Cardinal Health Laurel Pharm, LLC. Prime Vendor Agreement
Exhibit 10.54
ORIGINAL
CONFIDENTIAL
Cardinal Health
&
Laurel Pharm, LLC.
March 15,
2004
This Prime Vendor Agreement (the “Agreement”) is made March 15, 2004 between
Laurel Pharm, LLC. (“Buyer”) and Cardinal Health* (“Cardinal”), who hereby agree as
follows:
1. | Designation as Primary Wholesaler |
During the term of this Agreement, Buyer will designate Cardinal as the primary
wholesale pharmaceutical supplier to all pharmacies, now owned, managed or operated
by Buyer (collectively, the “Facilities” and
individually, a “Facility”). A current
list of the Facilities is attached hereto as Exhibit A. Additional facilities may be made
parties to this Agreement from time to time subject to the prior approval of Buyer and
Cardinal.
2. | Sale of Merchandise |
Buyer
will purchase from Cardinal during the term of this Agreement its Primary
Requirements of pharmaceuticals (“Rx Products”) and, may, at its option, purchase
certain other inventory carried by Cardinal (“Non-Rx Products” and, together with Rx
Products, collectively the “Merchandise”) for delivery directly to the Facilities. The
term “Primary Requirements” means that Buyer will purchase for each Facility all of
its requirements of Rx Merchandise from Cardinal. Cardinal reserves the right at all
times to determine what Merchandise it will carry based upon product quality,
manufacturer indemnity, insurance, and other policies, and other standards determined
by it, and may delete from its available inventory items of Merchandise with limited or
no movement activity.
3. | Purchase Price |
Buyer will pay a purchase price for all Merchandise purchased under this
Agreement in an amount equal to Cardinal’s Cost plus the percentage specified in the
pricing matrix attached hereto as Exhibit B (the “Pricing Matrix”). For purposes of
this Agreement: (a) the term “Cardinal’s Cost” will mean the manufacturer’s published
wholesale acquisition cost for Merchandise at the date of Cardinal’s invoice to the
Facility, adjusted to reflect any then-applicable contract pricing, but without
reduction for cash discounts; and (b) the term “Qualified Purchases” will mean all purchases
made and paid for by Buyer and/or the Facilities under the terms of this Agreement,
net of all returns, credits, rebates, late charges, or other similar items, on an annual,
quarterly, or monthly basis, as applicable. Manufacturer off-invoice quantity
discounts and promotional allowances will be made available consistent with Cardinal’s normal
and customary practices.
The purchase price for selected Merchandise, including but not limited to
multisource pharmaceuticals, private label products, medical/surgical supplies, home
health care/durable medical equipment, Merchandise acquired from vendors not offering
customary cash discount or other terms, and other slow moving, specialty, and non-
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pharmaceutical Merchandise will not be based upon the Cardinal’s Cost-plus pricing
described above but will instead be net-billed in accordance with the terms and
conditions established by Cardinal (including applicable xxxx-up) for such Merchandise.
Merchandise described in this paragraph is sometimes referred to as
“Specially Priced
Merchandise.” Buyer may, but will have no obligation to, purchase any specified
volume or percentage of its requirements for Specially Priced Merchandise (except
generics).
The pricing specified in the Pricing Matrix does not reflect administrative fees for
membership in any group purchasing organization (a
“GPO”). If any Facility
affiliates with a GPO, the appropriate administrative fee will be added to the percentages
specified in the Pricing Matrix.
All
orders must be electronically transmitted via the CardinalCHOICE®
pharmacy system or other electronic order entry system approved by Cardinal to
qualify for the pricing specified in the Pricing Matrix. Non-electronically transmitted
orders are subject to Cardinal’s Cost plus 10% pricing (excluding Schedule II and emergency
orders).
4. | Payment Terms |
(a) Generally. The payment terms initially applicable to Buyer will be jointly
determined by Cardinal and Buyer based on Buyer’s payment preferences (among the
selections offered in this section and the Pricing Matrix), the historical purchasing
and weighted average payment data for Buyer (“Matrix Slotting
Data”) and credit
considerations deemed relevant by Cardinal. Buyer will deliver to Cardinal the Matrix
Slotting Data not less than 30 days prior to its initial purchases of Merchandise under
this Agreement. Following the determination of Buyer’s initial payment terms, all payments
for the Merchandise will be due in accordance with those terms unless and until
otherwise agreed by Buyer and Cardinal. Buyer may from time to time (but not more often than
once per calendar quarter) request that its payment terms be changed to one of the
options set forth in Subsection (b) as to future Merchandise purchases, subject to Cardinal’s
prior written consent. In such event, Buyer acknowledges and agrees that Buyer’s Cost of
Goods may be adjusted by Cardinal to reflect Buyer’s new payment terms and credit
considerations deemed relevant to Cardinal.
