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Express Scripts, Inc. Employer Participation AgreementMasterpiece on the Mississippi Dubuque band AI- America City 1 2007 • 2012 • 2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Employer Participation Agreement between the City of Dubuque and Express Scripts, Inc. DATE: September 5, 2013 In 2004, the Health Care Committee participated in a RFP process for pharmacy benefit managers sponsored by the Iowa Employer Coalition and conducted by Gallagher Benefit Services Inc., our benefit and actuarial consultant. There was no cost to the City to participate in the RFP process. Express Scripts was selected as the pharmacy benefit manager for the Iowa Employer Coalition. As a result of negotiations conducted by Gallagher Benefit Services Inc., Express Scripts agreed to improved financial terms in 2012. The estimated value of the financial improvement is 6.1 % per year net average over the next three years. The estimated annual savings is $8,200. Projected savings will come primarily from higher formulary rebates and larger discounts. Personnel Manager Randy Peck has been working with Express Scripts for approximately one year to resolve some language issues, particularly as it relates to the renewal provision. City Attorney Barry Lindahl has reviewed the applicable provisions of the Employer Participation Agreement and specifically, the renewal provision, and finds the terms acceptable. Personnel Manager Randy Peck recommends City Council approval of the Employer Participation Agreement, which was effective January 1, 2012, and authorize the City Manager to sign the agreement. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Randy Peck, Personnel Manager 2 Masterpiece on the Mississippi Dubuque All - America City 11111! 2007 • 2012 • 2013 TO: Michael C. Van Milligen, City Manager FROM: Randy Peck, Personnel Manager SUBJECT: Employer Participation Agreement between the City of Dubuque and Express Scripts, Inc. DATE: August 30, 2013 In 2004, the Health Care Committee participated in a RFP process for pharmacy benefit managers sponsored by the Iowa Employer Coalition and conducted by Gallagher Benefit Services 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. Express Scripts was selected as the pharmacy benefit manager for the Iowa Employer Coalition. As a result of negotiations conducted by Gallagher Benefit Services Inc., Express Scripts agreed to improved financial terms in 2012. The estimated value of the financial improvement is 6.1% per year net average over the next three years. The estimated annual savings is $8,200. Projected savings will come primarily from higher formulary rebates and larger discounts. In order to take advantage of the new pricing arrangement, we signed the attached Letter of Acknowledgement on February 24, 2012. After signing the Letter of Acknowledgment, we received a new Employer Participation Agreement. The agreement is effective January 1, 2012. I have been working with Express Scripts for approximately one year to resolve some language issues, particularly as it relates to the renewal provision. City Attorney, Barry Lindahl has reviewed the applicable provisions of the Employer Participation Agreement and specifically, the renewal provision, and finds the terms acceptable. I request that the City Council approve a motion authorizing you to sign the agreement. RP:lmh EXPRESS•SCRIPTS® Vag 7A I February 14, 2012 City of Dubuque ' 50 Wes113' Skeet Dubuque, Iowa 52001 Attn: Randy Peck, Thank you for selecting Express Scripts as your pharmacy benefit manager (PBM), This letter will serve to confirm that Express Scripts will manage the costs and utilization of your prescripfori dng benefit plan. • While the contracting process has been Initiated, a definitive agreement has not been executed. In order for Express Scripts to be able to Implement your prescription drug program without a signed contract, Express Scripts requires written confirmation from you concerning the financial terms dour arrangement . • Subject to the requirements below, Express Scripts will implement the financial terms set forth on the attached pricing, to be effective as of 'January 1, 2012, provided Ihls letter Is received signed by an appropriate officer of your organization prior to January 1, 2012, in addition, this pricing is conditioned upon a one (1) year term with ESI as your exclusive PBM. • The,parlies understand there are extra - market industry, legal, government and regulatory activities which may lead to changes relating to, or elimination of, the AWP pricing Index that could alter, the pricing intent under this Agreement it the Pricing Source changes the methodology for calculating AWP or replaces AWP, or If, as a result of such change, ESI utilizes another recognized pricing benchmark other than AWP (e.g., to Wholesale Acquisition Cost), then Participating