THIS AGREEMENT, entered into this _____ day of _______________ , 20_____, by and between the COUNTY OF SAN MATEO, hereinafter called "County," and TED’S VILLAGE PHARMACY, hereinafter called "Contractor";


W I T N E S S E T H:


WHEREAS, pursuant to Government Code, Section 31000, County may contract with independent contractors for the furnishing of such services to or for County or any Department thereof;


WHEREAS, it is necessary and desirable that Contractor be retained for the purpose of providing pharmacy services to patients of the County’s Clinics.





Exhibits and Attachments


The following exhibits and attachments are included hereto and incorporated by reference herein:

Exhibit A—Services

Exhibit B—Payments and rates

Exhibit C—Agreed upon procedures for independent audit
Exhibit E – Corporate Compliance SMMC Code of Conduct (Third Parties)

Attachment I—504 Compliance



Services to be Performed by Contractor


In consideration of the payments set forth herein and in Exhibit B, Contractor shall perform services for County in accordance with the terms, conditions and specifications set forth herein and in Exhibit A.





In consideration of the services provided by Contractor in accordance with all terms, conditions and specifications set forth herein and in Exhibit A, County shall make payment to Contractor based on the rates and in the manner specified in Exhibit B. The County reserves the right to withhold payment if the County determines that the

quantity or quality of the work performed is unacceptable. In no event shall the County’s total fiscal obligation under this Agreement exceed TWO-HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000)



Term and Termination


Subject to compliance with all terms and conditions, the term of this Agreement shall be from May 1, 2010 through April 30, 2013.


This Agreement may be terminated by Contractor, the Chief of the Health System or his/her designee at any time without a requirement of good cause upon thirty (30) days’ written notice to the other party.


In the event of termination, all finished or unfinished documents, data, studies, maps, photographs, reports, and materials (hereafter referred to as materials) prepared by Contractor under this Agreement shall become the property of the County and shall be promptly delivered to the County. Upon termination, the Contractor may make and retain a copy of such materials. Subject to availability of funding, Contractor shall be entitled to receive payment for work/services provided prior to termination of the Agreement. Such payment shall be that portion of the full payment which is determined by comparing the work/services completed to the work/services required by the Agreement.



Availability of Funds


The County may terminate this Agreement or a portion of the services referenced in the Attachments and Exhibits based upon unavailability of Federal, State, or County funds, by providing written notice to Contractor as soon as is reasonably possible after the County learns of said unavailability of outside funding.



Relationship of Parties


Contractor agrees and understands that the work/services performed under this Agreement are performed as an independent Contractor and not as an employee of the County and that Contractor acquires none of the rights, privileges, powers, or advantages of County employees.



Hold Harmless


Contractor shall indemnify and save harmless County, its officers, agents, employees, and servants from all claims, suits, or actions of every name, kind, and description, brought for, or on account of: (A) injuries to or death of any person, including Contractor, or (B) damage to any property of any kind whatsoever and to whomsoever belonging, (C) any sanctions, penalties, or claims of damages resulting from Contractor’s failure to comply with the requirements set forth in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and all Federal regulations promulgated thereunder, as amended, or (D) any other loss or cost, including but not limited to that caused by the concurrent active or passive negligence of County, its officers, agents, employees, or servants, resulting from the performance of any work required of Contractor or payments made pursuant to this Agreement, provided that this shall not apply to injuries or damage for which County has been found in a court of competent jurisdiction to be solely liable by reason of its own negligence or willful misconduct.


The duty of Contractor to indemnify and save harmless as set forth herein, shall include the duty to defend as set forth in Section 2778 of the California Civil Code.



Assignability and Subcontracting


Contractor shall not assign this Agreement or any portion thereof to a third party or subcontract with a third party to provide services required by contractor under this Agreement without the prior written consent of County. Any such assignment or subcontract without the County’s prior written consent shall give County the right to automatically and immediately terminate this Agreement.





The Contractor shall not commence work or be required to commence work under this Agreement unless and until all insurance required under this paragraph has been obtained and such insurance has been approved by Risk Management, and Contractor shall use diligence to obtain such insurance and to obtain such approval. The Contractor shall furnish the County with certificates of insurance evidencing the required coverage, and there shall be a specific contractual liability endorsement extending the Contractor's coverage to include the contractual liability assumed by the Contractor pursuant to this Agreement. These certificates shall specify or be endorsed to provide that thirty (30) days' notice must be given, in writing, to the County of any pending change in the limits of liability or of any cancellation or modification of the policy.