(b) Optional Extended Payment Terms. Subject to Subsection (a), Buyer may
elect to cause Cardinal to receive payment as described below.
(i) Fifteen Days from Invoice Date. If Buyer selects this payment
option, Buyer will cause Cardinal to receive payment in full within fifteen
(15) days of the invoice date of the invoice.
(ii) Thirty Days from Invoice Date. If Buyer selects this payment option,
Buyer will cause Cardinal to receive payment in full within thirty (30) days of
the invoice date of the invoice.
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(c) Prepayment Terms. If Buyer is utilizing Prepayment Terms, in addition to
the requirements set forth under “Optional Extended Payment Terms” above, Buyer will,
at least five (5) business days prior to the effective date of this Agreement, make an
advance payment to Cardinal. The advance payment will be held by Cardinal as a deposit
(the “Deposit”), and Cardinal shall have a security interest in the Deposit to secure
payment of all of Buyer’s obligations, now existing, and arising in the future, under this
Agreement. The Deposit will be in an amount equal to the good faith estimate, as
mutually agreed by Buyer and Cardinal as described below.
(i) Thirty Day Prepayment. If Buyer selects this pre-payment
option, the Buyer agrees to a Deposit amount equaling forty-five (45) days of Buyer
purchases. Buyer further agrees to pay open Cardinal invoices within fifteen (15) days of
the invoice date.
(ii) Fifteen Day Prepayment. If Buyer selects this pre-payment
option, the Buyer agrees to a Deposit amount equaling thirty (30) days of Buyer
purchases. Buyer further agrees to pay open Cardinal invoices within fifteen (15) days of
the invoice date.
(iii) 7 Day Prepayment. If Buyer selects this payment option, the
Buyer agrees to make a Deposit amount equaling sixteen and a half (16.5) days of Buyer
purchases. Buyer further agrees to pay open Cardinal invoices by weekly statement.
At the end of each calendar quarter, beginning with the first full calendar quarter
after Cardinal receives the Deposit, Cardinal will produce a statement which compares
the Deposit with the average dollar volume of Merchandise purchased from Cardinal for
each payment cycle during that calendar quarter (“Average
Volume”). If the Average
Volume exceeds the Deposit, Cardinal will send a copy of the statement to Buyer
requesting payment of the difference. Buyer will, within 10 days of the date of such
statement, pay the difference to Cardinal and the difference will be added to the Deposit
upon receipt by Cardinal. If the Average Volume is less than the Deposit, Cardinal will
send a copy of the statement to Buyer with payment of the difference in the form of check
or credit memo as mutually determined by Buyer and Cardinal.
(d) Cost of Goods Adjustments. At the end of each calendar quarter, Cardinal
will evaluate Buyer’s payment history based on actual weighted average payment days
and average Qualified Monthly Purchases. Prospective adjustments to the then-
applicable Cost of Goods will be made as appropriate. No retroactive adjustment will be
applied with respect to purchases by Buyer, absent bad faith on the part of Buyer.
(e) Service Charges. All payments for Merchandise delivered and services
provided by Cardinal will be made to the applicable servicing division specified in
Cardinal’s invoice (or as otherwise specified by Cardinal) by electronic funds transfer or
other method acceptable to Cardinal so as to provide Cardinal with good funds by the due
date. Buyer will pay a service charge calculated at the rate of 1.5% per month (or the
maximum rate allowed by law, if such rate is less than 1.5% per month) on any amount
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not paid by Buyer to Cardinal when due under the terms of this Agreement from the
first day of delinquency until such amount is paid in full, along with reasonable attorney fees
associated with any such delinquency, unless such invoices are put in “dispute” by the
customer. To put an invoice in “dispute” means that service charges will not be assessed
on the outstanding invoice until a resolution has been reached, in a reasonable time frame.
Failure or delay by Cardinal to xxxx Buyer for any such service charge will not waive
Cardinal’s right to receive the same. Cardinal retains the right to place Buyer on C.O.D.
status, and/or refuse orders or cease its supply relationship with Buyer if Cardinal has
not received payment when due for Merchandise delivered or services provided to Buyer, or
based upon credit considerations deemed relevant by Cardinal.
