-inflammatory drugs (NSAIDs) and COX-2s $0.05 PMPM
-Proton Pump Inhibitors (PPls) $0.08 PMPM
-Selective serotonin reuptake inhibitors (SSRls) $0.04 PMPM
-Glucophage XR $0.01 PMPM
-Leukotriene Pathway Inhibitors $0.01 PMPM
-Topicallmmunomodulators $0.01 PMPM
-Strattera $0.01 PMPM
-Disease Modifying Antirheumatic Drugs (DMARDs -Enbrei,
Humira, and Kineret) $0.01 PMPM
-OTC Non-sedating Antihistamines $0.05 PM PM
-Xopenex $0.01 PMPM
-HMG $0.02 PMPM
-Zetia $0.01 PMPM
Note: Prices for new modules will be established upon development.
96463v2
22
Clinical Management Programs
CARE MANAGEMENT
Program Name Description Fees
Care Management Disease specific education on more than 40 No additional charge
(Level 1) disease states accessed through Member
Member Portal portal. Includes e-bulletins and personal
reminders.
Care Management Disease and/or therapy specific, physician $0.01/Claim - Asthma
(Level 2) and patient letter based interventions. $0.01/Claim - Cardiovascular Disease
$0.02/Claim - CHF
$0.02/Claim - Depression
$0.01/Claim - Diabetes
$0.03/Claim - GI Disease
$0.02/Claim - Hypertension
$0.02/Claim - Migraine
Note: Fee shall be added to, then
current, claims administration fees for
retail and mail claims.
Care Management Plus Comprehensive disease management service $225.00/case/year Asthma
(Level 3) that helps patients improve their health $225.00/case/year - Diabetes
through ongoing, one-on-one consultation
sessions with a registered nurse. $225.00/case/year - Cardiovascular
Disease
SAFETY MANAGEMENT
Program Name Description Fees
Concurrent DUR - Point-of-service edits for the most important drug- and No additional charge
Clinical Member-specific pharmaceutical care issues
Emerging Therapeutic Rapid communication to alert physicians, Members, No additional charge
Issues Management and clients about significant patient-safety related
issues (drug withdrawais, black box warnings, and
class I recalls). Proactively alerts our clients to new
drugs that are anticipated to have a significant impact
on pharmacy cost.
RxPredict$ Report available to clients for the purposes of $0.05 PMPM for six months
identifying Members predicted to have high medical each time the report is run (e.g.
expenditures in the following six months. 100,000 Members' $0.05
PMPM' 6 mos). A subsequent
charge will occur with the
second report. There is a
minimum charge of $3000
96463v2
23
SAFETY MANAGEMENT
Program Name Description Fees
Retrospective DUR Daily and weekly physician communication targeting $0.03/claim
multiple utilization issues.
. Drug-Drug Interactions
. Drug-Patient Interactions
. Drug-Disease Interactions
. Drug-Pregnancy interactions
. Drug Overutilization
. Drug Underutilization
. Duplicate Therapy
. Addictive Substances
. Oxycontin
. Lona term hvonotics
OxyContin The program identifies Members who may be misusing $0.01/claim
OxyContin. Physicians of identified Members that Fee can be waived if the client
meet utilization criteria receive mailed intervention
materials. implements Retro DUR for
$0.03 per claim
Retrospective DUR Weekly physician intervention to identify inappropriate $0.02lclaim
for Seniors utilization issues in the senior population
. Polypharmacy
. Drugs of Concern
96463v2
24
EXHIBIT B
REBATES
Subject to the terms and conditions set forth below, ESI will pay an amount equal to the following:
A.
Rebates / Rx(1)
Network Access Program 2-Tier Plan Design 3.Tier Plan Design
ESI Formulary ESI Formulary with a minimum $15 Copay Differential
ESI National Preferred Formulary
Participating Mail Service Participating Mail Service Participating Mail Service
Pharmacv Pharmacv Pharmacy Pharmacy Pharmacy Pharmacv
$0.75 $5.00 1'tyear: $1.20 $5.00 $2.35 $9.00
2nd year: $1.35
3'dyear: $1.50
ESI shall retaIn Rebates, If any, whtch exceed the Rebate per claim.
B.
Conditions of the Rebate Program
1. Rebates are conditioned upon (a) Sponsor's election of, and conformance to, the
Formulary indicated above; (b) Sponsor's adoption and conformance to certain plan design requirements
(e.g., implementation of qualifying co payment benefit designs and Drug Choice Management program);
(c) distribution of the Formulary (or a summary thereof) to Members and/or physicians, as applicable; (d)
100% of Members included in the applicable benefit plan design(s); and (e) Sponsor's compliance with
other reasonable, generally applicable requirements for participation by all clients in the Rebate Program,
as are communicated by ESI to Sponsor from time to time.
2. Certain Member Submitted Claims, CuraScript and claims for 100% copayment (cash
and carry) plans not offered in connection with a health plan benefit may not be eligible for Rebates.
