COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Health Services Agency

 

DATE:

July 9, 2004

BOARD MEETING DATE:

July 27, 2004

 

TO:

Honorable Board of Supervisors

FROM:

Charlene A. Silva, Director of Health Services

Gale Bataille, Director of Mental Health Services

SUBJECT:

Amendment to the Agreement with Eli Lilly and Company

 

Recommendation

Adopt a resolution authorizing the President of the Board to amend 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 December 17, 2002, your Board ratified an agreement with Eli Lilly for an 8% access rebate calculated on the total purchase of Zyprexa by San Mateo County Mental Health Services. The term of that agreement is October 1, 2002 through September 30, 2003.

 

Discussion

Eli Lilly and Company provide a rebate calculated on the total purchases of Zyprexa by the San Mateo County Health Services Agency. They have increased the rebate to 10%, effective October 1, 2003. The end date for this agreement has been extended to September 30, 2006. This agreement is being presented late to your Board due to late delivery of the agreement from the contractor and administrative delays in processing in Mental Health Services.

 

The agreement has been reviewed and approved by County Counsel and Risk Management.

 

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 $800,000 for the term of the agreement. For FY 2004-05 rebates are anticipated to be approximately $200,000. These funds will offset the cost of drugs and are built into the Mental Health Services recommended budget for pharmaceuticals for FY 2004-05. There is no net County cost associated with this agreement.