Worker's Compensation and Employer's Liability Insurance. The Contractor shall have in effect during the entire life of this Agreement Workers' Compensation and Employer's Liability Insurance providing full statutory coverage. In signing this Agreement, the Contractor certifies, as required by Section 1861 of the California Labor Code, that it is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of the Code, and I will comply with such provisions before commencing the performance of the work of this Agreement.



Liability Insurance. The Contractor shall take out and maintain during the life of this Agreement such Bodily Injury Liability and Property Damage Liability Insurance as shall protect him/her while performing work covered by this Agreement from any and all claims for damages for bodily injury, including accidental death, as well as any and all claims for property damage which may arise from contractors operations under this Agreement, whether such operations be by himself/herself or by any subcontractor or by anyone directly or indirectly employed by either of them. Such insurance shall be combined single limit bodily injury and property damage for each occurrence and shall be not less than the amount specified below.


Such insurance shall include:



Comprehensive General Liability . . . . . . . . . . .




Motor Vehicle Liability Insurance . . . . . . . . . . .




Professional Liability . . . . . . . . . . . . . . . . . . . . .



County and its officers, agents, employees and servants shall be named as additional insured on any such policies of insurance, which shall also contain a provision that the insurance afforded thereby to the County, its officers, agents, employees and servants shall be primary insurance to the full limits of liability of the policy, and that if the County or its officers and employees have other insurance against the loss covered by such a policy, such other insurance shall be excess insurance only.


In the event of the breach of any provision of this section, or in the event any notice is received which indicates any required insurance coverage will be diminished or canceled, the County of San Mateo at its option, may, notwithstanding any other provision of this Agreement to the contrary, immediately declare a material breach of this Agreement and suspend all further work pursuant to this Agreement.



Compliance with Laws; Payment of Permits/Licenses


All services to be performed by Contractor pursuant to this Agreement shall be performed in accordance with all applicable Federal, State, County, and municipal laws, including, but not limited to, Health Insurance Portability and Accountability Act of 1996 (HIPAA) and all Federal regulations promulgated thereunder, as amended, and the Americans with Disabilities Act of 1990, as amended, and Section 504 of the Rehabilitation Act of 1973, as amended and attached hereto and incorporated by reference herein as Attachment “I,” which prohibits discrimination on the basis of handicap in programs and activities receiving any Federal or County financial assistance. Such services shall also be performed in accordance with all applicable ordinances and regulations, including, but not limited to, appropriate licensure, certification regulations, provisions pertaining to confidentiality of records, and applicable quality assurance regulations. Further, Contractor certifies that the Contractor and all of its subcontractors will adhere to all applicable provisions of Chapter 4.106 of the San Mateo County Ordinance Code, which regulates the use of disposable food service ware.


In the event of a conflict between the terms of this Agreement and State, Federal, County, or municipal law or regulations, the requirements of the applicable law will take precedence over the requirements set forth in this Agreement.


Contractor will timely and accurately complete, sign, and submit all necessary documentation of compliance.



Non-Discrimination and Other Requirements



Section 504 applies only to Contractors who are providing services to members of the public. Contractor shall comply with 504 of the Rehabilitation Act of 1973, which provides that no otherwise qualified handicapped individual shall, solely by reason of a disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination in the performance of this Agreement.



General Non-Discrimination. No person shall, on the grounds of race, color, religion, ancestry, gender, age (over 40), national origin, medical condition (cancer), physical or mental disability, sexual orientation, pregnancy, childbirth or related medical condition, marital status, or political affiliation be denied any benefits or subject to discrimination under this Agreement.



Equal Employment Opportunity. Contractor shall ensure equal employment opportunity based on objective standards of recruitment, classification, selection, promotion, compensation, performance evaluation, and management relations for all employees under this Agreement. Contractor’s equal employment policies shall be made available to County of San Mateo upon request.



Violation of Non-Discrimination Provisions. Violation of the non-discrimination provisions of this Agreement shall be considered a breach of this Agreement and subject the Contractor to penalties, to be determined by the County Manager, including but not limited to:



termination of this Agreement



disqualification of the Contractor from bidding on or being awarded a County contract for a period of up to 3 years



liquidated damages of $2,500 per violation



imposition of other appropriate contractual and civil remedies and sanctions, as determined by the County Manager


To effectuate the provisions of this section, the County Manager shall have the authority to examine Contractor’s employment records with respect to compliance with this paragraph and/or to set off all or any portion of the amount described in this paragraph against amounts due to Contractor under the Contract or any other Contract between Contractor and County.


