HomeMy WebLinkAboutPHARMACY BENEFIT MANAGEMENT SERVICES AGREEMENT BETWEEN AUGUSTA, GEORGIA AND MAGELLAN RX MANAGEMENT, LLC 09.05.17
PHARMACY BENEFIT MANAGEMENT
SERVICES AGREEMENT
THIS AGREEMENT(hereinafter"Agreement"or"Contract")is effective on January 1,2017("Effective
Date"), by and between Augusta, Georgia("Sponsor"), with its principal place of business at 535 Telfair
St.,Augusta,GA 30901,and Magellan Rx Management,LLC("MRx"),with its principal place of business
at 15950 N.76th Street,Suite 200,Scottsdale,Arizona 85260(each a"Party"and collectively the"Parties").
WHEREAS, MRx operates a prescription benefit management program for sponsors requesting
prescription benefit management and related services; and
WHEREAS, Sponsor provides for the payment of prescription drugs and related services for persons
eligible to receive such benefits;and
WHEREAS, Sponsor desires to procure the services of MRx and certain of its Affiliates, including an
entity that holds a TPA or similar license,to provide a prescription drug benefit program for its Members;
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, MRx and
Sponsor agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings:
"Affiliate"means any entity that controls, is controlled by,or is under common control with such specified
entity.
"AWP"means the average wholesale price of drugs or ancillary supplies, as applicable, as dispensed and
as set forth in the latest edition of the Medi-Span Prescription Pricing Guide (with supplements) or any
other nationally recognized pricing source reasonably determined by MRx(the"Pricing Source"). AWP
is based on the 11-digit NDC of the package size submitted by the Participating Pharmacy. If the Pricing
Source changes the methodology used to calculate AWP(e.g.,change in the mark-up percentage)or ceases
to publish AWP or replaces AWP, or MRx uses another benchmark other than AWP (each, an "AWP
Change"), whether prior to or after the Effective Date, in a manner that changes the economics of this
Agreement,the Parties will modify the pricing terms to maintain the parties'relative economic position as
of the effective date of such AWP Change.
"Benefit Builder" means the form on which Sponsor specifies the Benefit Design and other information
necessary for MRx to perform services.
"Benefit Design" means the specifications applicable to the Plan, including but not limited to Covered
Pharmaceuticals,Cost Share,and Formulary,set forth in this Agreement or otherwise documented between
the Parties.
"Brand"means those Prescription Drugs designated as"M","N"or"0"in Medi-Span's Multisource Code
indicator. In some instances, a Brand may be dispensed and treated as a Generic to determine the amount
due from Sponsor and/or a Member for Covered Pharmaceuticals under Schedule B, Sections 1 and 2.
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"Business Days"or"business days"means all days except Saturdays, Sundays, and federal holidays. All
references to"day(s)"are to calendar days unless"business day" is specified.
"Claim"means a request for payment submitted by a Participating Pharmacy or Member for prescription
drugs or services under Sponsor's benefit plan.
"Claims Runout"means a process whereby Claims incurred prior to the effective date of the termination of
this Agreement may properly be submitted after the effective date of termination.
"Compound Prescription"means a prescription consisting of two or more ingredients,at least one of which
is a Covered Pharmaceutical, and which is prepared by the pharmacist specifically for the Member
according to the prescriber's directions.
"Contract Quarter" means the three (3) month period commencing on the Effective Date and each
consecutive three(3)month period thereafter while this Agreement is effective.
"Contract Year" means the twelve (12) month period commencing on the Effective Date and each
consecutive twelve(12)month period thereafter while this Agreement is effective.
"Cost Share" means the amount to be paid by the Member for Covered Pharmaceuticals, such as a
copayment or coinsurance,under the Benefit Design.
"Covered Pharmaceuticals" means those Prescription Drugs and supplies that a Member is entitled to
receive under the terms of Sponsor's Plan.
"Dispensing Fee"means the amount payable by Sponsor under this Agreement for a Participating Pharmacy
to dispense a Covered Pharmaceutical to a Member.
"Formulary" means a list of Prescription Drugs selected for their clinical efficacy, safety and cost
effectiveness,and which may be updated from time to time.
"Generic"means those Prescription Drug(s)designated as"Y"in Medi-Span's Multisource Code indicator.
"Group"means a group of Members that have the same Benefit Design as designated by Sponsor.
"Law" means any applicable federal, state and local laws, rules, regulations, administrative guidelines,
judicial or administrative order or agreement with any governmental agency, unit or subdivision, as such
may be amended from time to time.
"Mail Order Pharmacy" means a pharmacy that(l) is licensed under Law,and(2) dispenses prescription
drugs to Members primarily through the U.S.mail.
"MAC"means the maximum allowable unit ingredient cost payable for a multisource drug specified on a
MAC List. A "MAC List"consists of a payment schedule for multisource drugs subject to MAC pricing
established,developed,adopted,and/or managed by MRx. MRx's MAC Lists and payment/cost schedules
are frequently updated.
"Member" means a person designated by Sponsor pursuant to this Agreement as eligible for Covered
Pharmaceuticals under a one of Sponsor's benefit plans.
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"Paid Claim"means a Claim that is approved for payment, in whole or in part, and has not been reversed
within the same invoice period.
"Participatinc Pharmacy"means a Retail Pharmacy,Mail Order Pharmacy, or Specialty Pharmacy, as the
case may be.
"Plan"means Sponsor's drug benefit program that offers certain Covered Pharmaceuticals to Members.
"Prescription Drug"means a pharmaceutical or pharmaceutical compound(i)that is included in the United
States Pharmacopeia and that is required to be dispensed pursuant to a prescription and which is required
by law to bear the legend, "Caution--Federal law prohibits dispensing without prescription",or(ii)that is
otherwise accepted by Sponsor as a Covered Pharmaceutical for purposes of this Agreement.
"PBM Services"means those services described under this Agreement, including but not limited to those
services set forth in Schedule A.
"Rebates"means any retrospective discount received by MRx that is paid by a pharmaceutical manufacturer
for utilization of designated prescription products by Members under the applicable rebate agreement with
MRx, including but not limited to base/formulary, incentive and market share rebates.
"Retail Pharmacy" means a licensed retail pharmacy that has entered into an agreement with MRx to
provide Covered Pharmaceuticals to Members.
"Specialty Drugs"means Prescription Drugs that are typically used to treat chronic or complex conditions,
and typically have one or more of several key characteristics, including frequent dosing adjustments and
intensive clinical monitoring to decrease the potential for drug toxicity and increase the probability for
beneficial treatment outcomes;intensive patient training and compliance assistance to facilitate therapeutic
goals; limited or exclusive product availability and distribution(if a drug is only available through limited
specialty pharmacy distribution it is always considered a Specialty Drug); specialized product handling
and/or administration requirements; or costs $600 or more on a monthly basis. Specialty Drugs may be
administered by any route of administration. Specialty Drugs include biosimilars. Specialty Drugs include
those drugs on the Specialty Drug List,and any added to the Specialty Drug List after the Effective Date.
"Specialty Pharmacy"means an entity that(1)is licensed under Law,and(2)dispenses Specialty Drugs to
Members through a commercial carrier service. For purposes of this Agreement,a Retail Pharmacy is not
a Specialty Pharmacy.
"Usual and Customary Charue" or "U&C" means the amount that, at the time of dispensing, a Retail
Pharmacy would charge to a cash-paying customer,exclusive of taxes.
2. MRx OBLIGATIONS
2.1 Services. MRx shall provide the PBM Services set forth in Schedule A.
2.2 Prosram Materials. MRx shall supply all forms necessary for MRx to implement and administer the
Plans under this Agreement.
3. SPONSOR OBLIGATIONS
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3.1 Enrollment Information. At least five (5) business days prior to the date on which Sponsor intends
for MRx to administer any PBM Services to a Group,and by the second business day of each calendar
month thereafter, Sponsor shall provide to MRx a list of all Members in the Group in a format
acceptable to MRx. Sponsor shall be responsible for providing MRx with accurate and complete
enrollment information and for providing any modifications or updates to this information to MRx.
MRx and Participating Pharmacies are entitled to rely on the enrollment information provided
hereunder.