(f) Submission of Financial Statements. Buyer will provide Cardinal with
financial statements and/or tax returns with all notes and schedules and such further
information as Cardinal may reasonably request from time to time.
5. | Ordering and Delivery |
Cardinal will deliver the Merchandise F.O.B. destination to the Facilities and
exercise its good faith efforts to provide an efficient delivery schedule designed to
meet the mutual needs of Cardinal and the Facilities, in accordance with Cardinal’s general
delivery schedules established from time to time by the applicable Cardinal servicing
division (exclusive of holidays, etc.). All deliveries will be accompanied by an
invoice and all delivery costs (not including emergency deliveries) absorbed by Cardinal.
Facilities having Qualified Monthly Purchases in excess of $ 25,000 will be eligible
to receive one delivery per day, six (6) days per week, except Facilities located outside
of the contiguous United States or other Facilities mutually agreed upon by the parties
from time to time. Buyer will incur a separate delivery charge, not to exceed Cardinal’s
actual cost, for additional deliveries. Delivery schedules and purchase order deadlines may
be reviewed and changed from time to time as mutually agreed upon by Cardinal and Buyer.
Cardinal will make every reasonable effort to accommodate individual order entry and
delivery requirements. It is possible, depending on the servicing Cardinal division,
that cutoff times may be later than (but not before) 7:00 p.m., and that morning deliveries
may be earlier than (but not later than) 9:30am
Buyer will submit all orders, except for orders for Schedule II drugs, for all
Merchandise to Cardinal via electronic order entry using equipment supplied by
Cardinal to Buyer or other mutually agreeable electronic means. Any such equipment supplied by
Cardinal will be returned to Cardinal by Buyer upon the expiration or termination of
this Agreement for any reason or prior to termination or expiration if Cardinal reasonably
believes its proprietary rights are threatened. In the event that electronic order
entry is temporarily interrupted for reasons beyond the control of Buyer or Cardinal, Buyer may
place orders manually and both parties will use reasonable efforts to rectify the
problem.
DEA Form 222 may be mailed to the applicable Cardinal Health center or given
to the delivery driver. Schedule II orders will be delivered within one (1) day of
Cardinal’s receipt of the signed original DEA Form 222. Buyer acknowledges that if
Buyer gives the DEA Form 222s to the delivery driver, such forms will not be received
by Cardinal until such time that the delivery driver physically
delivers the DEA Form 222
to
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the applicable Cardinal Health center. Notwithstanding the foregoing, no Schedule
II orders will be delivered other than in compliance with DEA regulations.
6. | Other Services |
Cardinal will provide comprehensive support services to Buyer and the
Facilities in accordance with Cardinal’s customary terms and practices for institutional
customers. A list of those programs, services, and reports is attached as Exhibit C to this
Agreement.
7. | Emergency Deliveries |
Cardinal will provide a twenty-four (24) hour, seven (7) day per week emergency
delivery service. The courier charge for such orders will be F.O.B. prepaid and added
to the invoice. A listing of key management personnel and emergency order procedures will
be supplied to each Facility.
8. | Contract Administration |
Cardinal will recognize and administer manufacturer contracts between Buyer and
any manufacturer (collectively, “Manufacturer Contracts”) subject to their continued
validity in accordance with applicable laws and subject to such credit considerations
concerning the applicable manufacturers as Cardinal may consider appropriate; however,
if manufacturers’ chargebacks for contract items submitted by Cardinal are disallowed,
uncollectable, or unreconcilable, then the applicable charge will be billed back to
Buyer. Cardinal reserves the right, at any time, to decline to sell or carry any
manufacturer’s merchandise, based upon credit considerations deemed relevant to Cardinal. Buyer will
notify Cardinal of all Manufacturer Contracts. In addition, Buyer or the Facilities
will provide Cardinal with a copy of all new Manufacturer Contracts entered into after the
Commencement Date and manufacturer verification of all renewals, replacements or
terminations of Manufacturer Contracts not less than forty-five (45) days prior to the
effective date of such new Contract, renewal, replacement or
termination. Failure to
comply with these notice requirements will entitle Cardinal to discontinue the service
level provisions herein until forty-five (45) days after delivery of accurate usage
data for the new items.