3. ESI and Sponsor each understand that market conditions, patent status and other factors
may influence Formulary decisions from time to time. The Formulary may be amended as appropriate by
mutual agreement, such agreement not to be unreasonably withheld by any party, each recognizing the
influence of Formulary actions on ESI's underlying assumptions in arriving at the Rebate amounts set
forth in this Exhibit. If (a) Sponsor changes its Formulary, benefit designs or otherwise takes an action
that has the effect of lowering the amount of Rebates earned by Sponsor, or (b) Rebate revenue is
materially decreased because of brand products moving off-patent to generic status, ESI shall have the
right to make an equitable adjustment to the Rebate as of the effective date of such event upon notice to
Sponsor.
4. Amounts representing the Rebates shall be paid on a quarterly basis approximately 150
days following the end of each quarterly period; provided, however, that ESI shall make quarterly
payments as provided herein only to the extent of the allocable Rebate payments it receives
approximately 120 days following the end of the quarterly period. Payments equal to allocable Rebate
amounts that ESI receives later than 120 days following the end of a quarter shall be included by ESI in
the next quarterly payment. ESI retains all right, title and interest to any and all Rebates received from
manufacturers, except that ESI shall pay Sponsor the amounts above from ESl's general assets.
Sponsor acknowledges and agrees that it shall not have a right to interest on, or the time value of, any
Rebate payments received by ESI during the collection period or moneys payable under this Section. No
Rebates shall be paid until this Agreement is executed by Sponsor. ESI may apply Rebates to unpaid
Fees and may delay payment of Rebates to allow for final adjustments upon termination of this
96463v2
25
Agreement.
5. Sponsor acknowledges that it may be eligible for Rebates under this Agreement only so long as
Sponsor, its affiliates, or its agents do not contract directly or indirectly with anyone else for discounts,
utilization limits, rebates or other financial incentives on pharmaceutical products or formulary programs
for claims processed by ESt pursuant to the Agreement, without the prior written consent of ESI. In the
event that Sponsor negotiates or arranges with a pharmaceutical manufacturer for Rebates or similar
discounts for any Covered Drugs hereunder, but without limiting ESI's right to other remedies, ESI may
immediately withhold any Rebates earned by, but not yet paid to, Sponsor as necessary to prevent
duplicative rebates on Covered Drugs. To the extent Sponsor knowingly negotiates and/or contracts for
discounts or rebates on claims for Covered Drugs without prior written approval of ESI, such activity shall
be deemed to be a material breach of this Agreement, entitling ESI to suspend payment of Rebates
hereunder and to renegotiate the terms and conditions of this Agreement.
96463v2
26
EXHIBIT C
AUDIT PROTOCOL
1.
Audit Principles
Express Scripts recognizes the importance of Sponsors ensuring the integrity of their business
relationship by engaging from time to time in audits of their financial arrangements with Express Scripts,
and will make every reasonable effort to address Sponsor concerns by facilitating a responsive and
responsible audit process.
Subject to the provisions of the Agreement regarding Sponsor audits, Express Scripts and
Sponsor agree that this Audit Protocol is intended to facilitate Sponsor's audit of Express Scripts by: (a)
clearly defining the scope of the review to be performed; (b) enabling production of timely and accurate
results; (c) minimizing administrative burdens on both parties; and (d) ensuring that standard accounting
and auditing practices are followed.
2.
Audit Prerequisites and Procedures
A.
B.
C.
3.
96463v2
An audit involves a review of more than three months of claims data, and addresses
broad operational areas including claim pricing accuracy, concurrent eligibility, Formulary
compliance and, when applicable, Rebates. General claim inquiries, which do not require
an audit, can be initiated by contacting Sponsor's Express Scripts Account Management
team at any time.
Sponsor agrees to supply a written request to begin an audit, which includes a clear
definition of the intent and scope of the audit, after which Express Scripts will retrieve
necessary data to perform the audit in a time frame not to exceed thirty (30) days.
Audits may be performed once annually, and due to the extraordinary demands placed
on Express Scripts' staff during the annual renewal period of December and January, no
audits may be initiated or conducted during these months.
Auditing Prescription Claims
A.
If requested, Express Scripts will supply Sponsor with claim detail history on CD-ROM in
NCPDP standard fields.
B.
The initial audit scope will cover a period not to exceed eighteen (18) months immediately
preceding the audit. Requests for older data may be subject to payment of fees for
retrieval of data from off-site storage.
C.
Most audits can be performed remotely via transfer of data on CD-ROM, hardcopy
documents, etc. Any requested on-site audits shall be conducted during normal business
hours at Express Scripts offices, during the months of February through November.
D.
Other Express Scripts documentation (e.g. policies and procedures) requested during the
course of the audit, other than that needed to determine the accuracy of Sponsor ciaims
payments, will be provided at Express Scripts' reasonable discretion.
E.
Sponsor will be given data sufficient for Sponsor to determine that Express Scripts has
billed Sponsor in accordance with contract terms for claims processing.