Pharmacy, CuraSatpt and Mali Service Pharmacy rates, rebates and guarantees, as applicable, Will be modified as reasonably and equitably necessary to maintain the pricing Intent under this Agreement. ESi shalt provide Sponsor With at least ninety (90) days notice of the change (or if such notice is not practicable, as much notice as Is reasonable under the circumstances), end written Illustration of the financial Impact of the pricing source or index change (e.g., specific drug examples). If Sponsor disputes the Illustration or the financial impact of the pricing source, the parties agree to cooperate In good faith to resolve such disputes. Express Scripts' policy prohibits the processing of subsidy reports as well as payments of such items•as rebates, guarantees, commissions or other similar payments until a contract is fully executed, Please also note that we may not be able to bbl for manufacturer rebates for any quarter for which a wr0ten contract Is not In place. do if a legal contract is nol in place by the time we bill the manufacturers (usually within two weeks of the end of a calendar quarter) we may not be able to bill tot rebates for your program for that quarter. Express Scripts looks forward to a long and mutually satisfying working relationship with you. if you have any questions, please contact Pat Burns at 314- 996 -0910. Please sign and return this letter via fax to Ellen Wynne at 800- 287 -0359, and mail the original to her attention at the address below. ' Sincerely, jc4-+n^f" Caw -Qu.„ Victoria L. Wheeler Vice President, Account Management and Sales Support Services 1.800.769 -3968, Ext. 344168 ArA Agreed to this ay of , 20 d company. City of Dubuque, Iowa Signature: Lys Printed Name: Michael C. V .n Milligen T'i18: City Manager One Express Way . St. Louis, MO 63121 . 314. 996.0900. www.express- scripts.com EMPLOYER PARTICIPATION AGREEMENT THIS EMPLOYER PARTICIPATION AGREEMENT (the "Employer Participation Agreement ") is made as of January 1, 2012 (the "Effective Date "), by and between CITY OF DUBUQUE ( "Employer ") and Express Scripts, Inc., a Delaware corporation ( "ESI "), for the purpose of delineating the terms and conditions under which ESI will provide certain pharmacy benefit management services to Employer under the Coalition Umbrella Agreement (as defined below) between ESI and Gallagher Benefit Services, Inc. RECITALS: A. Gallagher Benefit Services ( "GBS "), a Denver corporation, manages healthcare vendor relationships on behalf of the Employer and its counterparts who participate in coalition purchasing programs; B. ESI and GBS have entered into that certain Pharmacy Benefit Management Agreement dated effective as of January 1, 2012 (the "Coalition Umbrella Agreement "); C. The parties acknowledge and intend that the Coalition Umbrella Agreement is incorporated herein by reference. Defined terms used herein shall have the same meaning assigned to such terms in the Coalition Umbrella Agreement; and D. Employer desires that ESI provide ESI Services to the Employer in accordance with the Coalition Umbrella Agreement. NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein by reference, and in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. ESI'S Obligations. ESI agrees to comply with the terms and conditions as set forth in the Coalition Umbrella Agreement. 2. Employer Obligations. Employer acknowledges that it has read and hereby agrees to the terms and conditions set forth in the Coalition Umbrella Agreement, which Employer acknowledges are hereby incorporated into this Employer Participation Agreement by reference. Furthermore, Employer agrees to the following: a) Financial Responsibility /Payment Terms. In accordance with the Coalition Umbrella Agreement, Employer will pay to ESI the fees due under the Coalition Umbrella Agreement pursuant to the payment terms set forth in the Coalition Umbrella Agreement. Employer has sole responsibility for timely payment of such fees. GBS may facilitate the payment process, but Employer retains all financial responsibility for timely payment of the applicable fees. b) Member Authorizations and Disclosures. When such services are requested by Employer, Employer will obtain all Member authorizations required by law for ESI to perform any ESI Services provided for in this Employer Participation Agreement or in any addendum or amendment hereto, and for ESI to contact Members, Members' physicians, and Participating Pharmacies in order to promote therapeutic and generic substitution opportunities and to perform any other ESI Services or activities contemplated by this Employer Participation Agreement that may require such contact. Employer shall provide ESI with Members' addresses and such other information as may be reasonably necessary to facilitate such communications. 