3.2 Benefit Builder. MRx will complete a Benefit Builder form with Sponsor in order to obtain
information related to Sponsor's Benefit Design(s), services selected, system and/or operational
requirements, and any other information necessary for MRx to perform services under this
Agreement. Sponsor will reasonably cooperate in completing the Benefit Builder, and will review
and confirm the accuracy of the information contained in the Benefit Builder in accordance with
MRx's standard procedures. MRx shall have the right to rely on all information contained in the
Sponsor-approved Benefit Builder. In addition, Sponsor will timely provide to MRx any and all
documentation,including but not limited to Benefit Design information(e.g.,Formulary,Cost Share
information provided to Members, etc.) that is reasonably required for MRx to perform services
hereunder.
3.3 Changes to Benefits. MRx shall administer only those benefits (a)listed on the Benefit Builder and
(b)for which Sponsor provides written notice of a change to MRx. In the event of any changes to a
Benefit Design,Sponsor shall notify MRx at least thirty(30)business days in advance of the effective
date of such change. If the proposed change requires any system modifications and/or coding,MRx
will notify Sponsor in order to discuss the requirements and a revised implementation timeline,and
any such changes, including the amount of any additional fees,shall be agreed upon in writing.
3.4 Member Communications. Sponsor is responsible for notifying Members of any Benefit Design
changes. Sponsor is responsible for obtaining Member authorizations and documentation required
by Law, if any, for MRx to provide the PBM Services. MRx may communicate with Members as
reasonably required to perform the PBM Services.
3.5 Exclusivity. MRx is the exclusive provider and/or administrator of PBM Services to Sponsor and its
Affiliates during the term of this Agreement. Without limiting the generality of the foregoing,
Sponsor represents that, as of the Effective Date, neither it (nor any of its Affiliates) has any
agreement with any pharmaceutical manufacturer or other entity under which it earns discounts based
on the utilization of Covered Pharmaceuticals or related administrative services, and will not enter
into any such agreement(s) for the period covered by this Agreement. Nothing in this Agreement
shall restrict MRx and/or its Affiliates from offering, providing, or administering any service,
including PBM Services,to any other entity.
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4. FINANCIAL ARRANGEMENTS
4.1 Payment for Services. Sponsor will pay MRx for all services provided under this Agreement in
accordance with the pricing terms set forth in Schedule B.
4.2 Invoices. MRx will invoice Sponsor for Claims weekly and for administrative fees monthly, on a
schedule conforming to MRx's billing cycle. Invoice amounts for Claims are due and payable within
seven (7)days of Sponsor's receipt of such invoice. Invoice amounts for other administrative fees
are due and payable within ten (10) days of Sponsor's receipt of such invoice. Sponsor will pay by
wire transfer (or by such other method approved by MRx) to an account designated by MRx in
writing. Sponsor's failure to make timely payment shall constitute a payment default.
Notwithstanding any other provision of this Agreement,if Sponsor fails to cure any payment default
within five(5)business days of the due date for such payment,then in addition to any other remedies
available,MRx may cease performing any or all of its services hereunder on written notice to Sponsor
until Sponsor brings its account current. MRx, in its sole discretion, may accept late payment of
delinquent amounts and,upon acceptance; this Agreement may be reinstated retroactively to the due
date for such payment. Any such actions by MRx shall not be deemed a waiver of MRx's termination
or suspension rights in the event of any future failure of Sponsor to make required payments.
4.4 Overdue Payments. Any invoice amounts that remain unpaid after five(5)business days of the due
date for such invoice shall bear a finance charge from the due date of such amount until paid in full,
equal to the lesser of(a) an annual interest rate consisting the prime rate plus five percent (5%), or
(b)the maximum rate permitted by Law.
4.4 Reasonable Assurances. In the event Sponsor fails to pay invoices timely on two (2) or more
occasions within a twelve(12)month period,or MRx has reasonable grounds to believe that Sponsor
may be incapable of meeting its financial obligations under this Agreement,MRx may request(and
Sponsor agrees to provide) reasonable assurances, including a deposit, regarding its financial
condition. If Sponsor does not provide such assurances within five(5)business days or the assurances
are not satisfactory in MRx's reasonable judgment,MRx may terminate this Agreement on written
notice to Sponsor.
4.5 Eligibility Changes. MRx will not be financially or otherwise responsible for any mistaken coverage,
claims payment or denial determination if such mistake is due to a change in a person's eligibility
status and the mistake is made prior to the earlier of(a)the entry of such changed information into
MRx's claims processing system or (b) two (2) business days after such change information is
received by MRx.
4.6 Claims Adjustments. The Parties acknowledge that, from time to time, adjustments to Paid Claims
may be necessary as the result of coordination of benefits, subrogation, workers' compensation,
payment errors,pharmacy audit recovery, or other reasons,and that such adjustments may result in
either credits to Sponsor or additional amounts owed by Sponsor.
4.7 Member Hold Harmless. In no event will MRx or a Participating Pharmacy directly or indirectly
collect, attempt to collect, or accept remuneration or reimbursement from a Member for Covered
Pharmaceuticals,except for Cost Share amounts or as otherwise provided in this Agreement,even in
the event of Sponsor's failure to pay MRx, a payment dispute between the Parties, Sponsor's
insolvency,or any other breach by Sponsor of the terms of this Agreement.
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disclosed to others without prior written authorization from MRx,except as permitted by the Georgia Open Records
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4.8 Taxes. Sponsor will pay all sales, use, and similar taxes and duties arising from or related to items
dispensed or services provided hereunder, or any other amounts that MRx may incur or be required
to pay arising from or relating to its performance of services as a third-party administrator in any
jurisdiction. If MRx or a Participating Pharmacy is obligated to collect and remit any such amount,
MRx will include such amount on an invoice to Sponsor. Sponsor is not responsible for taxes on
MRx's income.
4.9 Financial Statements. Upon request,Sponsor will provide a copy of its most recent audited financial
statements to MRx.
5. RECORDS
5.1 Recordkeeping. MRx agrees to maintain reasonable documentation related to the PBM Services
provided to Members and Claims processed under to this Agreement. Sponsor agrees to maintain
reasonable documentation related to the enrollment information and Benefit Design information
provided hereunder. The Parties will maintain the records and information required by this subsection
for six(6)years from the date of enrollment or service,as applicable,or such longer period that may
be required by Law, in a format and electronic media deemed reasonably appropriate by the Party
holding such records. MRx shall also require that Participating Pharmacies maintain records of the
Covered Pharmaceuticals dispensed to Members in accordance with Law. Subject to all applicable
privacy and confidentiality requirements,certain records may be made available to other pharmacies
and health professionals treating Members.
5.2 Transfer of Data Upon Termination. Upon termination of this Agreement for any reason, Sponsor
and MRx will develop a mutually agreeable plan for the orderly provision of Claims data to Sponsor
or its designee. Within thirty (30) days after receipt of Sponsor's written authorization (and
confidentiality agreement, if to a designee), MRx will deliver to Sponsor or its designee a Claim
history report for the two (2) years preceding the termination date. The report will be provided in
MRx's standard format then available.Additional files such as Mail Order Pharmacy open refill files,
prior authorization files and accumulator files are not standard reports and will be subject to additional
fees. MRx will have no obligation to provide information under this Section unless Sponsor has met
all of it payment obligations under this Agreement.
5.3 Ownership. All records and reports generated by MRx hereunder are the property of MRx.
6. AUDITS
6.1 General. Up to once annually, Sponsor may audit MRx's performance of PBM Services. The audit
shall be conducted so as not to unduly interfere with the operation of MRx's business operations. In
the event Sponsor wishes to conduct an audit, it shall provide a written audit request to MRx and a
document outlining the proposed scope of the audit. Within sixty (60) days of receiving the scope
document,MRx shall compile and prepare the data in a format agreeable to both Parties.
6.2 Third Parties. Sponsor shall have the right(and for an audit of Rebates,the obligation)to utilize an
independent audit firm to conduct any audit under this Section 6. An audit of pharmaceutical
manufacturer agreements will be conducted by a top 100 public accounting firm whose audit
department is a separate function of its business and that carries professional malpractice insurance
of at least$2,000,000. Any third party audit firm shall not have a conflict of interest, and Sponsor
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shall cause such firm to sign MRx's standard audit protocol/confidentiality agreement. For purposes
of this Section 6, a "conflict of interest"does not exist solely because the audit firm has previously
audited MRx for Sponsor or other customers of MRx. In the event Sponsor utilizes an audit firm,
MRx shall compile and prepare the data in a format agreeable to both Parties within sixty(60) days
after receipt of the scope document and a signed confidentiality agreement. A request by Sponsor to
use an independent audit firm shall constitute Sponsor's authorization to MRx to provide Member-
identifiable information to such auditor in accordance with Law.