F.
Results of Express Scripts' most recent SAS-70 audit conducted by a national accounting
firm will be provided upon request. The Sponsor Audit may not duplicate a SAS-70
control audit regarding areas for which Express Scripts has obtained a SAS-70 audit.
27
4.
However, this does not preclude Sponsor from obtaining a reasonable understanding
from Express Scripts personnel of any areas covered within the SAS-70 audit.
G.
During the course of an audit, all data, including claims detail and any copies of claims
(or compilations thereof) supplied by Express Scripts may be retained by Sponsor.
Auditing Rebates from Manufacturers
A.
The initial scope of any rebate audit may not exceed two (2) calendar quarters during the
twelve month period immediately preceding the audit. In the event findings from the
initial review period warrant an increase in calendar quarters to be reviewed, Express
Scripts and Sponsor will mutually agree on a process by which additional calendar
quarters may be reviewed by Sponsor.
B.
Express Scripts' contracts with pharmaceutical manufacturers for drug product rebates
are highly confidential and proprietary. Nevertheless, Sponsor may audit payments
under rebate contracts applicable to Sponsor, and may select five (5) initial manufacturer
contracts to be audited, or such larger initial number of contracts that will enable Sponsor
to audit fifty percent (50%) of total rebate payments due to Sponsor. In the event findings
from the initial rebate contract audits warrant an increase in the number of contracts to be
audited, Express Scripts and Sponsor will mutually agree on a process by which
additional contracts may be reviewed by Sponsor.
c.
Express Scripts will use reasonable best efforts to obtain manufacturer consent to
disclose such contracts when such consent is required. In the event that a selected
manufacturer declines to permit Sponsor to reyiew the applicable rebate rate
components, then Express Scripts will use its best reasonable efforts to secure
permission from one or more additional manufacturers of Sponsor's choice which will
enable Sponsor to meet the initial targets of five (5) manufacturer contracts and fifty
percent (50%) of total rebate payments as set forth in paragraph 4B above.
D.
Express Scripts will permit Sponsor to perform an on-site review of the applicable rebate
rate components of the manufacturer rebate agreements which are relevant and
necessary to audit the calculation of the rebate payments made to Sponsor by Express
Scripts for the selected drugs.
E.
Sponsor should bring, or otherwise supply its independent auditor with, the most recent
Allocation Report (PSG) or Sponsor Share Report (MS), which should be brought to the
on-site rebate audit. Additional reasonable charges may occur if Express Scripts is
asked to re-produce these reports.
F.
Sponsor will not be permitted to copy or retain any such manufacturer agreements (in
part or in whole) or documents provided or made available by Express Scripts in
connection with the rebate audit. Sponsor will be entitled, however, to take and retain
notes to the extent necessary to document any identified exceptions. Express Scripts
shall be entitled to review any notes to affirm compliance with this paragraph.
5. Verification or Explanation of Disputed Claims
96463v2
A.
After Express Scripts has supplied the claims data, Sponsor will provide Express Scripts
with a written exception report stating the entire error population, if any, and dollar
amount associated with such errors. In addition to the written report, Sponsor will provide
an electronic extrapolation of errors representatiYe of the entire population of errors not to
exceed an initial compilation of 200 (hereafter referred to as "representative sample").
Express Scripts will research and investigate the "representative sam pie" within thirty (30)
days. If additional time is reasonably required, Express Scripts will notify Sponsor within
B.
28
96463v2
these thirty (30) days.
c.
In the event findings warrant an increase in the representative sample of drug claims or
the scope of the rebate audit period, Express Scripts and Sponsor shall mutually
determine the scope of such increase.
D.
Overpayments or underpayments shall be promptly paid and/or credited by Express
Scripts (or the Sponsor, as the case may be).
E.
Automatic closure of the audit will occur if Sponsor or Auditor fails to communicate
research updates within 90 days of Express Scripts supplying the audit data.
29
APPENDIX I
FORM OF AUDITOR CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT (the "Agreement") is made and entered into as of
200_, by and between EXPRESS SCRIPTS, INC. ("ESI") and
("Recipient").
1. ESI, either directly or through its subsidiaries, engages in a variety of health care businesses, including, among
other things, pharmacy benefit management, disease and demand management, specialty pharmaceutical distribution
and medical information management.
2. ESI has been administering a prescription drug benefits program for [employees] [members] and their eligible
dependents of ISoonsor) (the "Prescription Drug Program").
3. Recipient is an audit firm and has been engaged by (Sponsor) to conduct an audit of
certain data in connection with the Prescription Drug Program. In connection therewith, it is necessary for ESI to provide
Recipient with certain Confidential Information (as defined below).