In order to facilitate Cardinal’s inventory management requirements, Buyer will
provide Cardinal with respect to each Facility accurate six (6) months’ usage figures
(including NDC numbers) on both contract and non-contract items in compatible
electronic (disk) format thirty (30) days prior to participation under this Agreement
by that Facility. To the extent Xxxxxxxx Xxxxxx Act exception for “own use” is applicable,
all purchases under this Agreement by Buyer will be for the Facilities’ “own use” as
that term is defined in judicial or legislative interpretation, and Buyer will comply with
applicable manufacturers’ pricing criteria and policies.
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9. | Service Level |
Cardinal will exercise all reasonable efforts to provide the Facilities with an
aggregate average monthly service level on Rx Products of at least 95% calculated quarterly
in accordance with the standards and procedures specified in Exhibit D.
10. | Returned Goods Policy |
Cardinal will accept Merchandise for return from Members in accordance with the
Standard Cardinal Returned Goods Policy (the “Cardinal Returns Policy”) in effect from time
to time during the term of this Agreement. A current copy of the Cardinal Returns Policy is
attached as Exhibit E. In addition to the terms and conditions described in the Cardinal
Returns Policy, Cardinal will be entitled to a returned goods processing fee (determined in
accordance with the Cardinal Returns Policy).
11. | Term |
The initial term of this Agreement will be for a period of three (3) years
beginning November 13, 2003 (the “Commencement Date”). Either party may effect an early
termination of this agreement upon the occurrence of a material breach by the other party.
The non-breaching party must give written notice to the breaching party of the occurrence
of such breach. The notice must describe in detail the nature of the breach. The breaching
party will have the opportunity to cure its breach to the reasonable satisfaction of the
non-breaching party during a sixty (60) day period beginning on the date the breaching
party receives the written notice (the “Cure Period”). In the alternative, if such breach
is of a nature that it cannot be cured in sixty (60) days, the breaching party must
commence and diligently prosecute in good faith the cure of such breach within the Cure
Period and cure such breach within one hundred twenty (120) days. If the breach is not
cured by the expiration of the Cure Period, or the breaching party has not begun the cure
process if it cannot be cured in sixty (60) days and does not cure the breach within one
hundred twenty (120) days, then the non-breaching party may provide written notice to the
breaching party that this Agreement will be terminated in thirty (30) days following the
expiration of the Cure Period. Notwithstanding the foregoing, with respect to payment
defaults by Buyer or similar credit considerations, Cardinal may terminate this Agreement
immediately. No termination notice from Buyer to Cardinal will be effective until such time
as Cardinal has received payment for all amounts due from Buyer. Following the initial
term, this agreement will automatically renew for successive one (1) year terms, unless one
party gives notice in writing to the other within 30 days of the then current term.
12. | Notices |
Any notice or other communication required or desired to be given to either
party under this Agreement shall be in writing and shall be deemed given when: (a) received
by the recipient, after being sent via certified mail, return receipt requested, and
addressed to that party at the address for such party set forth at the end of this
Agreement; (b) received by the recipient after being sent via Federal Express, Airborne, or
any other similar overnight delivery service for delivery to that party at that address; or
(c) received
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by facsimile transmission, as evidenced by electronic confirmation, to that
party at its facsimile number set forth at the end of this Agreement. Either party may
change its address or facsimile number for notices under this Agreement by giving the other
party notice of such change.
13. | Taxes/Compliance with Laws |
Buyer will pay when due any sales, use, excise, gross receipts, or other
federal, state, or local taxes or other assessments (other than any tax based solely on the
net income of Cardinal) and related interest and penalties in connection with or arising out
of the transactions contemplated by this Agreement. If Cardinal pays any such amounts which
Buyer is obligated to pay under this section, then Buyer will promptly reimburse Cardinal in
an amount equal to the amount so paid by Cardinal.
If and to the extent any discounts, credits, rebates or other purchase incentives are
paid or applied by Cardinal with respect to the Merchandise purchased under this Agreement,
then applicable provisions of the Medicare/Medicaid and state health care fraud and
abuse/anti-kickback laws (collectively, “fraud and abuse
laws”) may require disclosure of
the applicable price reduction on Buyer’s claim or cost reports for reimbursement from
governmental or other third parties. Buyer and Cardinal agree to comply with all applicable
provisions of the fraud and abuse laws and to indemnify and hold each other harmless for
any failure to do so.
14. | Force Majeure |
Cardinal’s obligations under this Agreement will be excused if and to the
extent that any delay or failure to perform such obligations is due to fire or other
casualty, product or material shortages, strikes or labor disputes, transportation delays,
change in business conditions (other than insignificant changes), manufacturer out-of-stock
or delivery disruptions, acts of God, seasonal supply disruptions, or other causes beyond
the reasonable control of Cardinal. During the period of any such delay or failure, Buyer
may purchase the Primary Requirements for the affected Facilities from others, but will
recommence purchasing from Cardinal upon cessation of such delay or failure.