6.3 Other Procedures. An audit of Claims records or Rebates will cover a maximum period of twelve
(12) months prior to the agreed upon audit date. MRx will be liable for agreed upon findings
attributable only to the audit period. No audit period may be audited more than once. No audits will
be conducted during the months of November,December and January because of the demands of the
annual renewal/implementation period. No audits shall be permitted unless and until Sponsor has
executed this Agreement. Sponsor is responsible for all expenses of the auditor(s). Any material
reviewed during the course of an audit shall be considered Confidential Information.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION
7.1 Confidential Information. The term"Confidential Information"means information of a confidential
or proprietary nature disclosed by one Party (the "Disclosing Party") to the other (the "Receiving
Party"). Confidential Information includes, but is not limited to,matters of a technical nature such
as trade secrets, methods, compositions, data and know-how, designs, systems, and processes, and
any information derived therefrom; proprietary reimbursement formula(e), marketing, sales,
strategies, proposals, lists of Participating Pharmacies and pharmaceutical manufacturers, and any
other information that is designated by either Party as confidential(and not subject to disclosure under
the Georgia Open Records Act) or which the Receiving Party should reasonably understand is
confidential and/or proprietary based on nature of the information.
7.2 Treatment of Confidential Information. Except as otherwise required by the Georgia Open Records
Act, the Receiving Party agrees to hold the Disclosing Party's Confidential Information in strict
confidence and to take reasonable precautions to protect such Confidential Information (including
using all precautions the Receiving Party employs with respect to its own Confidential Information),
and not to use Confidential Information for any purpose not previously authorized by the Disclosing
Party,except as necessary for MRx to perform PBM Services. Except as otherwise required by the
Georgia Open Records Act, the Receiving Party further agrees not to disclose any Confidential
Information to a third party unless authorized in writing by the Disclosing Party and provided further
that the ultimate recipient of such Confidential Information agrees to be bound by confidentiality
terms at least as stringent as those contained herein. The Receiving Party may disclose Confidential
Information to its employees, directors, and affiliates (collectively "Receiving Party
Representatives") that have a reasonable need to know such information, provided that such
Receiving Party Representatives are informed of the confidential nature of the information and have
agreed to treat the Confidential Information in a confidential manner consistent with this Agreement.
7.3 n Exce ti "
Exceptions. "Confidential Information" does not include information that (a) prior nor to disclosure
hereunder was known by the Receiving Party, provided that there has not been a violation of any
confidentiality obligation to the Disclosing Party, (b)is or subsequently becomes publicly available
without violation of any confidentiality obligation owed to the Disclosing Party, (c)is independently
developed by the Receiving Party without violation of this Agreement, or(d) is disclosed with the
written approval of the Disclosing Party, or (e) is required to be disclosed by the Georgia Open
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Records Act.
7.4 Requests. If the Receiving Party receives a court order, subpoena, governmental request or other
request (whether formal or informal) for Confidential Information, the Receiving Party shall
promptly notify the Disclosing Party to provide the Disclosing Party with the opportunity to seek
confidential treatment or other appropriate relief relating to such Confidential Information. The
Receiving Party shall not oppose such efforts. If the Disclosing Party is unable to obtain any relief
with respect to the request, the Receiving Party may provide those portions of Confidential
Information that it is advised by counsel are required by Law to be produced, and will further use
commercially reasonable efforts to obtain confidential treatment of the Confidential Information from
the recipient of such information.
7.5 Procrams. Any clinical and other programs implemented by MRx,including any Formulary,together
with any related materials, manuals, lists and descriptions provided hereunder, will remain the
property of MRx. Sponsor will use such programs only while this Agreement is in effect.
7.6 Trademarks. Neither Party shall use the other's trademarks,trade names,nor service marks (or any
reasonably likely to cause confusion)without the other Party's written consent.
7.7 Member and Sponsor Identifiable Information. The Parties will comply with all Laws regarding
patient confidentiality as set forth in the Business Associate Agreement between them. MRx will not
provide any data or information that identifies Sponsor without Sponsor's consent, except as
reasonably necessary to provide PBM Services or as required by Law. The restrictions set forth in
this Section 7 do not apply to Claims data or other information that does not identify Sponsor.
7.8 Remedies. The Parties acknowledge that any unauthorized use or disclosure of the other's
Confidential Information would cause the Disclosing Party immediate and irreparable injury or loss.
Accordingly, if MRx or Sponsor fails to comply with the confidentiality provisions of this
Agreement, or threaten to do so, the Disclosing party shall be entitled to equitable relief, including
the immediate issuance of a temporary restraining order or preliminary injunction enforcing this
Agreement,in addition to other remedies permitted by Law.
8. TERM AND TERMINATION
8.1 Term. This Agreement shall commence on January 1, 2017. The initial term of this Agreement
shall be through December 31,2019. There shall be two,one-year options to renew this Agreement.
MRx must provide Sponsor(Augusta)with written notice of its intent to renew at least one hundred
eighty(180)days prior to the expiration of the then current term.This Agreement shall(i)terminate
absolutely and without further obligation on the part of Augusta each and every December 31",as
required by O.C.G.A. § 36-60-13, as amended, unless terminated earlier in accordance with the
termination provisions in this Article of this Agreement; (ii)automatically renew on each January
ls', unless terminated in accordance with the termination provisions of this Article of this
Agreement;and (iii)terminate absolutely,with no further renewals,on December 31,2021,unless
extended by written ntten amendment.
8.2 Termination. This Agreement may be terminated in the following manners:
(a) In the event of a material breach of this Agreement,the non-breaching Party shall provide
written notice of the breach to the other Party. If the breach is not cured within thirty(30)
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days after the breaching Party's receipt of written notice of such breach,the non-breaching
Party may terminate this Agreement upon written notice.
(b) Notwithstanding the provisions of Section 8.2(a), in the event of a payment default by
Sponsor under Section 4,MRx shall provide written notice of such default to Sponsor. If
Sponsor does not cure the payment default within ten(10)days after receiving such notice,
MRx may terminate this Agreement on written notice to Sponsor.
(c) By either Party if the other Party becomes insolvent, is dissolved or liquidated, makes a
general assignment for the benefit of creditors, files or has filed against it a petition in
bankruptcy and such petition is not dismissed with prejudice within 45 days after the filing,
or has a receiver appointed for a substantial part of its assets.
(d) By mutual written consent of the Parties; or
(e) Termination for Convenience. Sponsor may,for its own convenience and at its sole option,
without cause and without prejudice to any other right or remedy of Sponsor, elect to
terminate the Contract by delivering to the MRx,at the address listed in the Notices article
of this Contract,a written notice of termination specifying the effective date of termination.
Such notice shall be delivered to MRx at least One Hundred and Eighty(180) days prior
to the effective date of termination.
(f) As otherwise permitted in this Agreement.
8.3 Effect of Termination. Upon termination of the Agreement for any reason,MRx shall cease to have
any liability for payment of Claims incurred after the effective date of such termination. In the event
that MRx or any Participating Pharmacy is required by Law to continue providing any PBM Services
after termination, Sponsor shall be liable to reimburse MRx under the applicable terms of this
Agreement.
8.4 Adverse Government Action. In the event any department,branch,or bureau of the federal, state or
local government materially adversely affects the ability of a Party to perform its obligations under
this Agreement,that Party shall provide the other Party with written notice of the nature of the action
having such adverse effect. During the immediately following sixty(60)day period,the Parties will,
in good faith, attempt to negotiate a modification to the Agreement to minimize the adverse effects
and to restore as closely as possible the original intention of this Agreement. If the Parties are unable
to reach an agreement, then either Party may terminate this Agreement on thirty(30) days advance
written notice.
9. INDEMNIFICATION AND RELATED MATTERS
9.1 MRx Indemnity.MRx agrees to indemnify, defend and hold Sponsor and its subsidiaries,affiliates,
and their officers, directors,employees, and agents (each a"Sponsor Indemnified Party"), harmless
from and against any claims, actions,causes of action,damages, liabilities,and expenses(including
without limitation attorneys' fees and litigation costs) (collectively, "Actions") asserted against a
Sponsor Indemnified Party in the event the Action arises from MRx's violation of Law, breach of
this Agreement,provision
gre , of Member identifiable information to MRx,MRx's agent or designee,8 gn ,or
other third parties at MRx's request(or the subsequent use or disclosure of such information or data
by MRx or its agent or designee, or third parties),or negligence or willful misconduct.