Contractor shall report to the County Manager the filing by any person in any court of any complaint of discrimination or the filing by any person of any and all charges with the Equal Employment Opportunity Commission, the Fair Employment and Housing Commission or any other entity charged with the investigation of allegations within 30 days of such filing, provided that within such 30 days such entity has not notified Contractor that such charges are dismissed or otherwise unfounded. Such notification shall include the name of the complainant, a copy of such complaint, and a description of the circumstance. Contractor shall provide County with a copy of their response to the Complaint when filed.



Compliance with Equal Benefits Ordinance. With respect to the provision of employee benefits, Contractor shall comply with the County Ordinance which prohibits contractors from discriminating in the provision of employee benefits between an employee with a domestic partner and an employee with a spouse.



The Contractor shall comply fully with the non-discrimination requirements required by 41 CFR 60-741.5(a), which is incorporated herein as if fully set forth.



Compliance with Contractor Employee Jury Service Ordinance


Contractor shall comply with the County Ordinance with respect to provision of jury duty pay to employees and have and adhere to a written policy that provides that its employees shall receive from the Contractor, on an annual basis, no less than five days of regular pay for actual jury service in San Mateo County. The policy may provide that employees deposit any fees received for such jury service with the Contractor or that the Contractor deducts from the employees’ regular pay the fees received for jury service.



Retention of Records, Right to Monitor and Audit



Contractor shall maintain all required records for three (3) years after the County makes final payment and all other pending matters are closed, and shall be subject to the examination and/or audit of the County, a Federal grantor agency, and the State of California. Contractor will provide Covered Entity with reports consistent with customary business practices (e.g., quarterly billing statements, status reports of collections and receiving and dispensing records).

Contractor shall ensure that all reimbursement accounts and dispensing records, and any and all other pertinent records relating to Contractor’s responsibilities and duties under the Agreement, are maintained by Contractor separately from Contractor’s own operations and will be made available to Covered Entity, HRSA, and the manufacturer in the case of an audit.

On behalf of Covered Entity and the County (“Covered Entity” is defined in Exhibit A, attached), Contractor shall maintain all relevant records relating to the Contractor services associated with 340B Drugs and Covered Entity Patients, in accordance with applicable Federal, State, and local laws and regulations, including but not limited to the Federal Standards for the Privacy of Individually Identifiable Health Information (45 CFR Parts 160 and 164). Contractor shall maintain all auditable records for a period of time that complies with all applicable Federal, State and local requirements, in any event not less than a period of ten (10) years.

Contractor shall provide Covered Entity and the County with reasonable access to Contractor’s business records relating to Contractor services for 340B Drugs, as is deemed necessary by Covered Entity in order to ensure that Contractor is in compliance with applicable Federal, State, and local laws, regulations, and requirements.

Covered Entity, the County, and Contractor understand that they are subject to audits by outside parties (the Department and participating manufacturers) of records that directly pertain to the Entity’s compliance with the drug resale or transfer prohibition and the prohibition against duplicate discounts.



Reporting and Record Keeping. Contractor shall comply with all program and fiscal reporting requirements set forth by appropriate Federal, State and local agencies, and as required by the County.



Contractor agrees to provide to County, to any Federal or State department having monitoring or review authority, to County's authorized representatives, and/or their appropriate audit agencies upon reasonable notice, access to and the right to examine all records and documents necessary to determine compliance with relevant Federal, State, and local statutes, rules and regulations, and this Agreement, and to evaluate the quality, appropriateness and timeliness of services performed.



Merger Clause


This Agreement, including the Exhibits attached hereto and incorporated herein by reference, constitutes the sole Agreement of the parties hereto and correctly states the rights, duties, and obligations of each party as of this document's date. In the event that any term, condition, provision, requirement or specification set forth in this body of the Agreement conflicts with or is inconsistent with any term, condition, provision, requirement or specification in any exhibit and/or attachment to this Agreement, the provisions of this body of the Agreement shall prevail. Any prior Agreement, promises, negotiations, or representations between the parties not expressly stated in this document are not binding. All subsequent modifications shall be in writing and signed by the parties.



Controlling Law and Venue


The validity of this Agreement and of its terms or provisions, as well as the rights and duties of the parties hereunder, the interpretation, and performance of this Agreement shall be governed by the laws of the State of California. Any dispute arising out of this Agreement shall be venued either in the San Mateo County Superior Court or the United States District Court for the Northern District of California.