15. | Records and Audit |
Cardinal will maintain records pertaining to the pharmaceutical products
purchased by Buyer under this Agreement as required by applicable FDA requirements. Not
more than once in any twelve (12) month period, and following sixty (60) days’ advance
written notice to Cardinal, Buyer will have the right to appoint one (1) or more of its
employees to review those relevant records applicable to its pharmaceutical purchases for
the sole purpose of verifying compliance with the pricing terms of this Agreement. Any such
review will be limited to twelve (12) months of historical information as of the date such
review begins and will be subject to a confidentiality agreement prepared by Cardinal and
signed by the Buyer and its employee(s) who will have access to the information prior to
beginning the review.
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16. | Return of Hardware/Software |
Upon termination of this Agreement for any reason, Buyer’s rights as a licensee of the
CardinalCHOICE®, CardinalCHOICE®-HQ or other Cardinal software will automatically expire,
and Buyer will promptly return such software and any related hardware not purchased by Buyer
to a return location specified by Cardinal.
17. | Entire Agreement; Successors |
This Agreement and its exhibits constitutes the entire agreement and understanding of
the parties with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, proposals, bids/bid responses, and understandings between the
parties relative to the subject matter of this Agreement. This Agreement will be governed
by Ohio law. Neither Cardinal nor Buyer may assign its obligations under this Agreement
without the written consent of the other; provided, however, that Cardinal may delegate its
rights and obligations to any entity that is controlled by or under common control with
Cardinal Health, Inc. This Agreement will be binding on, inure to the benefit of, and be
enforceable by and against the respective successors and assigns of each party to this
Agreement.
18. | Amendments |
No changes to this Agreement will be made or be binding on any party unless made in
writing and signed by each party to this Agreement.
19. | Waiver |
The failure of either party to enforce any provision of this Agreement will not be
considered a waiver of any future right to enforce such provision.
20. | Announcements |
Both Buyer and Cardinal Health will not issue any press release or other public
announcement, verbally or in writing, referring to Cardinal or buyer any entity which is
controlled by or under common control with Cardinal Health, Inc., or Buyer’s control
without Buyer or Cardinal’s prior written consent and advice of counsel. Buyer will provide
Cardinal’s Senior Vice-President, Health Systems Sales and Marketing, 0000 Xxxxxxxx Xxxxx,
Xxxxxx, Xxxx 00000, with a written copy of any such press release or other public
announcement no less than seventy-two (72) hours prior to Buyer’s intent to issue such
release or announcement. Buyer is responsible for confirming in writing that Cardinal’s
Senior Vice-President, Retail Sales and Marketing has received any such proposed press
release. Any such press release or other public announcement proposed by Buyer will be
subject to Cardinal’s revision and final approval. Nothing contained herein will limit the
right of Cardinal to issue a press release if, in the opinion of Cardinal’s counsel, such
press release is required pursuant to state or federal securities laws, rules or
regulations.
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21. | Arbitration |
Any dispute, controversy or claim arising out of this Agreement shall be settled by
mandatory binding arbitration in accordance with this Section. Any arbitration under this
Section shall be conducted in accordance with the American Health Lawyers Association
Alternative Dispute Resolution Service Rules of Procedure for Arbitration, and judgment upon the
award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The
place of arbitration shall be Orlando, Florida. The arbitrators shall decide legal issues
pertaining to the dispute, controversy or claim pursuant to the laws of the State of Florida.
Subject to the control of the arbitrators, or as the parties may otherwise mutually agree, the
parties shall have the right to conduct reasonable discovery pursuant to the Federal Rules of
Civil Procedure. The arbitrators shall not have the authority to award punitive damages, but
shall have authority to award equitable relief. THE PARTIES UNDERSTAND THAT THEY ARE KNOWINGLY
AND WILLINGLY EXPRESSLY WAIVING A RIGHT TO JURY TRIAL CONCERNING ANY MATTERS RELATING TO THIS
AGREEMENT.