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9.2 sponsor Indemnity. Sponsor agrees to indemnify, defend and hold MRx and its subsidiaries,
affiliates, and their officers, directors, employees, and agents (each a "MRx Indemnified Party"),
harmless from and against any Actions asserted against a MRx Indemnified Party in the event the
Action arises from Sponsor's violation of Law, breach of this Agreement, provision of Member
identifiable information to Sponsor, Sponsor's agent or designee, or other third parties at Sponsor's
request (or the subsequent use or disclosure of such information or data by Sponsor or its agent or
designee,or third parties),or negligence or willful misconduct.
9.3 Ind emnity Procedures.
A. MRx shall be responsible from the time of the beginning of the Work,for all injury or damage
of any kind resulting from the Work,to persons or property,including employees and property
of Sponsor to the extent caused by MRx. MRx shall exonerate,indemnify, and save harmless
Sponsor,its elected officials,officers,employees,agents and servants,hereinafter collectively
referred to in this General Requirement as"Sponsor Indemnitees,"from and against all claims
or actions based upon or arising out of any damage or injury(including without limitation any
injury or death to persons and any damage to property) caused by or sustained in connection
with the performance of this Contract or by conditions created thereby or arising out of or any
way connected with Work performed under this Contract,as well as all expenses incidental to
the defense of any such claims, litigation, and actions to the extent caused by MRx.
Furthermore,MRx shall assume and pay for,without cost to Sponsor Indemnitees,the defense
of any and all claims, litigation, and actions suffered through any act or omission of MRx, or
any Subcontractor, or anyone directly or indirectly employed by or under the supervision of
any of them. Notwithstanding any language or provision in this Contract, MRx shall not be
required to indemnify any Sponsor Indemnitee against claims,actions,or expenses tO the extent
arising out of Sponsor Indemnitee's negligence.
B. As between Sponsor Indemnitees and MRx as the other party,MRx shall assume responsibility
and liability for any damage,loss,or injury,including death,of any kind or nature whatever to
person or property,resulting from any kind of claim made by Contractor's employees, agents,
vendors, or suppliers caused by or resulting from the performance of Work by MRx under this
Contract,or caused by or resulting from any error,omission,or the negligent or intentional act
of MRx, or MRx vendors, or MRx suppliers, or any of their officers, agents, servants, or
employees. MRx shall defend, indemnify, and hold harmless Sponsor Indemnitees from and
against any and all claims,loss,damage,charge,or expense to which they or any of them may
be put or subjected by reason of any such damage,loss,or injury.
C. MRx expressly agrees to provide a full and complete defense against any claims brought or
actions filed against Sponsor Indemnitees,where such claim or action involves,in whole or in
part,the subject of the indemnity contained in this Contract,whether such claims or actions are
rightfully or wrongfully brought or filed. MRx has the sole discretion to choose the counsel
who will provide the defense.
D. No provision of this Contract and nothing herein shall be construed as creating any individual
or personal liability on the part of any elected official, officer, employee, agent or servant of
Sponsor, nor shall the Contract be construed as giving any rights or benefits hereunder to
anyone other than the parties to this Contract.
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09.05.17
9.4 Insurance. During the term of this Agreement,MRx will maintain liability coverage with limits not
less than $1,000,000 per occurrence and $5,000,000 in the aggregate per policy year. MRx will
provide evidence of such coverage upon Sponsor's written request. Certificates shall state that the
policy or policies shall not expire,be cancelled or altered without at least thirty(30)days prior written
notice to Sponsor. Sponsor shall be named as an additional insured on said Insurance coverage.
9.5 Pharmacy Care. Sponsor acknowledges that, except to the extent provided in Section 9.1, MRx
assumes no responsibility for the nature or quality of pharmaceutical products dispensed, the
provision or failure to provide pharmaceutical goods or services, or any action or inaction by
Participating Pharmacies, pharmaceutical manufacturers, or other providers of care in connection
with this Agreement.
9.6 Disclaimers. MRx relies on First Data Bank,Medi-Span or other industry comparable databases in
providing Sponsor and Members with PBM Services, including without limitation drug utilization
review (DUR) services. MRx has utilized due care in collecting and reporting the information
contained in its databases and has obtained such information from sources believed to be reliable. In
addition, the data available from MRx though the databases and services provided hereunder is
limited by the amount, type and accuracy of information made available to MRx by Sponsor,
Participating Pharmacies, Members and prescribers. MRx has no obligation to acquire information
about a Member beyond that provided in connection with enrollment and Claims information from
Participating Pharmacies. MRx does not warrant the accuracy of reports,alerts,codes,prices or other
data contained in such databases. The clinical information contained in these databases and the
Formulary, nor any information provided by MRx in connection with its services (including DUR
services) is not intended as a supplement to, or a substitute for,the knowledge, expertise, skill, and
judgment of physicians, pharmacists, or other healthcare professionals involved in Members' care.
The absence of a warning for a given drug or drug combination in a database shall not be construed
to indicate that the drug or drug combination is safe, appropriate or effective for any Member. In
addition, services provided by MRx, including without limitation any utilization management
services, are not intended to substitute for the professional judgment and responsibility of the
Member's physician.
9.7 Limitation of Liability. Except as otherwise provided in this Contract,no Party shall be responsible
for or have any obligation to indemnify, defend or hold harmless any other Party for (a) Actions
arising out of or resulting from a breach of a duty owed independently by the other Party or the
negligence, willful misconduct or fraud of the other Party, or (b) any award of punitive or other
exemplary damages arising out of this Agreement or out of its performance hereunder,regardless of
the form of action and/or whether the Party is or was aware of the possibility of such damages. MRx's
liability for negligence or willful misconduct by MRx will be limited to the per occurrence liability
insurance amount set forth in Section 9.4.
10. GENERAL PROVISIONS
10.1 Compliance with Law. The Parties represent and warrant that, at all times under this Agreement,
they will comply with all applicable federal, state, and local laws, ordinances, and the rules and
regulations of all authorities having jurisdiction over the work shall apply to the Agreement
throughout, and to the performance of their respective obligations hereunder, including without
limitation any Laws, including but not limited to the Employee Retirement Income Security Act
(ERISA),as amended,relating to the disclosure or notification of plan benefits or Rebates to Groups
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09.05.17
and/or Members. The Parties further represent and warrant that each shall maintain all licenses,
certifications, and/or qualifications that are required by Law relating to the operation of their
respective businesses and/or to comply with their obligations under this Agreement. 10.2
Independent Contractors. The relationship between MRx and Sponsor is solely that of
independent contractors engaged in the operation of their own respective businesses. Nothing
contained in this Agreement shall be construed as creating an employee/employer or agency
relationship. Sponsor will not represent that MRx or any of its Affiliates is a Plan Administrator or
fiduciary of a Plan or any Group,as applicable, as those terms are used in the Employee Retirement
Income Security Act, including applicable regulations. MRx provides solely ministerial service
functions in connection with the Plan(s) sponsored by Sponsor. Sponsor acknowledges that it has
the sole authority to control and administer the Plan(s). Sponsor has complete discretionary,binding,
and final authority to construe the terms of the Plan(s), to interpret ambiguous language, to make
factual determinations regarding the payment of benefits,to review denied claims and to resolve any
complaints by Members.
10.3 Entire Agreement. All Exhibits, Addenda, Responsive Proposals, Agreement Amendments,
Attachments, Insurance Certificates, BID Performance and Payment Bond,Notice to Proceed, Fee
Schedules, Appendices 1-6, and RFP Item# 16-236, Pharmacy Benefits for Augusta, Georgia, and
associated documents are hereby incorporated by reference and shall be deemed to be a part of this
Agreement for all purposes. Any inconsistency between the Exhibits, Addenda, Responsive
Proposals,Attachments,RFP Item#16-236,and this Agreement,shall be resolved in favor of this 1)
Agreement;2)MRx's Response to RFP#16-236.
10.4 Amendment. This Agreement may be amended only in writing when signed by a duly authorized
representative of each Party.
10.5 No Third Parity Beneficiary. The Agreement is solely for the benefit of the Parties,and is not intended
to create any interest in any third party.
10.6 Severability. In the event that any provision of this Agreement is determined to be invalid,unlawful,
void or unenforceable to any extent, the remainder of this Agreement shall not be impaired or
otherwise affected,will be construed to preserve the intent and purpose of this Agreement, and shall
continue to be valid and enforceable to the fullest extent permitted by law.