1. As used in this Agreement, the term "Confidential Information" includes any information, written or oral, that
Recipient receives from ESI or from one of ESl's subsidiaries or affiliates in connection with the audit described above,
including all copies thereof; provided, that the Confidential Information shall not include any information that (a) is or
becomes generally known to the public by a source other than Recipient or its employees or agents, (b) is in possession
of Recipient prior to the date hereof, (c) is independently developed by Recipient under circumstances not involving a
breach of this Agreement by Recipient, (d) is acquired by Recipient from a third party who is not under an obligation of
confidentiality to ESI or without a breach of this or a similar agreement, or (e) is publicly disclosed pursuant to a lawful
requirement or request from a governmental agency acting within its jurisdiction, or nonconfidential disclosure is
otherwise required by law.
2. Recipient shall use the Confidential Information it receives pursuant to this Agreement for the sole purpose of
auditing the prescription drug management services, and in no event shall disseminate or communicate the Confidential
Information in any form to any other person or entity without the express written consent of ESI.
3. Recipient shall disclose Confidential Information only to persons within its organization who (a) are required to
protect and otherwise not disclose or use the Confidential Information except as provided in this Agreement, and (b)
need to know the Confidential Information. Such persons who receive any Confidential Information shall be made aware
of the terms of this Agreement and shall agree to be bound thereby.
4. Any reports, documents or other information in whatever form or medium which are derived or result from the
receipt of Confidential Information shall be governed by the same terms and conditions respecting confidentiality and use
as is the Confidential Information itself.
5. All Confidential Information of ESI shall be and remain the property of ESI. Recipient shall not obtain any rights
in or to the Confidential Information as a result of such disclosure. Upon ESl's request, Recipient shall promptly destroy
or return to ESI all of ESl's Confidential Information, including all copies thereof. Upon ESl's request, an authorized
representative of Recipient shall certify to ESI that all Confidential Information has been destroyed or returned to ESI.
6. Recipient shall indemnify, defend and hold ESI harmless from any and all claims, penalties, liabilities, losses,
damages, settlements or costs, including reasonable attorneys' fees, which may arise from Recipient's breach of this
Agreement, or improper use or disclosure of Confidential Information or "protected health information" as defined by the
Heaith Insurance Portability and Accountability Act of 1996, as amended.
7. This Agreement shall remain in full force and effect for a period of three years from the date hereof. This
Agreement may not be amended except in writing, signed by both parties.
8.
This Agreement shall be governed by and construed in accordance with the internal laws of Iowa
96463v2
30
EXHIBIT D
BUSINESS ASSOCIATE AGREEMENT
1.
Definitions.
(a) "Compliance Date(s)" shall mean the date established by HHS or the United States
Congress for effective date of applicability and enforceability of the HIPAA Rules.
(b) "Designated Record Set" shall mean a group of records maintained by or for Plan that is
(i) the medical records and billing records about individuals maintained by or for Plan, (ii) the enrollment,
payment, claims adjudication, and case or medical management record systems maintained by or for a
health pian; or (iii) used, in whole or in part, by or for Plan to make decisions about individuals.
(c) "HIPAA Rules" means the collective privacy, transaction and security regulations
promulgated pursuant to the Health Insurance Portability and Accountability Act, as codified at 45 CFR
Parts 160, 162 & 164.
(d)
160.103.
"Health Plan" or "Plan" shall have the same meaning as the term "Health Plan" in 45 CFR
(e) "Individual" shall have the same meaning as the term "individual" in 45 CFR § 164.501
and shall include a person who qualifies as a personal representative in accordance with 45 CFR §
164.502(g).
(f) "Protected Health Information" or "PHI" shall have the same meaning as the term
"protected health information" in 45 CFR § 164.501, limited to the information created or received by ESI
from or on behalf of Plan.
(g) "Privacy Rule" shall mean the Standards for Privacy of Individually Identifiable Health
Information at 45 CFR Part 160 and Part 164, as they exist now or as they may be amended.
(h)
§ 164.501.
(i)
his designee.
"Required By Law" shall have the same meaning as the term "required by law" in 45 CFR
"Secretary" shall mean the Secretary of the Department of Health and Human Services or
m "Security Standards" shall mean the Security Standards, 45 C.F.R. parts 160, 162 and
164, to be effective no later than April 20, 2005, as they exist now or as they may be amended.
(k) "Transaction Standards" shall mean the Standards for Electronic Transactions, 45 C.F.R.
160 and 162, as they exist now or as they may be amended.
Terms used, but not otherwise defined, in this Addendum shall have the same meaning as those
terms in 45 CFR §§ 160.103 and 164.501.
2.
General Use and Disclosure Provisions. ESI and the Plan acknowledge and agree as follows:
(a) Except as otherwise limited in this Agreement, ESI may use and disclose PHI to properly
provide, manage and administer the services required under the PBM Agreement and consistent with
applicable iaw to assist the Plan in its operations, as long as such use or disclosure would not violate the
HIPAA Rules if done by the Plan.
(b) ESI will take reasonable efforts to limit requests for, use and disclosure of PHI to the
minimum necessary to accomplish the intended request, use or disclosure.