Laurel Pharm, LLC. | Cardinal Health* | |||||
000 Xxxxxxxxx Xxxxxxx South | 0000 Xxxxxxxx Xxxxx | |||||
Xxxxx 000 | Xxxxxx, Xxxx 00000 | |||||
Xxxxxxxx, XX 00000 | Telecopy: (000) 000-0000 | |||||
By:
|
/s/ Xxxx Xxxxx | By: | /s/ Xxxx Xxxxxx | |||
Title Vice President of Purchasing | Title Director of Sales | |||||
Date March 15, 2004 | Date March 15, 2004 |
*
The term
“Cardinal Health” will include the following affiliated operating companies:
Cardinal Syracuse, Inc., a New York corporation (Syracuse, New York); Xxxxxxxx Drug Distributors,
Inc., a Delaware corporation (Zanesville, Ohio); Marmac Distributors, Inc., a Connecticut
corporation (Hartford, Connecticut); Xxxxx X. Xxxx, Inc., a Massachusetts corporation (Peabody,
Massachusetts); National PharmPak Services, Inc., an Ohio corporation
(Zanesville, Ohio); Ohio
Valley-Clarksburg, Inc., a Delaware corporation (Wheeling, West Virginia); Cardinal Southeast,
inc. a Mississippi corporation (Madison, Mississippi); Xxxxxxxx Distribution Corporation, a
Delaware corporation (Folsom, California); Cardinal Health Systems, Inc., an Ohio corporation; and
any other subsidiary of Cardinal Health, Inc., an Ohio corporation
(“CHI”), as may be designated
by CHI.
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EXHIBIT A
Facilities
Laurel Pharm, LLC. d/b/a CoastalMed, Coastal Med of Palmetto
000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Laurel Pharm, LLC d/b/a CoastalMed, Coastal Med of Panama City
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
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EXHIBIT B
Pricing
This Pricing offered is based on the assumption that Buyer will purchase a minimum of
$50,000 per month from Cardinal. If monthly volumes fall below these minimum purchase
commitments for three (3) consecutive months, the Pricing may be subject to change.
Laurel Pharm, Inc.
30 Day | 15 Day | 7 Day | 7 Day | 15 Day | 30 Day | |||||||||||||||||||
Prepay | Prepay | Prepay | Pay(*) | Pay(*) | Pay(*) | |||||||||||||||||||
Qualified Monthly Purchases | (-30 DSO) | (-15 DSO) | (-4 DSO) | (7 DSO) | (15 DSO) | (30 DSO) | ||||||||||||||||||
Less than $750,000 | Renegotiate |
|||||||||||||||||||||||
$750,000 - $999,999 |
-3.00 | -2.75 | -2.55 | -2.35 | -2.05 | -1.40 | ||||||||||||||||||
$1,000,000 - $1,499,999 |
-3.05 | -2.80 | -2.60 | -2.40 | -2,10 | -1.45 | ||||||||||||||||||
$1,500,000 - $1,999,999 |
-3.10 | -2.85 | -2.65 | -2.45 | -2.15 | -1.50 | ||||||||||||||||||
$2,000,000 - $2,499,999 |
-3.15 | -2.90 | -2.70 | -2.55 | -2.20 | -1.55 | ||||||||||||||||||
$2,500,000 - $2,999,999 |
-3.25 | -0,00 | -0.00 | -0.00 | -0.00 | -0.00 | ||||||||||||||||||
$3,000,000 - $3,999,999 |
-3.35 | -3.10 | -2.90 | -2.75 | -2.30 | -1.65 | ||||||||||||||||||
$4,000,000 - $ABOVE |
-3.45 | -3.20 | -3.00 | -2.85 | -2.35 | -1.70 |
* | Extended Payment Terms: Subject to approval by Cardinal’s Financial Services Department. |
If Qualified Monthly Purchases average less than $ 500 thousand for
three (3) consecutive months, the Supply Pricing Matrix may be
subject to change.
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EXHIBIT C
Other
Services
Programs and Services
Ø | Xxxxxxxx.xxx | ||
Ø | Hand Held PDT Ordering Units | ||
Ø | Shelf Labels | ||
Ø | Price Stickers |
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EXHIBIT D
Service Level Definition
For purposes of this Agreement, the service level percentage will be calculated by
dividing total lines of Rx Products shipped by the number of lines of Rx Products ordered.
The following items will be excluded from the service level calculation:
1. | Manufacturer back orders/temporary outs; | ||
2. | Non-stock and/or discontinued items due to non-movement or discontinuation by manufacturer; | ||
3. | Rx Products shipped within two (2) working days of initial order (including those filled by an affiliate of Cardinal), which will instead be counted as a line filled; | ||
4. | Items where a Facility has failed to provide accurate usage figures; | ||
5. | Items where a Facility’s historical demand is exceeded by 125% over the preceding two (2) months; and | ||
6. | Same item ordered more than once within three (3) days. |
The service level guaranty in this Agreement for Buyer will commence ninety (90) days
following the later of the Commencement Date or Cardinal’s receipt of accurate usage data.