10.7 Assignment. Neither Party may assign this Agreement without the prior written approval of the other
Party, provided however, that MRx may assign this Agreement to an Affiliate, with approval of
Sponsor, which shall not be unreasonably withheld. MRx may provide any services either itself or
through an Affiliate or subcontractor,and all references to MRx relating to the provision of services
shall be deemed to include the applicable Affiliate or subcontractor. MRx shall be responsible to
Sponsor for the performance of PBM Services, regardless of whether a service is performed by an
Affiliate or subcontractor. For purposes of this Agreement, Affiliates and Participating Pharmacies
shall not be considered subcontractors.
10.8 Headings. The headings to the sections and subsections of this Agreement shall be disregarded in its
interpretation.
10.9 Force Majeure. Neither Party will be deemed to have breached this Agreement or be responsible for
any failure of performance hereunder if the Party was prevented from complying with its obligations
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09.05.17
by a cause or causes beyond its reasonable control. Such causes include, without limitation, fires,
earthquakes, floods, storms and other natural disasters; acts of God; strikes, lockouts,and boycotts;
acts of war, riots or other insurrections; failure of communications, electric, or similar utility lines;
or a change in Law occurring after the Effective Date.
10.10 No Waiver. The failure of either Party to enforce or insist upon compliance with any provision of
this Agreement shall not be construed as or constitute a waiver of the right to enforce or insist upon
compliance with such provision in the future.
10.11 Construction. The Parties jointly prepared this Agreement and have had the opportunity to consult
with counsel about its terms. No rule of construction relating to ambiguity shall be applied against
any one Party and in favor of the other.
10.12 Approvals. Whenever approval of a Party is required under this Agreement,such approval will not
be unreasonably withheld.
10.13 Choice of Law. All matters pertaining to this agreement(including its interpretation,application,
validity,performance and breach)in whatever jurisdiction action may be brought,shall be governed
by,construed and enforced in accordance with the laws of the State of Georgia.The parties herein
waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject
matter jurisdiction located in Richmond County,State of Georgia.In the event that litigation results
from or arises out of this Agreement or the performance thereof, the parties agree that each party
shall pay their own attorney's fees, court costs and all other expenses,unless otherwise ordered by
a court of law.
10.14 Venue: This Agreement shall be deemed to have been made and performed in Augusta, Georgia.
For the purpose of venue,all suits or causes of action arising out of this Agreement shall be brought
in the Superior Court of Richmond County, Georgia. Lessee, by executing this Agreement,
specifically consents to jurisdiction and venue in Richmond County and waives any right to contest
the jurisdiction and venue in the Superior Court of Richmond County,Georgia.
10.15 Contineent Fees. MRx warrants that no person or selling agency has been employed or retained to
solicit or secure this Agreement upon an agreement or understanding for a commission,percentage,
brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial
or selling agencies maintained by MRx for the purpose of securing business and that the MRx has
not received any non-Sponsor fee related to this Agreement without the prior written consent of
Sponsor. For breach or violation of this warranty, Sponsor shall have the right to annul this
Agreement without liability or at its discretion to deduct from the Agreement Price of consideration
the full amount of such commission,percentage,brokerage or contingent fee.
10.15 Notices. Any notice required under this Agreement shall be in writing and sent either by hand
delivery, by overnight delivery by a nationally recognized courier service, or by certified mail,
return receipt requested,in each case address as follows:
If to Sponsor: Augusta, Georgia
Attn:Administrator Janice Allen Jackson
535 Telfair Street, Suite 910
Augusta,GA 30901
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09.05.17
With a copy to: Augusta, Georgia Law Department
Attn: General Counsel Andrew Mackenzie
535 Telfair Street,Building 3000
Augusta, GA 30901
If to MRx: Magellan Rx Management,LLC
15950 N. 76th Street, Suite 200
Scottsdale, Arizona 85260
Attention: Vice President and Associate General Counsel
With a copy to: Magellan Health,Inc.
55 Nod Road
Avon, CT 06001
Attention: General Counsel
Any notice shall be deemed to have been given as of the date of hand delivery, as of the date it is
placed into the hands of a nationally recognized courier service, or three (3)days from the date of
mailing,as the case may be.
10.16 Counterparts; Facsimiles. This Agreement may be executed by any of the following methods. (a)
The Parties will sign two identical originals of this Agreement, and each Party, after
countersignature,will retain one(1)original. (b)This Agreement may be executed in one or more
counterparts, each of which may be signed by no more than one Party,and all of which originals
taken together shall be considered one and the same agreement. (c) One Party may sign at least
one(1)original Agreement and electronically transmit a scanned/pdf copy of this entire Agreement
to the other Party for countersignature, and the receiving Party will countersign such scanned/pdf
copy and return a fully-signed entire Agreement either electronically or through another means.
10.17 Survival. The provisions of Sections 4,5,7,9, 10.14 and 10.15 will survive the termination of this
Agreement.
10.18 No Restrictions. No Party has any conflict of interest that would impair its ability to perform its
obligations under this Agreement. No Party is subject to any restrictions, whether under Law,
contract, or otherwise,that would prevent it from entering into this Agreement or performing its
obligations hereunder. Neither the execution nor delivery of this Agreement nor the transactions
contemplated hereunder will be a violation of any term or provision of the Party's governance
documents.
10.19 Georgia Open Records Act. MRx shall comply with the Georgia Open Records Act, OCGA 50-
18-70 et seq, subject to Section 7.4 and other protections MRx may have available to it under
Georgia Law.
10.20 Organization and Authority. Each Party is duly organized and in good standing,and has the power
to carry on its respective business. The execution and delivery of this Agreement and the
transactions contemplated hereunder have been authorized by all necessary action by each Party.
Each Party represents and warrants that the individual signing this Agreement on its behalf is duly
authorized to bind such party to all terms and conditions of this Agreement.
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09.05.17
N WITNESS WHEREOF,the Parties have caused this Agreement to be executed in duplicate by affixing
the signatures of duly authorized officers.
AUGUSTA, GEORGIA MAGELLAN Rx MANAGEMENT, LLC
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15
Proprietary
The contents of this document are proprietary to MRx and may not be reproduced,transmitted,published,or
disclosed to others without prior written authorization from MRx,except as permitted by the Georgia Open Records
Act.
09.05.17
SCHEDULE A
PBM SERVICES
MRx will provide the PBM Services set forth in this Schedule A.
1. RETAIL PHARMACY NETWORK
A. Network Management. MRx will establish and maintain a network of Retail Pharmacies
that agree to provide Covered Pharmaceuticals to Members under Law, applicable
standards of care, and the terms and conditions set forth in the applicable pharmacy
agreements. MRx is responsible to contract with such pharmacies.
B. Network Access. Members will have access to the network of Retail Pharmacies
established and maintained by MRx to deliver Covered Pharmaceuticals to Members. MRx
will maintain or develop a network in Sponsor's service area(s) that meets reasonable
access standards. MRx will notify Sponsor within thirty(30)days of any changes to the
Retail Pharmacy network that will materially impact the ability of Members to obtain
Covered Pharmaceuticals hereunder.
C. Help Desk. MRx will provide toll-free access to Participating Pharmacies to obtain
assistance with eligibility,Claims processing,DUR,and similar issues.
D. Auditing. MRx shall conduct audits of its participating Retail Pharmacies. Such audits
may include:
1. Statistical Auditing. A periodic computerized analysis of those pharmacies handling a
significant number of Claims, which compares their Claims activity to the Claims
activity of similar pharmacies. This information shall be used for,among other things,
audit selection.
2. Auditing. Desk audits on selected pharmacies to ensure compliance with the terms of
the pharmacy agreement.
3. Audit Recoveries. MRx will provide eighty percent (80%) of all audit recoveries to
Sponsor.
E. Pricing. The pricing terms applicable to the Retail Pharmacy Network are set forth in
Schedule B, Section 1.
2. MAIL ORDER PHARMACY
A. Services. MRx shall maintain, operate and/or provide a Mail Order Pharmacy that
dispenses Covered Pharmaceuticals to Members through the U.S. Mail or other carrier.
MRx may change the Mail Order Pharmacy upon sixty (60) days advance written to
Sponsor.
B. Procedures. The Mail Order Pharmacy will receive prescriptions from Members via the
U.S.mail or other carrier,facsimile,electronically,or through other means,in each case at
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09.05.17
an address, number, or other designation specified by MRx, which is subject to change
from time to time at MRx's discretion. The Mail Order Pharmacy shall have no obligation
to fill any prescription for Covered Pharmaceuticals that is not accompanied by an
appropriately completed order form and the payment of any applicable Cost Share.
