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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Health Department
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DATE:
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June 2, 2006
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BOARD MEETING DATE:
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June 20, 2006
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Charlene A. Silva, Director of Health
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Gale Bataille, Director of Mental Health Services
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SUBJECT:
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Agreement with Eli Lilly and Company
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RECOMMENDATION:
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Adopt a resolution authorizing the President of the Board to execute an Agreement with Eli Lilly and Company to provide pharmaceutical rebates for the term July 1, 2006 through June 30, 2009.
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VISION ALIGNMENT:
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Commitment: To ensure basic health and safety for all.
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Goal(s): Help vulnerable people – the aged, disabled, mentally ill, at risk youth, and others – achieve a better quality of life.
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This agreement will contribute to this commitment and goal by decreasing the overall cost of pharmaceutical drugs purchased from Eli Lilly and Company.
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Performance Measure:
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Measure
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FY 2005-06
Actual
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FY 2006-07
Projected
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Contractor shall provide rebate payments within 90 days of receipt of rebate invoice
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n/a*
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95%
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*This is a new measure for FY 2006-07
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BACKGROUND:
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Most pharmaceutical business in Mental Health is handled through MedImpact, the Pharmacy Benefits Management (PBM) contractor. The MedImpact Agreement includes a provision for managing rebates from pharmaceutical companies, which is a common industry practice in California. The PBM charges an administrative fee for managing rebates.
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Eli Lilly offers rebates for Zyprexa and Cymbalta, anti-psychotic therapeutic drugs they manufacture. They are willing to contract with the County directly. This is advantageous to the County because it saves in administrative fees charged by the PBM.
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Mental Health Services has contracted with Eli Lilly for these access rebates since 2002. Mental Health Services has a current Agreement with this contractor that goes through September 30, 2006.
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DISCUSSION:
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Eli Lilly and Company is now offering to provide a 10% access rebate on purchases of Zyprexa and an 8% rebate on purchases of Cymbalta calculated on the total purchases for clients of Mental Health Services, effective July 1, 2006. This new Agreement will be for the term of July 1, 2006 through June 30, 2009, and will supersede the current Agreement.
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The agreement has been reviewed and approved by County Counsel and Risk Management.
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FISCAL IMPACT:
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Rebates from this Contractor are expected to save the County an anticipated $600,000 for the term of the agreement. For FY 2006-07 rebates are anticipated to be approximately $200,000, with rebates for Cymbalta anticipated to be approximately $3,000. These funds will offset the cost of prescription drugs and are built into the Mental Health Services approved budget for pharmaceuticals for FY 2006-07. There is no Agreement maximum. There is no Net County Cost associated with this agreement.
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