96463v2
31
(c)
Except as otherwise limited in this Agreement:
(i) ESI may use PHI for the proper management and administration of ESI or to
carry out ESl's legal responsibilities.
(H) ESI may disclose PHI to third parties for the proper management and
administration of ESI or to carry out the legal responsibilities of ESI, provided that the disclosures
are Required by Law, or ESI obtains reasonable assurances from the person to whom the
information is disclosed that it will remain confidential and used or further disclosed only as
Required by Law or for the purpose for which it was disclosed to the person, and the person
notifies ESI of any instances of which it is aware in which the confidentiality of the information has
been breached.
(iii) ESI may use PHI to perform Data Aggregation services on behalf of the Plan as
permitted by 45 CFR 164.504(e)(2)(i)(B).
(d) ESI agrees to promptly notify the Plan if ESI has knowledge that PHI has been used or
disclosed by ESI in a manner that violates applicable law.
(e) ESI agrees to use appropriate safeguards, consistent with applicable law, to preyent use
or disclosure of PHI in a manner that would violate this Agreement. ESI shall provide the Plan with such
information concerning such safeguards as the Plan may reasonably request from time to time.
(f) ESI agrees to mitigate, to the extent practicable, any harmful effect that is known to ESI
of a use or disclosure of PHI by ESI in violation of this Agreement or the PBM Agreement.
(g) ESI agrees to ensure that any agent, including a subcontractor, to whom it provides PHI
received from, or created or received by ESI on behalf of the Plan agrees to the same restrictions and
conditions that apply through this Agreement to ESI with respect to such information.
(h) Within fifteen (15) business days of a request from the Plan, ESI shall provide access to
the Plan to PHI in a Designated Record Set in order to meet the requirements under 45 CFR 164.524. If
ESI receives a request directly from an Individual, or if the Plan requests that access be provided to the
Individual, ESI shall provide access to the Individual to PHI in a Designated Record Set within thirty (30)
days in order to meet the requirements under 45 CFR 164.524.
(i) Within sixty (60) business days of a request of the Plan or subject Individual, ESI agrees
to make any appropriate amendment(s) to PHI in a Designated Record Set that the Plan directs or agrees
to pursuant to 45 CFR 164.526.
G) Within thirty (30) business days of a proper request by the Plan, ESI agrees to document
and make available to the Plan, for a reasonable cost-based fee (under conditions permitted by HIPAA if
an Individual requests an accounting more than once during a twelve month period), such disclosures of
PHI and information related to such disclosures necessary to respond to such request for an accounting
of disclosures of PHI, exclusive of those disclosures for payment, treatment or healthcare operations, in
accordance with 45 CFR 164.528. Within sixty (60) days of proper request by subject Individual, ESI
agrees to document and make available to the Individual the information described above. ESI shall
retain copies of any accountings for a period of six (6) years from the date the accounting was created.
(k) Within fifteen (15) business days of a request of the Plan, ESI shall consider requests to
restrict use or disclosure of PHI agreed to by the Plan on behalf of an Individual in accordance with 45
CFR 164.522.
(I) ESI agrees to make internal practices, books, and records relating to the use and
disclosure of PHI received from, or created or received by ESI on behalf of, the Plan available to the Plan
within ten (10) business days, or at the request of the Plan or the Secretary of HHS ("Secretary"), to the
Secretary in a time and manner directed by the Secretary, for purposes of the Secretary determining the
96463v2
32
Plan's compliance with the HIPAA Rules.
3.
Plan Obliaations.
(a) Plan shall notify ESI of any limitation(s) in the notice of privacy practices of Plan in
accordance with 45 C.F.R. §164.520, to the extent that such limitation may affect ESI's use or disclosure
of PHI.
(b) Plan shall notify ESI of any changes in, or revocation of, permission by an Individual to
use or disclose PHI, to the extent that such changes may affect ESI's use or disclosure of PHI.
(c) Plan shall notify ESI of any restriction to the use or disclosure of PHI that Plan has
agreed to in accordance with 45 C.F.R. §164.522, to the extent that such restriction may affect ESl's use
or disclosure of PHI.
(d) Plan shall not request that ESI use or disclose PHI in any manner that would exceed that
which is minimally necessary under the HIPAA Ruies or that would not be permitted by a Covered Entity.
4. Transactions Standards. The HIPAA Rules provide for certain Transactions Standards for
transfer of data between trading partners. While certain of the standards mayor may not be adopted by
the Pian (e.g., for eligibility), ESI will be prepared to accept the following In accordance with 45 CFR Part
162.1502: ASC X12N 834 - Benefit Enrollment and Maintenance. In addition, to the extent applicable,
ESI shall comply with other applicable transactions standards for claims processing functions between
ESI and provider pharmacies. The parties each hereby agree that it shall not change any definition, data
condition or use of a data element or segment in a standard, add any data elements or segment to the
maximum defined data set, use any code or data elements that are either marked "not used" in the
standard's implementation specification or are not in the implementation specification, or change the
meaning or intent of the implementation specification.