1 195733.4 Employer will disclose to Members any and all matters relating to the plan design that are required by law to be disclosed, including information relating to the calculation of co- payments, coinsurance amounts, deductibles or any other amounts that are payable by a Member in connection with the plan design. c) Confidentiality. Employer will hold the terms and conditions of this Employer Participation Agreement confidential except to the extent disclosure is required under applicable law. Employer will not share the terms of this Agreement with its consultant or other third party without the express permission of ESI and GBS. 3. Term and Renewal. The initial term of this Employer Participation Agreement shall commence on the Effective Date and remain in effect through June 30, 2013 (the "Initial Term "). Thereafter, this Employer Participation Agreement shall automatically renew for successive one (1) year terms unless terminated by either party as described in Section 4 of this Employer Participation Agreement. 4. Termination of Employer Participation Agreement. ESI and Employer may terminate this Employer Participation Agreement as follows: a) Non - Renewal Upon Notice. Not less than ninety (90) days prior to the end of the Initial Term 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, this Agreement is terminable "without cause" 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 - 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 will such period exceed sixty (60) days. c) Non - Payment. Notwithstanding anything to the contrary herein, ESI (and its wholly -owned subsidiaries) shall have the right to terminate this Employer Participation Agreement or suspend performance hereunder (and the Coalition Umbrella Agreement) and cease providing or authorizing the provision of Covered Drugs to that Employer's Members upon forty -eight (48) hours written notice if Employer fails to pay ESI or provide a deposit, if required, in accordance with the terms of this Agreement. ESI attempts collection through written and verbal communications with Employer prior to sending the notice described herein. d) Move to Fully Insured Plan. In the event Employer moves to a fully insured plan which includes both pharmacy and medical coverage, Employer may terminate this Agreement upon ninety (90) days written notice of the move to a fully insured plan. e) Termination of the Coalition Umbrella Agreement. If GBS terminates the Coalition Umbrella Agreement, Employer will also have the option to terminate this Employer Participation Agreement as of the effective date of the date the Coalition Umbrella Agreement terminates. In the event the Coalition Umbrella 2 195733.4 Agreement is terminated, ESI will cease offering Coalition pricing to Employer, and will offer different pricing (based on Employer's size, utilization, market conditions, etc.) if the Employer wishes to enter into an Agreement with ESI. If the parties cannot agree on revised pricing terms, either party may terminate this Employer Participation Agreement upon ninety (90) days prior written notice. f) Obligations Upon Termination. Upon notice of termination of this Employer Participation Agreement, the parties will mutually develop a run -off plan providing for: (a) Employer notification to 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; (b) ESI provision of open Mail Service Pharmacy refill files and standard claims data and PA files for transition to the successor pharmacy benefit manager in accordance with then existing industry protocol; and (c) whether Employer elects for ESI to process Participating Pharmacy or Member Submitted Claims for prescriptions filled during the Term but filed with ESI after the effective date of termination ( "Termination Date "). Employer will continue to pay ESI in accordance with this Employer Participation Agreement and the Coalition Umbrella Agreement for any Fees for ESI Services provided during the term and any run -off period. ESI will continue filing for Rebates for claims incurred prior to the Termination Date and will pay Employer Rebates for such claims in accordance with the Rebate payment schedule set forth in Exhibit B of the Coalition Umbrella Agreement. 5. HIPAA. 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 a separate Business Associate Agreement. 6. PMF. ESI has agreed to pay a Pharmacy Management Fund ( "PMF ") to Employer in the amount of $5.00 per Member implemented as of the Effective Date of this Employer Participation Agreement to reimburse Employer for the actual, fair market value of expenses incurred by Employer in transitioning to ESI, subject to the following: (i) Employer must submit adequate documentation of implementation expenses within 180 days of implementation, at which time a final reimbursement of eligible expenses will be made. (ii) Employer represents and warrants that: (A) it will only use the Implementation Payment as reimbursement for its actual implementation expenses incurred in transferring to ESI (including amounts Employer owes to GBS for transition services); (B) the amount of the Implementation Payment is equal to or less than the fair market value of the actual implementation expenses incurred by Employer in transitioning to ESI; and (c) the expenses are reasonable and consistent with the fair market value associated with such expenses in an arm's length transaction. Implementation Payments may not be used in connection with the Medicare Part D program unless otherwise agreed by ESI. Employer may elect to have its payment directed to GBS if indicated to ESI in writing. 