Any notice, request, demand, or other communication required or permitted hereunder shall be deemed to be properly given when both (1) transmitted via facsimile to the telephone number listed below and (2) either deposited in the United States mail, postage prepaid, or when deposited for overnight delivery with an established overnight courier that provides a tracking number showing confirmation of receipt for transmittal, charges prepaid, addressed to:

    If to County: Chief Executive Officer

        San Mateo Medical Center

        222 W/ 39th Avenue

        San Mateo, CA 94403

        Facsimile: 650/573-2950

    With copy to: County Counsel’s Office

        400 County Center

        Redwood City, CA 94063

        Facsimile: 650/363-4034

    If to Contractor: Nguyen Pham
    Ted’s Village Pharmacy
    29 W. 25th Ave
    San Mateo, CA 94403
    Facsimile: 650/349-1745


In the event that the facsimile transmission is not possible, notice shall be given both by United States mail and an overnight courier as outlined above.

IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have affixed their hands.






Title, President

Board of Supervisors, San Mateo County







Clerk of Said Board




Contractor’s Signature




Long Form Agreement/Non Business Associate v 8/19/08








The 1992 Veteran’s Health Care Act created Section 340B of the Public Health Services Act, which classifies certain health care clinics, including County of San Mateo San Mateo Medical Center Clinics (“CLINIC”), as “Covered Entities” eligible to purchase outpatient prescription drugs for their patients at favorable discounts from drug manufacturers who enter into drug purchasing agreements with the United States Department of Health and Human Services (“DHHS”).



California Business & Professions Code 4126, effective January 1, 2002, authorizes Covered Entities, including CLINIC, to contract with pharmacies licensed under California state law, such as CONTRACTOR, to dispense Covered 340B Drugs for the Covered Entity, provided certain requirements are met, including adequate inventory control and limitation of dispensing to eligible outpatients of the Covered Entity.



The County of San Mateo, Clinics (CLINIC) and CONTRACTOR mutually desire to enter into a “ship to/bill to” arrangement under which CONTRACTOR will order Covered 340B Drugs and receive shipment, maintain inventory and controls, dispense such drugs on behalf of CLINIC only to eligible CLINIC outpatients, and charge and collect for such drugs, all on CLINIC’s behalf, and CLINIC will be billed and will pay for such drugs, in compliance with applicable laws and regulations.



CLINIC and CONTRACTOR mutually acknowledge that their intent in entering into this Agreement is solely to facilitate CLINIC’s participation in the 340B drug purchasing program, without having to establish and operate its own pharmacy and to increase patient access. The services provided each to the other are only those necessary in order to fulfill this intent, and all financial arrangements established herein are mutually determined to represent either cost or fair market value for the items and services received. The parties expressly do not intend to take any action that would violate state or federal anti-kickback prohibitions, such as those appearing in Section 1128B of the Social Security Act, 42 USC Section 1320a-7b. Instead, it is the intention of the parties that this Agreement and all actions taken in connection herewith shall fully comply with the regulatory


requirements of the safe harbor for personal services and management contracts appearing in 42 CFR Section 1001.952(d), and this Agreement shall in all respects be construed consistent therewith.




“340B Drugs” are hereby defined in accordance with applicable laws and guidance at 42 U.S.C. 256b(b), 42 U.S.C. 1396r-8(k), and 59 Fed. Reg. 25,110 (May 13, 1994).


“Tracking System” is hereby defined as a system for identifying and monitoring the use of drugs through all phases of the Parties’ involvement with such drugs, including the ordering of 340B drugs, the receipt of 340B drugs, Covered Entity’s payment for 340B drugs, internal transfers of 340B drugs within the Contractor, Contractor’s preparation and dispensing of 340B drugs, and Contractor’s billing of the Covered Entity Patient or third-party insurer for the 340B drugs on behalf of Covered Entity.


“Contractor” or “Pharmacy” shall mean “Contractor,” as defined by the attached Agreement.


“Covered Entity” or “Clinic” shall mean the County, as defined by the attached Agreement, including all of its 340B-eligible clinical site locations.


NOW, THEREFORE, in consideration of the promises, covenants and agreements

hereinafter set forth, CLINIC and CONTRACTOR hereby agree to the following terms and conditions:



Covered 340B Drugs. The prescription outpatient drugs covered by this Agreement (hereinafter "Covered 340B Drugs") include “Legend” drugs, that is those drugs which by federal law can be dispensed only pursuant to a prescription and which are required to bear the legend “Caution – Federal Law prohibits dispensing without prescription.” Other qualified prescriptions include insulin (on prescription only) and over the counter medications as long as prescribed by an authorized medical provider. All Covered 340B Drugs purchased under this Agreement are the property of CLINIC. All Covered 340B Drugs subject to this Agreement are also subject to the Limiting Definition of “covered outpatient drug” set forth in Section 1927(k) of the Social Security Act, 42 USC 1396r-8(k) (2) & (3), which is incorporated as the applicable definition for the section of the 1992 Veterans Affairs Act that created Section 340B of the Public Health Services Act.