C. Standards. Subject to reasonable processing parameters, MRx will dispense Covered
Pharmaceuticals in accordance with the prescription to the address designated by the
Member, as long as such addresses are located in the United States or Puerto Rico. MRx
will dispense Covered Pharmaceuticals in accordance with Law and standards of care
prevalent in the mail service pharmacy industry.
D. Member Services. MRx will provide a toll-free telephone number for Members to use in
order to speak with a pharmacist or other appropriate representative. MRx will provide
materials explaining how to access and use the Mail Order Pharmacy.
E. Professional Judment. Nothing herein shall be construed to prohibit or otherwise limit
the ability of any pharmacist to exercise his or her professional judgment, including the
refusal to fill a prescription. Further,nothing herein shall be construed to require the Mail
Order Pharmacy to stock all federal legend drugs.
F. Pricing. The pricing terms applicable to the Mail Order Pharmacy are set forth in Schedule
B, Section 2.
3. SPECIALTY DRUGS
A. Services. MRx shall maintain,operate and/or provide a Specialty Pharmacy that dispenses
Specialty Drugs to Members through a commercial carrier. The terms of Schedule A,
Section 2 above shall also apply to the Specialty Pharmacy, except as otherwise provided
in this Agreement.
B. Pn cine. Notwithstanding anything to the contrary in this Agreement, including Section 2
above, the pricing terms applicable to Specialty Drugs dispensed through the Specialty
Pharmacy are set forth in Schedule B-i. Sponsor shall pay for Specialty Drugs dispensed
through a Retail Pharmacy according to the terms set forth in Schedule B,Section 1.
4. FORMULARY AND REBATE ADMINISTRATION
A. Establishment of Formulary. MRx shall establish and provide a Formulary (the "MRx
Standard Formulary") for Sponsor. The drugs included on the MRx Standard Formulary
have been evaluated by a Pharmacy and Therapeutics Committee and may change from
time to time as a result of a number of factors, including but not limited to medical
appropriateness,cost-effectiveness and generic availability. MRx shall work with Sponsor
to effect the adoption,distribution,and implementation of such Formulary.
B. Formulary Programs. MRx may implement its standard formulary management programs,
which may include communications with Members,pharmacies,and/or physicians,clinical
or other coverage rules/criteria, compliance and/or adherence programs, generic
substitution and/or therapeutic interchange programs, financial incentives, and other
measures to promote cost effectiveness of the Formulary.
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09.05i7
C. Rebates. MRx will arrange for the provision of Rebates from pharmaceutical
manufacturers, including the contracting and administration of a Rebate program. MRx
earns Rebates based upon the utilization of certain Covered Pharmaceuticals on the
Formulary. The availability and amount of Rebates will depend upon the Plan's Benefit
Design and other factors.
D. Rebate Terms. The amount and timing of Rebates payable to Sponsor are set forth on
Schedule B, Section 5. As a condition of receiving payments hereunder, Sponsor will
implement the MRx Standard Formulary and MRx formulary management programs, and
provide documentation reasonably requested and/or required by MRx regarding the
implementation of such Formulary,programs,and any related clinical or other coverage rules
or criteria.
5. CORE ADMINISTRATIVE SERVICES
hfRx will provide the following Core Administrative Services,which are included within the Core
Administrative Fee set forth in Schedule B, Section 6A:
A. Eligibility Services
1. Administration of eligibility based upon Sponsor-provided information in a format
acceptable to MRx
2. Updates to Sponsor's eligibility in accordance with this Agreement
B. Member Communications
1. Standard MRx Welcome Packages(mailed to Sponsor)
2. Other standard MRx Member materials(e.g.,claim forms)
C. Claims Processing and Payment
1. Adjudication of Claims from Participating Pharmacies through MRx's designated on-
line electronic claims processing system
2. Administration of Sponsor's Benefit Design in accordance with accepted industry
standards
3. Payments to Participating Pharmacy under applicable contracts
4. Coordination of benefits(COB)(reject for primary carrier,electronic only)
5. Sponsor access to claim system for up to two (2) user IDs by specific, identified
Sponsor employees only
D. Customer Service
1. Toll-free telephone number for Sponsor,Members,and physicians
2. Availability of toll-free number 24 hours a day, 7 days a week
3. Responses regarding eligibility, Claims, prior authorization status, drug coverage,
enrollment status,and other matters related to PBM Services
E. Drug Utilization Review("DUR")Services
1. Prospective DUR -- provision of educational materials to certain Participating
Pharmacies,Members,and/or prescribers
2. Concurrent DUR--automated for point of sale transactions; edits include clinical and
other edits that MRx may develop and/or change from time to time.
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09.05.17
3. Retrospective DUR — evaluation of Member claims history and communications to
Member, Participating Pharmacies and/or prescribers to promote health and/or
decrease costs
F. Reporting
1. Standard plan reporting package,including utilization and eligibility reports
2. Standard billing reports package
3. Claims detail extract
4. Web access,including standard and ad hoc reporting capabilities
G. Member Web Portal
1. Drug lookup
2. Pharmacy lookup
3. Formulary,Mail Order,and Claim information
H. Claims Runout(post-termination)
1. Upon Sponsor request,MRx will pay Claims for six(6)months after termination
2. MRx invoicing and compensation per the Agreement prior to termination
6. VALUE-ADDED ADMINISTRATIVE SERVICES
Sponsor will pay for the Value-Added Administrative Services provided by MRx upon request or
use by Sponsor as set forth in Schedule B, Section 6B.
7. UTILIZATION REVIEW
A. Sponsor delegates to MRx the authority to perform administrative and/or clinical initial
coverage determinations and appeals(whether first level, second level, or urgent)filed by
or on behalf of Members. In the event MRx issues a denial in connection with the final
level of internal(plan)appeal,MRx will,on Sponsor's behalf,provide the Member access
to a panel of Independent Review Organizations (IROS) for the purpose of obtaining an
external review if desired. MRx may offer the services of different IROs, or otherwise
change the composition of the panel,during the term of the Agreement. MRx offers access
to such IROs as a convenience to Sponsor, and Sponsor at all times retains the
responsibility and authority to determine the IROs that will perform external reviews for
its Plan.
B. MRx will perform all services under this Section 7 in accordance with Law,including, as
applicable, the U.S. Department of Labor Claims Procedure Regulations, 29 C.F.R.
§2560.503-1.
C. The services set forth in this Schedule A, Section 7 are Value Added Administrative
Services, except that administrative (non-clinical) initial coverage determinations are
included within the Core Administrative Fee.
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09.05.17
SCHEDULE B
PRICING TERMS
I. RETAIL PHARMACY
Pricing. Sponsor will pay MRx for each Covered Pharmaceutical dispensed to a Member through a Retail
Pharmacy an amount equal to (a)the lowest of(i)AWP minus a discount plus a Dispensing Fee, (ii)the
Retail Pharmacy's submitted cost plus Dispensing Fee, (iii)MAC plus Dispensing Fee, or(iv)U&C, less
(b)the Cost Share. These terms also apply to Member-submitted claims. Sponsor will pay for Compound
Prescriptions on a separate ingredient cost and Dispensing Fee basis. Retail Pharmacy Claims may not
exceed a 34-day supply.
MRx's contracted rates and fees with pharmacies may vary between each other and are subject to change
based on various factors, including market conditions. Pass-through pricing does not include, and MRx
retains,Claims transaction fees paid by a pharmacy.
No Minimum Charge. There will be no minimum charge to Members. Members will be charged the lowest
of discounted AWP.submitted cost,MAC.U&C,or the Cost Share. If a Member pays the entire cost of a
Covered Pharmaceutical,there will be no charge or credit to Sponsor.
MRx will provide the following estimate averages for the Retail Pharmacy network, Actual and overall
discounts and dispensing fees may vary from the estimates.
Component Retail 30 Retail 90
Brand Effective Rate(AWP Discount): AWP minus 17 % AWP minus 20%
Generic Effective Rate(AWP Discount): AWP minus 79% AWP minus 79%
Brand Claim Dispensing Fee $1.25 $0.75
Generic Claim Dispensing Fee: $1.25 $0.75
2. MAIL ORDER PHARMACY
Sponsor will pay MRx for Covered Pharmaceuticals dispensed to Members through a Mail Order Pharmacy
an amount equal to (a)the lower of(i) AWP minus a discount or(ii)MAC, less (b) the Cost Share. The
Dispensing Fee applicable to each Paid Claim is$0.00. The minimum days' supply per prescription is 84
days. A Claim for less than 84 days' supply will be processed at rates applicable to the Retail Pharmacy.
