COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Health Services Agency

DATE:

November 25, 2002

BOARD MEETING DATE:

December 17, 2002

TO:

Honorable Board of Supervisors

FROM:

Margaret Taylor, Director, Health Services

SUBJECT:

Gale Bataille, Director, Mental Health Services

Agreement with Eli Lilly and Company

Recommendation

Adopt a resolution authorizing the President of the Board to execute an agreement with Eli Lilly and Company to provide an access rebate on the purchase of Zyprexa.

Background

Most pharmaceutical business in Mental Health is handled through MedImpact, the Pharmacy Benefits Management (PBM) contractor. The MedImpact contract includes a provision for managing rebates from pharmaceutical companies, which are a common industry practice in California. The PBM charges an administrative fee for managing rebates.

Eli Lilly offers a rebate for Zyprexa, an anti-psychotic therapeutic drug they manufacture. They are willing to contract with the County directly. This is advantageous to the County fiscally because it saves in administrative fees charged by the PBM.

On January 8, 2002, your Board ratified an agreement with Eli Lilly for a 4% access rebate calculated on the total purchase of Zyprexa by San Mateo County Mental Health Services. The term was October 1, 2001 through September 30, 2002. On May 21, 2002, your Board approved an amendment to that agreement that increased the rebate to 6%.

Discussion

This agreement is being renewed for the term of October 1, 2002 through September 30, 2003. The rebate is being increased to 8%.

Vision Alignment

This agreement with Eli Lilly and Company keeps the commitment to Ensure Basic Health and Safety for All and goal number 8: Help vulnerable people-the aged, disabled, mentally ill, at risk youth, and others- achieve a better quality of life. The agreement contributes to this commitment by providing an access rebate on the purchase of Zyprexa by San Mateo County.

Fiscal Impact

Rebates are expected to save the County an anticipated $200,000 for the term of the agreement. For FY 2002-03 rebates are anticipated to be approximately $187,500. These funds will offset the cost of drugs and are built into the Mental Health Services budget for pharmaceuticals for FY 2002-03. There is no net County cost associated with this agreement.