Eligible Patients. Only outpatients of CLINIC, excluding CLINIC’s patients who are MediCal beneficiaries and for whom claims for pharmaceuticals will be submitted to the state MediCal program, are eligible to purchase or receive Covered 340B Drugs from CONTRACTOR (“Eligible Patients”). Under no circumstances will CONTRACTOR dispense Covered 340B Drugs to anyone other than Eligible Patients of CLINIC. Contractor shall dispense Covered 340B Drugs to Eligible Patients only in the following circumstances:



Upon presentation of a prescription form bearing CLINIC's name, the

Eligible Patient's name, a designation that the patient is an Eligible Patient, and the signature of a legally qualified health care provider affiliated with CLINIC; or,



Upon receipt of a prescription ordered by telephone or electronically on behalf of an Eligible Patient by a legally qualified health care provider affiliated with CLINIC who states that the prescription is for an Eligible Patient. CLINIC will furnish a list to Contractor of all such qualified health care providers and will update the list of providers to reflect any changes. PROVIDED, however, that no electronic transmission of patient specific information hereunder shall occur on or after the compliance date for healthcare providers of final HIPAA regulations, currently scheduled for October 16, 2003, unless and until the Parties have provided for strict compliance with applicable Health Insurance Portability and Accountability Act (HIPAA) rules, as described in paragraph 21 hereof.



Purchasing, Restocking and Inventory Maintenance.



Purchasing. Covered Entity shall purchase and maintain title to the 340B Drugs and shall assume all responsibility for establishing the price of the 340B Drugs subject to applicable Federal and State laws. Pharmacy is responsible for the receipt of 340B Drugs purchased by Covered Entity. Upon receipt of 340B Drugs, Pharmacy shall compare all shipments received on behalf of Covered Entity and confirm that the shipments conform to the orders of 340B Drugs placed by Covered Entity. If Pharmacy should find a discrepancy between the shipment and order of 340B covered outpatient drugs, Pharmacy shall inform Covered Entity within five (5) business days of this discrepancy.



Restocking. CONTRACTOR agrees to place orders as necessary with one or more pharmaceutical suppliers (“SUPPLIER”) to maintain and replenish the drugs consumed pursuant to this Agreement. CLINIC and CONTRACTOR shall arrange with SUPPLIER to ship directly to CONTRACTOR. CONTRACTOR shall provide CLINIC a copy of each and every order so placed, as well as shipping orders and invoices showing prices.



Inventory. Contractor shall conduct a complete and accurate inventory of all Covered 340B Drugs on the last business day OR the 30th of June of each year and provide an electronic file in Excel compatible format within 5 days of conducting the inventory.

Contractor shall maintain an inventory of expired or otherwise unusable Covered 340B Drugs and provide that inventory in electronic file in Excel compatible format within 5 days of conducting the annual inventory. Expired or otherwise unusable Covered 340B Drugs shall be disposed of in compliance with state, local or federal regulations.



Inventory Maintenance. CONTRACTOR agrees to maintain a stock of Covered 340B Drugs physically separate from its other drug inventory, and to protect its inventory of Covered 340B Drugs against intentional or unintentional dispensing to anyone other than Eligible Patients, and to reduce the possibility of this or other occurrences of drug diversion. CONTRACTOR shall maintain such records as are adequate to permit it to prepare the reports required under paragraph 7 hereof, and to permit CLINIC, DHHS, or any eligible drug manufacturer to determine upon audit to whom such Covered 340B Drugs have been dispensed. Upon termination of this Agreement, CONTRACTOR shall deliver all unused items of inventory purchased by or on behalf of CLINIC hereunder to CLINIC, if CLINIC has a valid permit, or, in the absence of such a permit, return them to SUPPLIER for CLINIC’s credit, if possible, or destroy them, if they cannot be returned or transferred within thirty days following termination.



Third party insurers. On behalf of Covered Entity, Pharmacy shall be responsible for billing third-party insurers for all 340B Drugs purchased by Covered Entity for Covered Entity Patients, and for billing Covered Entity Patients for insurance co-payments, where applicable.


Payment to SUPPLIER by CLINIC. CLINIC agrees to timely pay SUPPLIER amounts owing to SUPPLIER for Covered 340B Drugs purchased hereunder. In the event that SUPPLIER is not paid and does not ship Covered 340B Drugs in sufficient quantity to CONTRACTOR, CONTRACTOR shall notify CLINIC in writing of its lack of 340B Drugs, and, if CLINIC continues to write prescriptions for CONTRACTOR to fill, may thereafter, in its sole discretion, fill prescriptions from its non-340B inventory, and charge for its own account Eligible Patients or CLINIC according to its own, non-340B prices as described in paragraph 6.2, or CONTRACTOR may refuse to fill prescriptions of CLINIC, until satisfactory arrangement is made by CLINIC.