5. Security Standards. No later than April 20, 2005, to the extent that ESI creates, receives,
maintains or transmits electronic PHI, ESI shall:
(a) Implement administrative, physical and technical safeguards that reasonably and
appropriately protect the confidentiality, integrity, and availability of the Electronic PHI that ESI creates,
receives, maintains or transmits on behalf of the Plan as required by the Security Standards;
(b) Ensure that any agent, including a subcontractor, to whom ESI provides Electronic PHI
agrees to implement reasonable and appropriate safeguards to protect the PHI; and
(c)
Report to Plan any Security Incident involving Electronic PHI of which ESI becomes
aware.
6.
Breach; Termination.
(a) Without limiting the termination rights of the parties pursuant to the PBM Agreement,
upon the Plan's knowledge of a material breach by ESI of this Agreement, the Plan shall notify ESI of
such breach and ESI shall haye thirty (30) days to cure such breach. In the event ESI does not cure the
breach, or cure is infeasible, the Plan shall have the right to immediately terminate this Agreement and
the PBM Agreement. If cure of the material breach is infeasible, Plan shall report the violation to the
Secretary.
(b) To the extent feasible, upon termination of the PBM Agreement for any reason, ESI shall,
and shall cause any subcontractors and agents to, return or destroy and retain no copies of all PHI
received from, or created or received by ESI on behalf of, the Plan. If return or destruction of such
information is not feasible, ESI shall continue to limit the use or disclosure of such information as set forth
in this Agreement as if the PBM Agreement had not been terminated.
96463v2
33
7. Indemnification. ESI will indemnify and hold harmless Plan from and against any claim, cause
of action, liabiiity, damage, cost or expense, including reasonable attorneys' fees and court or proceeding
costs, arising out of or in connection with any (a) unauthorized use or disclosure of PHI, (b) failure in
security measures affecting PHI (after the Security Standard Compliance Date); or (c) other material
breach of the terms of this Agreement by ESI or any person or entity under ESI control. Indemnification is
conditioned upon the Plan notifying the ESI in writing promptly upon learning of any claim for which
indemnification may be sought hereunder, and shall tender the defense of such claim to ESI. ESI shall
not be required to indemnify Plan if any claim is settled without ESI's written consent.
8.
Miscellaneous.
(a) Amendment. The parties acknowledge that the foregoing provisions are designed to
comply with the mandates of the HIPAA Rules. Should the provisions of the HIPAA Rules change or be
amended after the date of this Agreement, the parties shall engage in negotiations to amend the
provisions of this Agreement to comply with such changes or amendments. If the parties fail to agree on
reasonable amendment to the provisions of this Agreement, either party may terminate this Agreement
upon ninety (90) days written notice.
(b) Effect on PBM Agreement. Except as relates to the use, security and disclosure of PHI
and electronic transactions, this Agreement is not intended to change the terms and conditions of, or the
rights and obligations of the parties under, the PBM Agreement.
(c) No Third-Party Beneficiaries. Nothing express or implied in the PBM Agreement or in
this Agreement is intended to confer, nor shall anything herein confer, upon any person other than the
parties and the respective successors or assigns of the parties, any rights, remedies, obligations or
liabilities whatsoever.
(d) Interpretation. Any ambiguity in this Agreement shall be resolved in favor of a meaning
that permits the Plan to comply with the HIPAA Rules.
(e) Effective Date. This Agreement shall be effective as of the applicable Compliance Dates
or the effective date of the PBM Agreement, whichever is later.
96463v2
34
EXHIBIT E
FINANCIAL DISCLOSURE TO ESI PBM CLIENTS
In addition to the administrative fees paid to Express Scripts by our clients, Express Scripts derives margin
in one or more of the following ways. These other revenue sources have allowed Express Scripts to keep
administrative fees to clients low. The specific terms of Express Scripts' contracts with clients will affect the
relative importance of these sources of margin with respect to that client.
1. Network Pharmacv Contracts. - Express Scripts contracts with retail pharmacies to provide prescription
drugs to members of health pians sponsored by clients. The rates paid to these pharmacies differ from network
to network, and among pharmacies within a network. Express Scripts generally contracts with clients to be paid
an ingredient cost for drugs dispensed in a retail network at a uniform rate that applies to all pharmacies in the
network that the client has selected for its plan. Thus, Express Scripts may realize a positive or negative margin
on any given prescription. In addition, the payment terms under our client contracts may result in our receiving
payments from our clients before we are required to pay network pharmacies. In such cases we retain the
benefit of the use of these funds until we pay the network pharmacies.
2. Mail Pharmacv Rates. - ESI Mail Pharmacy Service, Inc. purchases prescription drugs to be dispensed from
its mail service pharmacies either from a prescription drug wholesaler or directly from the manufacturer. Express
Scripts' contracts with clients contain rates that we will be paid for dispensing these drugs that may be greater or
less than Express Scripts' acquisition cost on any given prescription. In general, Express Scripts realizes an
overall positive margin between acquisition cost and the amounts paid by clients.