If the Mail Order Pharmacy is an Affiliate of MRx, MRx may retain discounts from manufacturers or
wholesalers as a purchaser of pharmaceuticals and the price by paid Sponsor will not equal the price paid
by MRx for Covered Pharmaceuticals.
No Minimum Charge. There will be no minimum charge to Members. Members will be charged the lowest
of discounted AWP or the Cost Share. If a Member pays the entire cost of a Covered Pharmaceutical,there
will be no charge or credit to Sponsor.
MRx will provide the following estimate averages for the Mail Order Pharmacy. Actual and overall
discounts and dispensing fees may vary from the estimates.
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Component
Brand Effective Rate(AWP Discount): AWP minus 25%
Generic Effective Rate(AWP Discount): AWP minus 80%
Brand Claim Dispensing Fee: $0
Generic Claim Dispensing Fee: $0
3. GUARANTEES (RETAIL PHARAMCY AND MAIL ORDER)
The following terms apply to the guarantees set forth in Sections 1 and 2 above.
A. Effective Rate(Inuedient Cost)Guarantees
The Effective Rate Guarantees take into account the price before the application of any Cost Share,and do
not include Dispensing Fees. Claims for which the Member paid the entire cost of the Covered
Pharmaceutical are included in the calculation. Claims for compound drugs, Specialty Drugs, and over-
the-counter drugs, Claims with ancillary charges (but not taxes), Member-submitted Claims, Claims for
subrogation, Claims older than 180 days, and out-of-network Claims are excluded from the calculations.
Under the Retail Pharmacy guarantees,Claims from LTC Pharmacies,Home Infusion Pharmacies,and ITU
Pharmacies are excluded from the calculations, and there are no guarantees applicable to individual
pharmacies. Under the Mail Order Pharmacy guarantees, Claims for less than an 84 days' supply are
excluded from the calculations.
For the Brand Effective Rate Guarantees, all Brands are included in the calculation. For the Generic
Effective Rate Guarantees, both Single Source Generics and Multisource Generics are included in the
calculation. "Single Source Generic"means a drug that is manufactured by and available from only one
generic pharmaceutical manufacturer. "Multisource Generic" means a drug is manufactured by and
available from more than one generic pharmaceutical manufacturer.
B. Dispensing Fee Guarantees
The Dispensing Fee Guarantees are based upon the Dispensing Fees on Paid Claims before the application
of any Cost Share. Claims in which the Member paid the entire cost of the drug are included in the
calculation. Claims for compound drugs, Specialty Drugs, and over-the-counter products, Claims with
ancillary charges(but not taxes),Member-submitted Claims,Claims for subrogation,Claims older than 180
days,and out-of-network Claims are excluded from the calculations.
C. Generic Dispense Rate Guarantees
The Retail Generic Dispense Rate or "GDR at Retail" shall be calculated as the total number of retail
Generic Claims divided by the total number of retail Claims.
The Mail Generic Dispense Rate or"GDR at Mail"shall be calculated as the total number of Generic mail
Claims divided by the total number of mail Claims.
The GDR at Retail will be calculated separately from the GDR at Mail.
MRx will provide the following GDR Guarantees:
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Year GDR at Retail GDR at Mail
Year 1 82.50% 73.75%
Year 2 83.00% 74.00%
Year 3 83.50% 74.25%
GDR Penalty calculation:
GDR Shortfall GDR at Retail% -Achieved GDR%=GDR Shortfall%
OR
GDR at Mail% -Achieved GDR%=GDR Shortfall%
#of Claims that fall short GDR x total number of claims in applicable Shortfall
category(Retail or Mail)
Difference in Average Drug Cost Average Brand Drug cost— Average Generic Drug cost
$$$Penalty to be Paid by MRx Number of claims that fall short x Difference in Drug Cost
For example. There are a 100 retail claims. The Retail GDR guarantee is equal to 82.5% and the Retail
Achieved GDR is equal to 79.5%, then the GDR Shortfall= 3% (82.5-79.5) The GDR Shortfall is then
multiplied by the total number of claims which results in the total number of claims that fall short of the
GDR (3% X 100 claims = 3 claims). Finally, the total dollar penalty shall be calculated by taking the
difference between the average Brand Drug cost and average Generic Drug cost[i.e.$100(avg.Brand cost)
-$20(avg.Generic cost)=$80] and multiplying that value($80)by the number of claims that fall short(3)
if any,from the applicable GDR Rates below(80 x 3= $240 in penalties).
E. Reconciliation Process
After the end of each Contract Year, MRx will measure and reconcile each of the guarantees. MRx may
offset any surplus on any Effective Rate and/or Dispensing Fee Guarantee within a dispensing channel(i.e.,
Retail Pharmacy, Mail Order Pharmacy, Specialty Drugs)against a shortfall in any other such guarantee
within the same dispensing channel. MRx will pay any shortfall against the guarantees within ninety(90))
days after the end of the Contract Year.GDR guarantee shortfalls will calculated as set forth above be paid
up to a maximum of$10,000 annually.
4. SPECIALTY DRUGS
Sponsor will pay MRx for Specialty Drugs that are Covered Pharmaceuticals dispensed through a Specialty
Pharmacy or a Mail Order Pharmacy as set forth in Schedule B-1. MRx may add new Specialty Drugs to
the Specialty Drug List as they become available in the market at a default price of AWP- 11% for a 30-
day supply until MRx establishes an appropriate contract price.
MRx may retain discounts from manufacturers or wholesalers as a purchaser of pharmaceuticals and the
price by paid Sponsor will not equal the price paid by MRx for Covered Pharmaceuticals.
MRx will provide the following financial guarantees for Specialty Drugs dispensed through the Specialty
Pharmacy and the Mail Order Pharmacy:
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09.05.17
Component
The Effective Rate Guarantees take into account the price before the application of any Cost Share,and do
not include Dispensing Fees. Claims for which the Member paid the entire cost of the Covered
Pharmaceutical are included in the calculation. Claims for compound drugs, over-the-counter drugs,
Claims with ancillary charges (but not taxes), Member-submitted Claims, Claims for subrogation, and
Claims older than 180 days are excluded from the calculations.
The Dispensing Fee Guarantees take into account the Dispensing Fees on Paid Claims before the application
of any Cost Share. Claims in which the Member paid the entire cost of the Covered Pharmaceutical are
included in the calculation. Claims for Compound drugs, and over-the-counter products, Claims with
ancillary charges(but not taxes),Member-submitted Claims,Claims for subrogation,and Claims older than
180 days are excluded from the calculations.
The Reconciliation Process applicable to the Specialty Drug Guarantees is the same process set forth in
Section 3C above.
5. REBATES
MRx will pay(credit)to Sponsor the Guaranteed Rebates within one hundred eighty(180)days following
the end of each Contract Quarter.
MRx will provide the following Guaranteed Rebates:
Guaranteed Rebates(per Brand Paid Claim):
Retail Pharmacy: (30 day) $37.29
Retail Pharmacy(90 day): $37.29
Mail Order Pharmacy: $125.77
Specialty Drugs: $263.25
Guaranteed Rebates do not include Claims for compound drugs, over-the-counter products, government
subrogation, or coordination of benefits, Claims under the 340B program, Member-submitted Claims,
Claims older than 180 days,out-of-network Claims,Claims for Specialty Drugs dispensed through a Retail
Pharmacy,Claims for biosimilars,and Brands dispensed as Generics.
MRx may contract with and/or utilize the services of a rebate administrator to contract with and collect
rebates from pharmaceutical manufacturers. The administrator may retain a portion of the rebates and earn
administrative fees for its services.
In addition to Rebates, MRx may earn additional amounts from pharmaceutical manufacturers and/or
others. For example, MRx may earn administrative and/or service fees relating to administration of the
Rebate program, and fees for other services rendered by MRx to such manufacturers unrelated to the
administration of rebates, such as adherence and compliance programs, other patient support and similar
services. MRx may also receive purchase discounts relating to purchases of drugs for dispensing from the
Mail Order Pharmacy or Specialty Pharmacy. The amounts described in this section are not "Rebates"
under this Agreement.