CONTRACTOR Dispensing Fee. CONTRACTOR and CLINIC agree that CONTRACTOR shall receive a Dispensing Fee as specified in Exhibit B, for each prescription of Covered 340B Drugs filled for Eligible Patients and that such Dispensing Fee covers CONTRACTOR’s costs and, in addition to delivery fees, constitutes the sole and exclusive payment CONTRACTOR is entitled to receive hereunder. With respect to each prescription, CLINIC shall designate whether such Dispensing Fee is to be collected from the Eligible Patient, from CLINIC, or in part from the Eligible Patient and in part from the CLINIC. If CLINIC is to pay all or part of the Dispensing Fee, CONTRACTOR shall bill CLINIC not more frequently than monthly for the amounts owing. CLINIC agrees to make payment within thirty to sixty (30 - 60) days of receipt of CONTRACTOR’s invoice for such Dispensing Fees. In the event that payment is late, CLINIC agrees to pay interest at the rate of seven percent (7%) per annum on the late balance.



CONTRACTOR Use of Non-340 B Stock. If CONTRACTOR fills prescriptions out of its non-340B stock after notifying CLINIC of a lack of 340B Drugs due to CLINIC nonpayment to SUPPLIER pursuant to paragraph 4, CLINIC agrees to make payment within fifteen (15) days of receipt of CONTRACTOR’s invoice for such costs. In the event that payment is late, CLINIC agrees to pay interest at the rate of seven percent (7%) per annum on the late balance.



In the event that the amount owed under paragraphs 6.1 or 6.2 by CLINIC to CONTRACTOR exceeds One Thousand Dollars ($1,000), CONTRACTOR shall have the right to refuse to fill further prescriptions of CLINIC, unless satisfactory arrangement is made by CLINIC.



Delivery Fee. CONTRACTOR shall maintain records of deliveries of prescriptions to patients and determine the cost of delivery. CONTRACTOR and CLINIC agree that CONTRACTOR shall receive an amount from CLINIC equivalent to one-half the actual cost of deliveries, and that CONTRACTOR will invoice CLINIC not more frequently than monthly for the amount owing.



Payment to CONTRACTOR by Patient. CLINIC may assign a share of the cost of the drug by the patient for patient’s in CLINIC’s ACE Program. In the event the patient is to share in the cost of the drug, CONTRACTOR shall collect payment from the patient prior to dispensing the drug. CONTRACTOR shall maintain records of all patient payments and submit such records monthly to CLINIC, including the name and patient number of patients who do not pay the co-payment. CONTRACTOR shall deduct payments from what CLINIC would otherwise owe CONTRACTOR under paragraphs 5 and 6.



Reports. By the tenth (10th) day of each month, CONTRACTOR shall transmit to CLINIC a detailed report, in Excel compatible format showing each Eligible Patient served, the prescription filled, with specific details about each claim, including the drug name, strength, unit dose, appropriate identification codes, manufacturer, quantity dispensed, amount charged and collected, for the previous month (example attached).



Maintenance of Records. CONTRACTOR will preserve all records of shipment, receipts, and dispensing of 340B drugs for audit at any reasonable time for a period of three years following date of provision of services. It is understood by both parties under this Agreement that, under Section 340B(a)(5)(C) of the PHS Act, they are subject to audit by the drug manufacturers and the U.S. Public Health Service of DHHS of records that directly pertain to compliance with the Act.



Contractor Compliance Responsibility. CONTRACTOR shall be solely responsible for all professional advice and services rendered by it for the Eligible Patients. CONTRACTOR is responsible for and agrees to render services as herein provided in accordance with the rules and regulations of the California State Board of Pharmacy, all laws of the State of California, and all applicable laws and regulations resulting from the Veteran's Health Care Act of 1992 (P.L. 102-585, sec 602). It is expressly understood that relations between the Eligible Patients and CONTRACTOR shall be subject to the rules, limitations, and privileges incident to the Contractor-patient relationship. CONTRACTOR shall be solely responsible, without interference from the CLINIC or its agents to said Eligible Patient for pharmaceutical advice and service, including the right to refuse to serve any individual where such service would violate pharmacy ethics or any pharmacy laws or regulations.