The service level guaranty for Facilities added to this Agreement after the Commencement Date
will commence sixty (60) days following receipt by Cardinal of accurate usage data. This will
allow Cardinal to gain usage information and adjust inventory levels appropriately.
Upon Buyer’s request, if Cardinal does not meet its service level for any quarter, Cardinal
and Buyer will jointly develop a service level action plan for the following quarter. During
the implementation of the service level action plan, Buyer may not terminate this Agreement for
cause.
Buyer will notify Cardinal at least forty-five (45) days prior to the expiration of any
manufacturer’s contract which is being replaced with a different contract, and will cooperate
with and assist Cardinal in disposing of any excess inventory of Merchandise previously stocked at
Buyer’s or a Facility’s request. Failure to comply with these notice requirements will entitle
Cardinal to discontinue the service level guaranty to the Facilities until ninety (90) days
after delivery of accurate usage data for the new items.
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EXHIBIT E
Cardinal Health Returned Goods Policy
(Hospitals, Charitable Institutions, and Other Health Care Entities)
(Hospitals, Charitable Institutions, and Other Health Care Entities)
General Policy
Product in “merchantable condition” (as defined below) may generally be returned to the Cardinal
Health company from which the product was originally purchased if the return is made within the time frames and subject to
the terms and conditions
described below:
Return Made Within | Normal Credit Amount | |||
1-10 Business Days | 100% of original invoice amount paid by customer (i.e., the customer’s contract or other “cost” plus the applicable xxxx-up). This policy covers all ordering/filling errors if identified and returned within 10 business days. | |||
10 Business Days -45 Calendar Days | 100% of original contract or other “cost” paid by customer (i.e., not including any applicable xxxx-up and not to exceed actual amount paid). | |||
45-180 Calendar Days | 75% of original contract or other “cost” paid by customer | |||
(i.e., not including any applicable xxxx-up and not to exceed actual amount paid). | ||||
More than 180 Calendar Days | Will not be accepted for return (since contract pricing files are not generally maintained beyond 6 months, verification of original pricing, as mandated by FDA guidelines, cannot be assured). |
“Merchantable condition” will be determined by Cardinal Health based upon its ability to return
the item to its inventory for
resale in the normal course of its business without special preparation, testing, handling, or
expense and will exclude the following:
A.
|
Any item which has been used or opened, is a partial dispensing unit or unit of sale, is without all original packaging, labeling, inserts, or operating manuals, or that is stickered, marked, damaged, defaced, or otherwise cannot readily be resold by Cardinal for any reason. | |
B.
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Short-dated (less than 7 months expiration dating), outdated, or seasonal product and items purchased on a “special order” basis, including non-stock and drop ship items. | |
C.
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Any sterile or refrigerated merchandise, unless Cardinal is specially assured that such
merchandise was properly stored
and protected at all times and such merchandise is returned separately in a package marked
as such and accompanied by a separate credit request form. |
|
D.
|
Any low stability product, including Epogen™, Eminase™, or other products which are usually sensitive to temperature and handling conditions. | |
E.
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Any product not intended for return to a wholesaler in accordance with the return policies of the applicable manufacturer. |
Unmerchantable Product
Any item not eligible for return in accordance with Cardinal’s General Policy (above) will not be
accepted for return without
special written authorization and will generally require return directly to the manufacturer. If
Cardinal does participate in the
return process for any product not in “merchantable condition”, any return credit to the customer
will be based upon the actual
credit issued by the manufacturer and will be subject to a minimum 25% handling charge.
Controlled Substances
Credit for the return of controlled substances requires a separate Merchandise Return
Authorization Form (the “MRA Form”)
and must comply with all federal and state procedures and requirements in addition to the terms
and conditions described herein.
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Shorts and Damaged Merchandise
Claims of order shortages (e.g., invoiced but not received) and damage must generally be reported
within five business days from
the applicable invoice date. Controlled substance shortage claims must be reported immediately per
DEA requirements, Pricing
and other errors/mistakes must be reported within 10 business days from the invoice date.
