COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Health Department

DATE:

December 18, 2008

BOARD MEETING DATE:

January 6, 2009

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Charlene A. Silva, Director, Health Department

Louise Rogers, Director of Behavioral Health and Recovery Services

SUBJECT:

First Amendment to Agreement with Eli Lilly and Company

RECOMMENDATION:

Adopt a Resolution authorizing the President of the Board to execute a First Amendment to the Agreement with Eli Lilly and Company to provide pharmaceutical rebates for the term July 1, 2006 through June 30, 2009.

VISION ALIGNMENT:

Commitment: To ensure basic health and safety for all.

Goal: Help vulnerable people—the aged, disabled, mentally ill, at-risk youth, and others—achieve a better quality of life.

This Agreement will contribute to this commitment and goal by decreasing the overall cost of pharmaceutical drugs purchased from Eli Lilly and Company (Lilly).

Performance Measure:

Measure

FY 2007-08
Actual

FY 2008-09
Projected

Contractor shall provide rebate payments within 90 days of receipt of rebate invoice

95%

95%

BACKGROUND:

Most pharmaceutical services for clients of Behavioral Health and Recovery Services (BHRS) are handled through an agreement with 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.

Under an Agreement effective for the term July 1, 2006 through June 30, 2009, Lilly provides a ten percent access rebate on the total purchases of Zyprexa and an eight percent rebate on purchases of Cymbalta for clients of BHRS. These drugs are anti-psychotic therapeutic drugs that Eli Lilly manufactures. Contracting with Lilly directly for rebates for these drugs is advantageous to the County because it saves administrative fees charged by the PBM. BHRS has contracted with Lilly for these access rebates since 2002.

DISCUSSION:

The current Agreement does not allow either party to assign the Agreement without the prior written consent of the other party. This Amendment to the Agreement allows Lilly (or its permitted assignees), to assign the Agreement (in whole or in part) without prior written consent of the County, to any entity that it owns, controls, is controlled by, or is under common control of Lilly. The Amendment has been reviewed and approved by County Counsel.

FISCAL IMPACT:

This Amendment does not change expected reimbursement through this Agreement. For FY 2008-09, this amended Agreement will provide estimated annual revenues of $130,000 and there is no Agreement maximum. There is no Net County Cost associated with this Agreement.