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. Employer shall notify and disclose the amount and the terms of the PMF to Members and other third parties to the extent required by applicable laws and regulations. If Employer terminates this Employer Participation Agreement for any reason other than EST's uncured material breach, Employer shall reimburse ESI the unamortized portion of the PMF. Any payment made to ESI by Employer 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 Employer Participation Agreement. 3 195733.4 7. GBS Management and Consulting Fees. Employer hereby confirms that GBS is providing management and consulting services on behalf of Employer in connection with the pharmacy benefit management program administered pursuant to this Employer Participation Agreement. Employer hereby directs and authorizes ESI to facilitate, on behalf of Employer, the payment of a monthly fee in an amount equal to $0.12 per each approved Prescription Drug Claim processed by ESI for Employer during such month ( "Management and Consulting Fees "). ESI agrees to facilitate the payment of the Management and Consulting Fees subject to the following: (a) Employer has executed this Agreement and Employer is current in its payment obligations to ESI. (b) Employer hereby represents and warrants that the GBS Fees are fair and reasonable for the actual services to be performed by GBS in connection with Employer's prescription drug program; are commensurate with other consulting fees in the industry; and are not in violation of any law or regulation, including ERISA. ESI will not pay per prescription fees on Medicare subsidy utilization. (c) ESI will comply with any request by Employer to stop GBS Fee payments. Employer shall hold ESI harmless in connection with any dispute between GBS and Employer regarding GBS Fees. 8. Thompson Reuters Fees. Employer hereby confirms that Thompson Reuters ( "TR" or "Auditor ") provides services for the benefit of Employer, in connection with the pharmacy benefit management program administered pursuant to this Employer Participation Agreement. In addition to the GBS fee described herein, Employer hereby directs and authorizes ESI to facilitate, on behalf of Employer, the payment of a monthly fee to TR, in an amount equal to $0.18 per approved Prescription Drug Claim processed by ESI for Employer during such month. ESI agrees to facilitate the payment of the TR Fees to TR subject to the following: (a) Employer has executed this Agreement and Employer is current in its payment obligations to ESI. (b) Employer hereby represents and warrants that the TR Fees are be remitted on behalf of Employer are fair and reasonable; are commensurate with other TR Fees in the industry for the actual services to be performed by Broker in connection with the Employer's prescription drug program; and are not in violation of any law or regulation, including ERISA. ESI will not pay per prescription TR Fees on Medicare subsidy utilization. (c) ESI will comply with any request by Employer to stop TR Fee payments. Employer shall hold ESI harmless in connection with any dispute between TR, and Employer regarding TR Fees. 9. CHECK APPLICABLE BENEFIT PLAN BELOW: TRADITIONAL ❑ PASS THROUGH 4 195733.4 10. Employer Information. Employer Name: City of Dubuque Contact Name: Randy Peck Address: 50 W. 13th Street Dubuque, IA 52001 Telephone No.: 563 - 589 -4125 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers or agents as of the date first above written. EXPRESS SCRIPTS, INC. CITY OF DUBUQUE By; By: / Print Name: Print Name: Michael C. Van Milligen Title; Title: City Manager Date: Date: 'L l 5 195733.4 ATTACHMENT 1 TO CLIENT AGREEMENT FINANCIAL DISCLOSURE TO ESI CLIENTS This disclosure provides an overview of the principal revenue sources of Express Scripts, Inc. ( "ESI "). In addition to administrative and dispensing fees paid to ESI by our clients for pharmaceutical benefit management ( "ESI ") services, ESI derives revenue from other sources, including arrangements with pharmaceutical manufacturers, wholesale distributors, and retail pharmacies. Some of this revenue relates to utilization of prescription drugs by members of the clients receiving ESI services. ESI may pass through certain