3. Manufacturer Rebates and Associated Administrative Fees. - Express Scripts contracts with pharmaceutical
manufacturers for retrospective discounts, or rebates, on the utilization of certain branded prescription products
by applicable Members. Often, a portion of these rebates is paid to clients in connection with their
pharmaceutical benefit management services, which payments are made In accordance with terms specified
under the agreement with Express Scripts. Express Scripts typicaliy receives rebates from pharmaceutical
manufacturers before such payments are owed to clients, and Express Scripts retains the benefit of funds held
until payment is made to a client. If a client has contracted to receive a portion of Express Scripts' rebates, the
client has the right to audit the computation of payments owed to the ciient. Express Scripts maintains extensive
systems and processes necessary for managing and administering its rebate programs. As partial consideration
for these efforts, pharmaceutical manufacturers pay administrative fees to Express Scripts in addition to amounts
attributable to rebates. Administrative fees retained by Express Scripts in connection with its rebate programs do
not exceed 3.5% of the AWP of the products for which rebates are payable to Express Scripts.
4. Formularv SUODort ProGrams. - Express Scripts does not receive manufacturer funding for product-specific
PBMformulary support programs. Express Scripts will continue to provide formulary support programs to its
clients but without targeted manufacturer funding for these services.
5. Other Manufacturer Revenues. - Certain subsidiaries of Express Scripts, including Phoenix Marketing
Group, CuraScript Pharmacy, Inc. and Express Scripts Specialty Distribution Services, provide services to
pharmaceuticai manufacturers that are separate from the rebate and formulary support programs discussed
above. Examples of these manufacturer services include product sample accountability and distribution, point-
of-sale coupon program design and implementation, pharmaceutical care services, and specialty pharmaceutical
product distribution. In addition, Express Scripts occasionally provides educational seminars regarding the PBM
industry to representatives of certain pharmaceutical manufacturers and others. Compensation paid to Express
Scripts or any of its subsidiaries for these types of services is based on the fair market value of the services
rendered.
March,2004
THIS EXHIBIT REPRESENTS ESI'S CURRENT FINANCIAL POLICIES. THIS EXHIBIT MAY NOT BE REVISED
OR MODIFIED. ESI MAY PERIODICALLY UPDATE ITS FINANCIAL DISCLOSURES TO REFLECT CHANGES IN
ITS BUSINESS PROCESSES.
96463v2
35
EXHIBIT F
BROKER/CONSULTANT OF RECORD AUTHORIZATION
During the term of this Agreement (or until otherwise indicated by Sponsor in writing), Sponsor hereby
authorizes and directs ESI to pay to Trivantage Pharmacy Strategies, Inc. ("Consultanf') a quarterly
consulting fee in the amount of $0.18 per Prescription Drug Claim approved and filled by a Participating
Pharmacy directly under this Agreement ("Consulting Fees"). ESI may pay commission or other
remuneration to other brokers or consultants in connection with this Agreement and Sponsor
acknowledges and consents to same. Information of such commission or other remuneration will be
provided by ESI upon written request.
Subject to the terms and conditions herein, Broker/Consulting Fees will be paid to Broker/Consultant
within forty-five (45) days following the end of the calendar quarter for which the Broker/Consulting Fees
are being paid. Sponsor represents and warrants that: (i) the Broker/Consulting Fees are for actual and
necessary services rendered by Broker/Consultant in the ordinary course of Broker/Consultant's services,
(ii) the Broker/Consulting Fee amount is reasonable and appropriate in light of the actual services being
performed, or to be performed, by Broker/Consultant in connection with Sponsor's prescription drug
program, and (iii) payment of the Broker/Consulting Fee is permissible under applicable law. Sponsor
acknowiedges and agrees that Broker/Consulting Fees paid by ESI to Broker/Consultant are to be paid
from ESl's general assets, and ESI retains full proprietary rights such general assets. Except for
nonpayment by ESI in violation of the express terms hereunder, Sponsor shall indemnify and hold
harmless ESI with respect to any dispute or liability related to the Broker/Consulting Fees.
Notwithstanding any1hing to the contrary herein, ESI shall have no obligation to pay the aforementioned
Broker/Consulting Fees for a given quarter unless, and until, Sponsor has paid all fees owed to ESI by
Sponsor hereunder for such quarter, and ESI shall not pay Broker/Consulting Fees for Prescription Drug
Claims processed by ESI prior to Sponsor's execution of this Agreement. Sponsor shall be responsible
for disclosing the Broker/Consulting Fees in accordance with applicable law.
96463v2
EXHIBIT G
INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES
1. All policies of insurance required hereunder shall be with an insurer authorized to
do business in Iowa. All insurers shall haye a rating of A of better in the current
A.M. Best Rating Guide.