Notice to Manufacturer
Upon approval of the return by Cardinal Health, the customer will be responsible to: (a) promptly
forward a copy of the credit
memo and MRA Form to the applicable manufacturer; (b) retain a copy of the credit memo and MRA
Form; and (c) make such
copies available to the manufacturer and to the authorized federal, state, and local law
enforcement officers upon request, all as
required pursuant to FDA guidelines.
Ongoing Assurance and Cardinal Credit Request Form
Prior to returning any product to Cardinal, each customer must execute and deliver to Cardinal an
Ongoing Assurance verifying
that all returned merchandise has been kept under proper conditions for storage, handling, and
shipping. All requests for credit
must be submitted via EOE, on the CardinalCHOICE® system or by
approved EDI interface. A fully
completed MRA Form
must accompany all merchandise to be returned. A fully completed form includes, but is not limited
to, the following
information: the invoice number & invoice date for the merchandise to be returned.
Other Restrictions
This policy is subject to change with sixty (60) days written notice by Cardinal Health. Subject
to the foregoing notice
requirements, this policy is further subject to modification as may be deemed
necessary or appropriate by Cardinal Health to comply with applicable federal and/or state
regulations, FDA guidelines, state
law, and other restrictions applicable to returned merchandise.
16 | Laurel Pharm, LLC. |
Cardinal Health Returned Goods Authorization
Ongoing Assurance
Ongoing Assurance
The
undersigned customer (“Laurel Pharm, Inc.”) of one or more of the Cardinal Health
companies identified below
(“Wholesaler,” whether one or more) hereby agrees that this document is being delivered to confirm
Customer’s compliance
with applicable federal, state, and local laws / guidelines concerning returned goods and shall
apply to all returns by Customer to
Wholesaler from time to time and shall supersede any inconsistent provisions which may be
contained in any credit request,
purchase order, or other documents pertaining to the supply relationship between Customer and
Wholesaler.
1. Customer represents, warrants, and guarantees to Wholesaler that: (a) each such return shall be
made only to the
specific Wholesaler from which the item was originally purchased; (b) each such return shall be
accompanied by Wholesaler’s
credit request form (the “Return Form”), which shall specify both Customer’s and Wholesaler’s name
and address, the date of
the return, the quantity and description of the product returned, and such other information as may
reasonably be requested on
Wholesaler’s Return Form; (c) Customer shall retain a copy of each Return Form and related credit
memo and make such
documentation available to the manufacturer and to authorized federal, state, and local law
enforcement officers upon request; (d)
the credit claimed or accepted by Customer for any such return shall not exceed the original
purchase price paid to Wholesaler,
and (e) all merchandise returned to Wholesaler has been stored and handled by Customer in
accordance with all applicable
federal, state, and local laws, manufacturer guidelines when disclosed to customer by the
manufacturer or wholesaler, and good
trade practices, and such merchandise has not been adulterated or misbranded by customer within the
meaning of the Federal
Food, Drug, and Cosmetic Act and meets all FDA, state, and other applicable requirements and
guidelines.
2. Customer shall indemnify and defend Wholesaler against and from any expense, claim, liability,
or penalty (including reasonable legal fees) arising from any failure of Customer to properly comply with the
provisions specified in this document.
3. Wholesaler shall indemnify and defend Customer against and from any expense, claim, liability,
or penalty (including reasonable legal fees) arising from any failure of Wholesaler to properly comply with the
provisions specified in this document.
4. *The term “Cardinal Health” shall include the following affiliated operating companies:
Cardinal Syracuse, Inc., a New York corporation (Syracuse, New York); Xxxxxxxx Drug Distributors, Inc., a Delaware corporation
(Zanesville, Ohio); Marmac Distributors, Inc., a Connecticut corporation (Hartford, Connecticut); Xxxxx X. Xxxx, Inc.,
a Massachusetts corporation (Peabody, Massachusetts); National PharmPak Services, Inc., an Ohio corporation (Zanesville, Ohio);
Ohio Valley-Clarksburg, Inc., a Delaware corporation (Wheeling, West Virginia); Cardinal Southeast, Inc. a Mississippi
corporation (Madison, Mississippi); Xxxxxxxx Distribution Corporation, a Delaware corporation (Folsom, California);
Cardinal Health Systems, Inc., an Ohio corporation; and any other subsidiary of Cardinal Health, Inc., an Ohio corporation (“CHI”),
as may be designated by CHI.
/s/ Xxxx Xxxxx | ||
Customer’s Name (Print) | ||
Dated: March 15, 2004
|
/s/ Xxxx Xxxxx/ Vice President of Purchasing | |
By Authorized Signature/Title |
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