manufacturer payments to its clients or may retain those payments for itself, depending on the contract terms between ESI and the client. Network Pharmacies — ESI contracts for its own account with retail pharmacies to dispense prescription drugs to client members. Rates paid by ESI to these pharmacies may differ among networks (e.g., Medicare, Worker's Comp, open and limited), and among pharmacies within a network, and by client arrangements. ESI agreements generally provide that a client pay ESI an ingredient cost, plus dispensing fee, for drug claims at a uniform rate. If the rate paid by a client exceeds the rate contracted with a particular pharmacy, ESI will realize a positive margin on the applicable claim. The reverse also may be true, resulting in negative margin for ESI. ESI also enters into pass- through arrangements where the client pays ESI the actual ingredient cost and dispensing fee paid by ESI to the pharmacy. In addition, when ESI receives payment from a client before payment to a pharmacy, ESI retains the benefit of the use of the funds between these payments. ESI may charge pharmacies standard transaction fees to access ESI's pharmacy claims systems and for other related administrative purposes. Brand /Generic Classifications — Prescription drugs may be classified as either a "brand" or "generic;" however, the reference to a drug by its chemical name does not necessarily mean that the product is recognized as a generic for adjudication, pricing or copay purposes. ESI distinguishes brands and generics through a proprietary algorithm ( "BGA ") that uses certain published elements provided by First DataBank (FDB) including price indicators, Generic Indicator, Generic Manufacturer Indicator, Generic Name Drug Indicator, Innovator, Drug Class and ANDA. The BGA uses these data elements in a hierarchical process to categorize the products as brand or generic. The BGA also has processes to resolve discrepancies and prevent "flipping" between brand and generic status due to price fluctuations and marketplace availability changes. The elements listed above and sources are subject to change based on the availability of the specific fields. Updated summaries of the BGA are available upon request. Maximum Allowable Cost/Maximum Reimbursement Amount ( "MAC ") — As part of the administration of the ESI services, ESI maintains a MAC List of drug products identified as requiring pricing management due to the number of manufacturers, utilization and /or pricing volatility. The criteria for inclusion on the MAC List are based on whether the drug has readily available generic product(s), is generally equivalent to a brand drug, is cleared of any negative clinical implications, and has a cost basis that will allow for pricing below brand rates. ESI also maintains correlative MAC price lists based on current price reference data provided by FDB or other nationally recognized pricing source, market pricing and availability information from generic manufacturers and on -line research of national wholesale drug company files, and client arrangements. Similar to the BGA, the elements listed above and sources are subject to change based on the availability of the specific fields. Updated summaries of the MAC methodology are available upon request. Manufacturer Formulary Rebates, Associated Administrative Fees, and ESI Service Fees — ESI contracts for its own account with manufacturers to obtain formulary rebates attributable to the utilization of certain brand drugs and supplies (and possibly certain authorized generics marketed under a brand manufacturer's new drug application). Formulary rebate amounts vary based on the volume of utilization as well as a client's benefit design and formulary position applicable to the drug or supplies, and in certain instances also may vary based on the product's market - share. ESI often pays an amount equal to all or a portion of the formulary rebates it receives to a client based on the client's ESI agreement terms. ESI retains the financial benefit of the use of any funds held until payment of formulary rebate amounts is made to the client. In addition, ESI provides administrative services to formulary rebate contracted manufacturers, which include, for example, maintenance and operation of the systems and other infrastructure necessary for managing and administering the ESI formulary rebate process and access to drug utilization data, as allowed by law, for purposes of verifying and evaluating the rebate payments and for other purposes related to the manufacturer's products. ESI receives administrative fees from the participating manufacturers for these services. These administrative fees are calculated based on the price of the rebated drug or supplies along with the volume of utilization and do not exceed the greater of (i) 4.58% of the average wholesale price, or (ii) 5.5% of the wholesale