Insurance. Contractor shall at its own expense maintain a policy of insurance

covering professional acts and omissions with a licensed insurance carrier to be in an amount not less than one million dollars ($1,000,000) per incident and three million dollars ($3,000,000) in the aggregate, and said policy shall be maintained during the term of this agreement. CONTRACTOR shall cause its insurer to name CLINIC as an additional named insured on such policy, and shall provide CLINIC with a certificate to such effect.






CLINIC shall indemnify, defend and hold harmless CONTRACTOR from any and all liability, loss, claim, lawsuit, injury, cost, damage or expense whatsoever (including reasonable attorneys fees and court costs) arising out of, incident to or in any manner occasioned by the performance or nonperformance of any duty or responsibility under this Agreement, by CLINIC or any of its employees, agents, contractors or subcontractors.



CONTRACTOR shall indemnify, defend and hold harmless CLINIC from any and all liability, loss, claim, lawsuit, injury, cost, damage or expense whatsoever (including reasonable attorneys fees and court costs) arising out of, incident to or in any manner occasioned by the performance or nonperformance of any duty or responsibility under this Agreement, by CONTRACTOR or any of its employees, agents, contractors or subcontractors.



Without limiting any other indemnification provisions set forth in this

Agreement, neither party shall be liable to the other party pursuant to this Section for any claim covered by insurance, except to the extent that the liability of such party exceeds the amount of such insurance coverage.



Medicaid Prescriptions. Notwithstanding anything herein to the contrary, CONTRACTOR will not use Covered 340B Drugs to dispense prescriptions paid for by the state MediCal agency, but will use its non-340B inventory, and bill and collect MediCal on its own account. When a Medicaid agency pays for drugs for its beneficiaries, it is generally entitled to claim a rebate from the drug manufacturer, to reduce its effective cost to a statutorily established price. Section 340B extends a similar price to Covered Entities, and requires that there be a mechanism to protect drug manufacturers from Medicaid rebate claims for Covered 340B Drugs purchased pursuant to Section 340B. To avoid any chance that a State Medicaid agency will pay for 340B Drugs purchased hereunder and then submit prohibited rebate claims to the drug manufacturers, CONTRACTOR agrees to dispense non-340B drugs from its own inventory in filling Medicaid prescriptions for CLINIC patients who are Medicaid beneficiaries, and all charges collected in connection therewith shall be for CONTRACTOR’s account. CONTRACTOR further agrees that, for CLINIC patients who are Medicaid beneficiaries, CONTRACTOR will take all reasonable steps necessary to obtain coverage from Medicaid for the costs associated with drugs prescribed for those patients, including activities necessary for requesting a Treatment Authorization Request from MediCal. CLINIC shall not be liable to CONTRACTOR for dispensing fees or other costs in connection with prescriptions filled for Medicaid beneficiaries receiving a prescription whose cost will be covered by MediCal.



Patient Choice. CONTRACTOR understands and agrees that Eligible Patients of CLINIC may elect not to use CONTRACTOR for pharmacy services. In the event that an Eligible Patient elects not to use CONTRACTOR for such services, the patient may obtain the prescription from the pharmacy provider of his or her choice. Subject to a patient's freedom to choose a provider of pharmacy services, CLINIC will inform Eligible Patients that they may be eligible for a discount on prescription drugs ordered by CLINIC, other than Medicaid prescriptions, and advise them that such discount has been arranged for only at CONTRACTOR.



Contractor Site. Contractor agrees it will provide pharmacy services contracted for under this Agreement at one site only, which is as follows:

    Ted’s Village Pharmacy
    29 W. 25th Ave
    San Mateo, CA 94403
    Facsimile: 650/349-1745



Inspection by Manufacturer. Upon request, Covered Entity and Contractor shall disclose or permit inspection of any records or information relating to the Agreement, when necessary to comply with audits or investigations conducted by the manufacturer, Federal or State governments.

Upon request, Contractor shall provide reasonable access by a drug manufacturer that sells 340B Drugs to Covered Entity to relevant records and materials for purposes of any audits conducted by the drug manufacturer relating to 340B Drugs in accordance with manufacturer audit guidelines as set forth at 61 Fed. Reg. 65406-65413 (December 12, 1996).

Covered Entity and Contractor will identify the necessary information for the Covered Entity to meet its ongoing obligations of ensuring that the requirements listed herein are being complied with and establish mechanisms to ensure availability of that information for periodic independent audits performed by the Covered Entity. Information regarding the functioning of the independent audits and any information to be made available to the independent auditor are described in Exhibit C.

Upon written request to the Covered Entity, a copy of this Agreement will be provided to the Office of Pharmacy Affairs.