2. All policies of insurance shall be endorsed to proYide a thirty (30) day adyance
notice of cancellation to the City of Dubuque if cancellation is prior to the
expiration date. This endorsement supersedes the standard cancellation
statement on the Certificate of Insurance.
3.
shall furnish a Certificate of Insurance to the City of
Dubuque, Iowa for the coyerage required in Paragraph 6 below. Such
Certificates shall include copies of the following endorsements:
a) Thirty day notice of cancellation to the City of Dubuque.
b) Commercial General Liability policy is primary and non-contributing.
c) Commercial General Liability additional insured endorsement.
d) Governmental Immunities Endorsement.
e) Waiver of Recovery under workers compensation.
shall also be required to proYide Certificates of
Insurance of all subcontractors and all sub-sub contractors who perfonm work or
services pursuant to the proYisions of this contract. Said certificates shall meet
the same insurance requirements as required of
4. Each certificate shall be submitted to the contracting department of the City of
Dubuque.
5. Failure to provide minimum coyerage shall not be deemed a waiver of these
requirements by the City of Dubuque. Failure to obtain or maintain the required
insurance shall be considered a material breach of this agreement.
6. Contractor shall be required to carry the following minimum coyerage/limits or
greater if required by law or other legal agreement:
a) COMMERCIAL GENERAL LIABILITY
General Aggregate Limit
Products-Completed Operations Aggregate Limit
Personal and Advertising Injury Limit
Each Occurrence Limit
Fire Damage Limit (anyone occurrence)
Medical Payments
$2,000,000
$1,000,000
$1,000,000
$1,000,000
$ 50,000
$ 5,000
This coyerage shall be written on an occurrence, not claims made, form
per project. All deyiations or exclusions from the standard ISO
commercial general liability form CG 0001 or Businessowners BP 0002
shall be clearly identified.
Page I 0[4
August 2003
INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES
Governmentallmrnunity endorsement identical or equivalent to form
attached.
An additional insured endorsement identical or equiyalent to ISO Form
CG 2026 and include as additional insureds: "The City of Dubuque.
including all its elected and appointed officials, all its employees and
volunteers, all its boards, commissions and/or authorities and their board
members, employees, and yolunteers,"
b) WORKERS COMPENSATION & EMPLOYERS LIABILITY
Statutory for Coverage A
Employers Liability:
$100,000 each accident
$100,000 each employee-disease
$500,000 policy limit-disease
Policy shall include an endorsement waiving right of recovery
against City of Dubuque.
c) PROFESSIONAL LIABILITY:
d) UMBRELLA/EXCESS LIABILITY
$1,000,000
Coyerage to be determined on a case-by-case basis by Finance Director.
Page20f4
August 2003
"
POLICY NUMBER
COMMERCIAL GENERAL LIABILITY
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
ADDITIONAL INSURED - DESIGNATED PERSON OR
ORGANIZATION
This endorsement modifies inSUIance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART.
SCHEDULE
Name of Person Or Organization:
The City of Dubuque, including all its elected and appointed officials, all its employees and volunteers, all
its boards, commissions and/or authorities and their board members, employees, and volunteers.
(Ifno entty appears above, infonnation required to complete this endorsement will be shown in the
Declarations as applicable to this endorsement.)
WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown
in the Schedule as IlI\ insured but only with respect to liability arising out of your operations or premises
owned by or rented to you.
CoDvri.bt. Insurance Services Office. Inc. 1994
CG 20 2611 85
Page30f4
August 2003
CITY OF DUBUQUE, IOWA
GOVERNMENTAL IMMUNITIES ENDORSEMENT
1.
Nonwaiver of Governmentallmmunitv. The insurance carrier expressly
agrees and states that the purchase of this policy and the including of the City
of Dubuque, Iowa as an Additional Insured does not waive any of the
defenses of governmental immunity available to the City of Dubuque, Iowa
under Code of Iowa Section 670.4 as it is now exists and as it may be
amended from time to time.
2.
Claims Coveraae. The insurance carrier further agrees that this policy of
insurance shall cover only those claims not subjectto the defense of
governmental immunity under the Code of Iowa Section 670.4 as it now exists
and as it may be amended from time to time. Those claims not subject to
Code of Iowa Section 670.4 shall be covered by the terms and conditions of
this insurance policy.
3.
Assertion of Government Immunity. The City of Dubuque, Iowa shall be
responsible for asserting any defense of governmental immunity, and may do
so at any time and shall do so upon the timely written request of the
insurance carrier.
4.
Non-Denial of Coveraae. The insurance carrier shall not deny coverage under
this policy and the insurance carrier shall not deny any of the rights and
benefits accruing to the City of Dubuque, Iowa under this policy for reasons of
governmental immunity unless and until a court of competent jurisdiction has
ruled in favor of the defense(s) of governmental immunity asserted by the City
of Dubuque, Iowa.
,
No Other Chanae in Policy. The above preservation of governmental immunities
shall not otherwise change or alter the coverage available under the policy.
Page 4 of4
August 2003