acquisition cost of the products. In its capacity as a ESI company, ESI also may receive service fees from manufacturers as compensation for the performance of various services, including, for example, formulary compliance initiatives, clinical services, therapy management services, education services, medical benefit management services, and the sale of non - patient identifiable claim information. These service fees are not part of the formulary rebates or associated administrative fees. 6 195733.4 ESI Subsidiary Pharmacies — ESI has several licensed pharmacy subsidiaries, including our specialty pharmacies. These entities may maintain product purchase discount arrangements and /or fee - for - service arrangements with pharmaceutical manufacturers and wholesale distributors. These subsidiary pharmacies contract for these arrangements on their own account in support of their various pharmacy operations. Many of these subsidiary arrangements relate to services provided outside of ESI arrangements, and may be entered into irrespective of whether the particular drug is on one of ESI's national formularies. Discounts and fee - for - service payments received by ESI's subsidiary pharmacies are not part of the ESI formulary rebates or associated administrative fees paid to ESI in connection with ESI's ESI formulary rebate programs. From time to time, ESI also may pursue and maintain for its own account other supply chain sourcing relationships not described below as beneficial to maximize ESI's drug purchasing capabilities and efficiencies, and ESI may realize an overall positive margin with regard to these initiatives. The following provides additional information regarding examples of ESI subsidiary pharmacy discount arrangements and fee - for - service arrangements with pharmaceutical manufacturers, wholesale distributors, and third party data aggregators: ESI Subsidiary Pharmacy Discount Arrangements — ESI subsidiary pharmacies purchase prescription drug inventories, either from manufacturers or wholesalers, for dispensing to patients. Often, purchase discounts off the acquisition cost of these products are made available by manufacturers and wholesalers in the form of either up -front discounts or retrospective discounts. These purchase discounts, obtained through separate purchase contracts, are not formulary rebates paid in connection with our ESI rebate programs. Drug purchase discounts are based on a pharmacy's inventory needs and, at times, the performance of related patient care services and other performance requirements. When a subsidiary pharmacy dispenses a product from its inventory, the purchase price paid for the dispensed product, including applicable dispensing fees, may be greater or less than that pharmacy's acquisition cost for the product net of purchase discounts. In general, our pharmacies realize an overall positive margin between the net acquisition cost and the amounts paid for the dispensed drugs. ESI Subsidiary Pharmacy Fee - For - Service Arrangements — ESI's subsidiary pharmacies also may receive fee - for - service payments from manufacturers or wholesalers in conjunction with various programs or services, including, for example, patient assistance programs for indigent patients, dispensing prescription medications to patients enrolled in clinical trials, various therapy adherence and fertility programs, administering FDA compliance requirements related to the drug, product reimbursement support services, and various other pharmacy programs or services. As a condition to having access to certain products, and sometimes related to certain therapy adherence criteria or FDA requirements, a pharmaceutical manufacturer may require a pharmacy to report selected information to the manufacturer regarding the pharmacy's service levels and other dispensing - related data with respect to patients who receive that manufacturer's product. A portion of the discounts or other fee - for - service payments made available to our pharmacies may represent compensation for such reporting. In addition, ESI may sell non - patient identifiable claim information it maintains as a ESI or through one of its subsidiaries to data aggregators or manufacturers on a fee- for - service basis. All reporting activities are conducted in compliance with applicable patient and pharmacy privacy laws Other Manufacturer Arrangements — ESI also maintains other lines of business that may involve discount and service fee relationships with pharmaceutical manufacturers and wholesale distributors. Examples of these businesses include a wholesale distribution business, a group purchasing organization, a drug sample fulfillment company (Phoenix Marketing Employer), and a medical benefit management company. Compensation derived through these business arrangements is not part of the ESI formulary rebates or associated administrative fees paid to ESI in connection with ESI's ESI formulary rebate programs. Services related to these arrangements are provided to manufacturers irrespective of whether a drug is on one of ESI's national formularies. THIS EXHIBIT REPRESENTS ESI'S FINANCIAL POLICIES. ESI MAY PERIODICALLY UPDATE THIS EXHIBIT AND THE FINANCIAL DISCLOSURES CONTAINED HEREIN TO REFLECT CHANGES IN ITS BUSINESS PROCESSES; THE CURRENT FINANCIAL DISCLOSURE IS AVAILABLE UPON REQUEST AND ACCESSIBLE ON EXPRESS - SCRIPTS.COM FOR CLIENTS & ADVISORS. 