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09.05.17
6. ADMINISTRATIVE FEES
A. Core Administrative Services. Sponsor will pay to MRx the following administrative fee for all of
the Core Administrative Services set forth in Schedule A,Section 6:
Per Paid Claim: $2.25
B. Value-Added Administrative Services. Sponsor will pay to MRx for the Value-Added
Administrative Services requested or used by Sponsor as follows:
SERVICE/DESCRIPTION PRICE
Eligibility Services
Manual Eligibility $2A0 per eligibility record
Electronic Prescribing _ $0.16 perpositive eligibility transaction
Retroactive termination letters Quoted upon request
Member Communications
Member Packets(mailed directly to Member) $1.25 per Member address,plus postage
Identification Cards $0.25 per card(Rx only)
$0.50 ier card(Rx+medical)
Customized materials(Member packets or other Quoted upon request
communications)
Member mailings $1.25 per letter,plus postage
Claims Processing and Payment
Direct Member Reimbursement (Member submitted $1.50 per Claim, plus postage and Core
manual/paper Claims) Administrative Fee
Utilization Management
MRx Standard Prior Authorization program,including
intervention at the point of sale to support appropriate $35 per review
use and initial clinical coverage reviews based upon
established criteria
Appeals $100 per review
Independent Review Organization(IRO)services— Pass through of fees from IRO entities
access to MRx-supplied panel of IROs for external
reviews if MRx provides fmal internal appeals
Reporting
Custom ad hoc reporting $195 per hour _
Retiree Drug Subside
RDS Support Services Quoted upon request
Audit/Fraud,Waste and Abuse
Custom FWA program _ , Quoted upon request
Sponsor-requested audits of pharmacy On site audit: $1,500 per audit
Desk audit: $500/audit
LPhysician Communications
Physician charges relating to utilization management Pass through of physician charges
i activities (e.g., requests for information, discussion of
clinical criteria)
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09.05.17
7. IMPLEMENTATION ALLOWANCE
Ninety (90) days after the Execution Date of this Agreement, MRx will credit Sponsor up to $5.00 per
Member (based on the initial enrollment as of the Effective Date) against the next regular invoice to
Sponsor. Such credit will be limited to reimbursement for Sponsor's reasonable and actual costs/expenses
relating to the implementation of this Agreement (e.g., consulting fees, cost of preparing a request for
proposal, communications to Members, etc.). Sponsor will provide appropriate documentation of its
costs/expenses within sixty(60)days after the Execution Date of this Agreement. In addition to any other
remedies MRx may have under Law,in the event Sponsor terminates this Agreement prior to the expiration
of the Initial Term, Sponsor will return any amount credited under this section upon the effective date of
such termination.
8. GENERAL
The pricing terms in this Agreement are based upon the Minimum Enrollment,Benefit Design(including
but not limited to the Formulary),and other information provided by Sponsor to MRx during the proposal
process. If Sponsor falls below the Minimum Enrollment,makes any changes to the Benefit Design,makes
other changes to its Plan(s), or other changes occur, that constitute a material departure from MRx's
underwriting assumptions based on information provided by Sponsor,the Parties agree to modify the terms
of this Schedule B as of the effective date of such event/change to return MRx to its relative economic
position prior to such event/change.
In the event a change in Law(including any interpretation of same)occurring after this Agreement has been
signed materially impacts MRx's costs of providing any of the PBM Services hereunder,or if an action by
a pharmaceutical manufacturer or any unscheduled patent expiration/availability of over-the-counter
products constitutes a material departure from MRx's underwriting assumptions,the Parties will make an
equitable modification to the pricing terms of this Schedule B as of the effective date of such event/change.
In the event of any increase in postage rates announced after this Agreement is signed, MRx will amend
the Dispensing Fee relating to the Mail Order Pharmacy to reflect such increased amount.
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SCHEDULE B-1
SPECIALTY DRUGS
This Schedule B-1 applies only to Specialty Drugs purchased through the Specialty Pharmacy or the Mail
Order Pharmacy. Sponsor will pay for Specialty Drugs obtained through a Retail Pharmacy under the terms
of Schedule B, Section 1 (Retail Pharmacy).
Sponsor will pay for Specialty Drugs purchased through the Specialty Pharmacy or the Mail Order
Pharmacy pursuant to the Specialty Drug List attached at the end of the Agreement.
** indicates a Specialty Drug with a restricted channel (sometimes referred to as a "limited distribution
drug"). MRx may arrange for the provision of limited distribution drugs through another pharmacy as
necessary or appropriate for continuing Member care. Sponsor will pay for such drugs on a pass-through
basis.
ft indicates a Specialty Drug with a per diem or per activity charge,such as associated equipment or nursing
services. Sponsor will pay for such charges on a pass-through basis.
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09.05.17
SCHEDULE C
PERFORMANCE GUARANTEES
MRx will be subject to the performance standards set forth in this Schedule C during the Initial Term of
this Agreement, for services fully delegated to MRx.
The total annual amount at risk for missed performance standards is$50,000. Sponsor shall have the right
to modify the risk allocation annually,provided (i) such modification is provided in writing within thirty
(30)days prior to the start of each Contract Year,and(ii)that no more than 20%of the total risk is allocated
to any one guarantee.
All performance standards will be measured and reported annually on a client specific basis unless
otherwise noted below. Subject to Sponsor adherence to payment obligations, guarantees will be reported
within ninety(90)days after the end of each Contract Year,and any applicable penalties will be paid within
thirty (30)days after Sponsor's receipt of the annual performance guarantee report. No missed standard
shall be considered a breach under Section 8.2(a).
Performance Standard Measurement Guarantee
Frequency ($)
I. Implementation
Implementation Based on mutually-agreed upon schedule and as Within 90 days $5,000
meetings requested by Sponsor post-
Implementation PBM shall submit an initial implementation plan to Within 90 days
plan Sponsor for review at least 90 days prior to start date. post-
implementation $5,000
CLIENT CLIENT will be satisfied with all aspects of Within 90 days $5,000
satisfaction implementation team performance and results post-
with of implementation process. implementation
implementation
process MRx guarantees an Implementation Satisfaction
Rate of 3 or better,on a 5 point scale.
Guarantee is contingent on the City of Augusta,
and any of the City of Augusta's third party
vendors meeting all mutually agreed upon
deliverable dates.
II.Eligibility File Maintenance
Electronically submitted eligibility shall be $3,500
Eligibility processed by PBM within two(2)business days of
file the start date.
installations Within I business day of receipt of a file,PBM Annually
will review it for errors and reconcile any errors
with CLIENT.
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09.05.]7
100%of maintenance ID cards issued by PBM $3,500
Maintenance will be mailed within five(5)business days Annually
ID Cards following PBM's processing of eligibility
information identifying the applicable Eligible
Person.
III.Retail Claims Processing
System availability PBM guarantees 99.5%claims processing systems Annually $3,500
for point-of-sale availability(other than scheduled maintenance time)
claims during normal service hours.
IV.Customer Service
Average speed to The average speed to answer of the member Annually $3,500
answer services toll free number will not exceed thirty
(30)seconds in any year.
The telephone abandonment rate of the member Annually $3,500
Abandonment rate services toll free telephone line will not exceed 3%
during any year.
90%of members will be satisfied(3 or higher on a Annually $3,500
Member 5 point Likert scale)based on MRX's standard
satisfaction member satisfaction survey instrument.A
statistically valid response rate shall be received for
any applicable penalty to apply.
V. Account Management
CLIENT is satisfied(3 or higher on a 5 point Likert Annually
scale)with the account management services as
Account measured by MRX's standard survey instrument. $3,500
Management
Satisfaction
Standard Plan Plan performance reports will be made
Reporting available within 45 days of the close of a Annually $3,500
Timeliness quarter.
VI.Retail Network
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PBM will maintain a network of Participating
Pharmacies to provide services under the Retail
Retail network Pharmacy Program. At least 95%of Eligible
access Participants will have at least one Participating wally
Pharmacy within 5 miles of his/her home zip code
(the"Retail Pharmacy Access Rate)"in $3,500
Urban/Suburban areas.At least 95%of Eligible
Participants will have at least one Participating
Pharmacy within 5 miles of his/her home zip code
(the"Retail Pharmacy Access Rate)"in Rural
areas.
VII.Mail Order Network
Turnaround All clean mail order services prescription received by
time—Clean PBM in each Contract Year will be processed within Annually
Mail Order an average of 2 business days of receipt of PBM, $3,500
Services measured on a book of business basis.
All intervention mail order services prescription
Turnaround received by PBM in each Contract Year will be Annually
time— processed within an average of five(5)business days $3,500
Interventions of receipt by PBM,measured on a book of business
basis.
99.9%of prescriptions will be dispensed without
Dispensing clinical error.Error indicators include associate
Accuracy name,drug name,drug strength,directions,and Annually
prescribername.Measured on a book of business $3,500
basis.
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disclosed to others without prior written authorization from MRx,except as permitted by the Georgia Open Records
Act.