Self Reporting Requirements. In the event that Covered Entity determines that 340B drug diversion or duplicate discounts have occurred or that it is otherwise unable to comply with its responsibility to ensure reasonable compliance, then it must take immediate remedial action to assure compliance and notify HRSA’s Office of Pharmacy Affairs (OPA) regarding such compliance problems and actions taken to remedy those problems.


Non-Assignment. This Agreement may not be assigned by either party without the prior written agreement of the other party.



Term and Termination. This Agreement shall commence on May 1, 2010 and shall continue through April 30, 2013 or until terminated by:



Mutual agreement of the parties;



Thirty (30) days days prior written notice by either party;



CLINIC, immediately and without prior notice, upon a material breach of this Agreement by CONTRACTOR. Without limiting CLINIC's right to assert any other act or failure to act as constituting a material breach by CONTRACTOR, CONTRACTOR's dispensing of a Covered Drug to an individual who is not an Eligible Patient or any other diversion of a Covered Drug shall be deemed to be a material breach. CLINIC's failure to take action with respect to CONTRACTOR's failure to comply with any term or provision of this Agreement shall not be deemed to be a waiver of CLINIC’s right to insist on future compliance with such term or provision.



CONTRACTOR, immediately and without prior notice, upon a material breach of this Agreement by CLINIC. Without limiting CONTRACTOR's right to assert any other act or failure to act as constituting a material breach by CLINIC, CLINIC’s prescribing of a Covered Drug to an individual who is not an Eligible Patient or any other diversion of a Covered Drug shall be deemed to be a material breach. CONTRACTOR’s failure to take action with respect to CLINIC's failure to comply with any term or provision of this Agreement shall not be deemed to be a waiver of CONTRACTOR’s right to insist on future compliance with such term or provision.



Either party, immediately upon written notice to the other, for material

breach of patient confidentiality requirements under HIPAA, as specified in paragraph 23.



Choice of Law. This Agreement shall be interpreted according to the laws of the State of California.



Dispute Resolution.


The parties shall each have the right to file with a court of competent

jurisdiction an application for temporary or preliminary injunctive relief, writ of attachment, writ of possession, temporary protective order, or appointment of a receiver if the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief or if there is no other adequate remedy. This application shall not waive a party's mediation and arbitration rights under this Agreement. This paragraph is subject to the venue provisions in the main Agreement to which this Exhibit is attached.



Confidentiality of Records. The parties agree to protect the confidentiality of each other’s records and business information disclosed to it to the extent permitted by law and not to use such information other than as necessary and appropriate in connection with performance of this Agreement, except as otherwise required by law.



Patient Privacy and HIPAA Compliance. The parties recognize that each may be a healthcare provider and a covered entity within the meaning of the federal Health Insurance Portability and Accountability Act (“HIPAA”), and therefore responsible for compliance with HIPAA standards for electronic transactions by not later than October 16, 2003, and for HIPAA privacy standards by not later than April 26, 2003 or April 26, 2004 (the earliest of whichever date applies to either of the parties). The Parties agree to protect and respect the rights of the patients of CLINIC and CONTRACTOR to privacy and confidentiality concerning their medical and pharmaceutical records, and to protect all individually identifiable health information as protected health information from misuse or disclosure, in compliance with all applicable state and federal law.



Without limiting the generality of the foregoing, the parties agree to use patient specific information only for permitted treatment, billing and related record-keeping purposes, and to protect patient-specific information from unnecessary disclosure to persons not employed or contracted for by the parties, and from their own employees and contractors unless they have a need to know and agree to maintain the confidentiality of patient specific information. In the event that any patient information created, maintained or transmitted in connection with this agreement is to be transmitted electronically, the Parties agree that they shall comply in all respects with the requirements of


HIPAA governing electronic transmission of individually identifiable patient information. See 42 CFR Section 160 et seq. Failure by either party to abide by these requirements shall be a basis for immediate termination of this agreement.




For all prescriptions dispensed to eligible patients, including Access and Care for Everyone (ACE) and ACE County (formerly WELL) programs, CLINIC shall pay a dispensing fee for each prescription to CONTRACTOR as described below:

Year 1 (May 1, 2010 through April 30, 2011) Ten dollars ($10)

Year 2 (May 1, 2011 through April 30, 2012) Ten dollars and fifty cents ($10.50)

Year 3 (May 1, 2012 through April 30, 2013) Eleven dollars ($11)

In addition to the dispensing fee, CLINIC shall pay CONTRACTOR twenty-five cents ($0.25) per prescription to offset some of the costs of claims adjudication and receipt of prescriptions electronically (eRx) from CLINIC.



SMMC has engaged the San Mateo County Controllers office to perform the annual compliance audits.

Upon completion of the “Agreed-Upon Procedures” the document will be inserted here.