7 195733.4 City of Dubuque Insurance Requirements for Professional Services 1. Insurance Schedule C shall furnish a signed Certificate of Insurance to the City of Dubuque, Iowa for the coverage required in Exhibit I prior to commencing work and at the end of the project if the term of work is longer than 60 days. Providers presenting annual certificates shall present a Certificate at the end of each project with the final billing. Each Certificate shall be prepared on the most current ACORD form approved by the Iowa Department of Insurance or an equivalent. Each certificate shall include a statement under Description of Operations as to why issued. Eg: Project # or Lease of premises at or construction of 2. All policies of insurance required hereunder shall be with a carrier authorized to do business in Iowa and all carriers shall have a rating of A or better in the current A.M. Best's Rating Guide. 3. Each Certificate shall be furnished to the contracting department of the City of Dubuque. 4. Failure to provide minimum coverage 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. 5. Subcontractors and sub subcontractor performing work or service shall provide a Certificate of Insurance in accord with Exhibit I. 6. All required endorsements to various policies shall be attached to Certificate of insurance. 7. Whenever a specific ISO form is listed, an equivalent form may be substituted subject to the provider identifying and listing in writing all deviations and exclusions that differ from the ISO form. 8. Provider shall be required to carry the minimum coverage /limits, or greater if required by law or other legal agreement, in Exhibit I. 9. Whenever an ISO form is referenced the current edition of the form must be used. Page 1 of 3 Schedule C, Professional Services April, 2013_2.Doc City of Dubuque Insurance Requirements for Professional Services Insurance Schedule C (continued) Exhibit I A) COMMERCIAL GENERAL LIABILITY General Aggregate Limit $2,000,000 Products - Completed Operations Aggregate Limit $1,000,000 Personal and Advertising Injury Limit $1,000,000 Each Occurrence $1,000,000 Fire Damage Limit (any one occurrence) $ 50,000 Medical Payments $ 5,000 a) Coverage shall be written on an occurrence, not claims made, form. All deviations from the standard ISO commercial general liability form CG 0001, or Business owners form BP 0002, shall be clearly identified. b) Include ISO endorsement form CG 25 04 "Designated Location(s) General Aggregate Limit" or CG 25 03 "Designated Construction Project (s) General Aggregate Limit" as appropriate. c) Include endorsement indicating that coverage is primary and non - contributory. d) Include endorsement to preserve Governmental Immunity. (Sample attached). e) Include an endorsement that deletes any fellow employee exclusion. f) Include additional insured endorsement for: 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. Use ISO form CG 2026. B) AUTOMOBILE LIABILITY $1,000,000 (Combined Single Limit) C) WORKERS' COMPENSATION & EMPLOYERS LIABILITY Statutory benefits covering all employees injured on the job by accident or disease as prescribed by Iowa Code Chapter 85 as amended. Coverage A Coverage B Statutory —State of Iowa Employers Liability Each Accident $100,000 Each Employee- Disease $100,000 Policy Limit- Disease $500,000 Policy shall include an endorsement providing a waiver of subrogation to the City of Dubuque. Coverage B limits shall be greater if required by Umbrella Carrier. D) UMBRELLA LIABILITY $1,000,000 Umbrella liability coverage must be at least following form with the underlying policies included herein. E) PROFESSIONAL LIABILITY $1,000,000 Page 2 of 3 . Schedule C, Professional Services April, 2013_2.Doc City of Dubuque Insurance Requirements for Professional Services Preservation of Governmental Immunities Endorsement 1. Nonwaiver of Governmental Immunity. 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 Coverage. The insurance carrier further agrees that this policy of insurance shall cover only those claims not subject to 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 Coverage. 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 Change in Policy. The above preservation of governmental immunities shall not otherwise change or alter the coverage available under the policy. SPECIMEN Page 3 of 3 Schedule C, Professional Services April, 2013_2.Doc