EXHIBIT 10.1
FIRST AMENDMENT
TO
AMENDED AND RESTATED
MANAGED PRESCRIPTION DRUG PROGRAM AGREEMENT
AND
CONSENT TO ASSIGNMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED MANAGED PRESCRIPTION DRUG
PROGRAM AGREEMENT AND CONSENT TO ASSIGNMENT (this "Amendment") is made and
entered into as of January 1, 1997, by and among EXPRESS SCRIPTS, INC., a
Delaware corporation ("ESI"), NEW YORK LIFE INSURANCE COMPANY, a mutual
insurance company organized under the laws of the State of New York ("NYL"), and
NYLCARE HEALTH PLANS, INC., a Delaware corporation ("NYLCare").
RECITALS
1. ESI and NYL are parties to that certain Amended and Restated Managed
Prescription Drug Program Agreement dated as of September 1, 1995 (as amended
from time to time, the "Agreement"; capitalized terms used herein and not
otherwise defined shall have the meaning given them in the Agreement), pursuant
to which ESI provides, among other things, certain pharmacy benefit management
services to NYL and its Clients.
2. NYL and NYLCare have requested ESI's consent to an assignment by NYL of
all its right, title and interest in and to the Agreement to NYLCare, said
assignment to be effective as of January 1, 1996, which consent ESI is willing
to grant on the terms and conditions stated herein.
3. ESI and NYLCare further desire to amend certain of the terms and
provisions of the Agreement and to implement ESI's ExpressPreferenceSM drug
therapy management program, all as more particularly set-forth herein.
AGREEMENT
1. DEFINITIONS.
"ExpressPreferenceSM Product List" means a list consisting of pairs of
prescription drugs such that each pair of drugs shall include a preferred drug
and a corresponding non-preferred drug. The ExpressPreferenceSM Product List
shall be developed by ESI in consultation with the ESI/NYLCare Pharmacy and
Therapeutics Committee, and is subject to change from time to time based on
changes in drug prices, new product introductions, new generic competition,
changes in approved indications for existing drugs, and other relevant factors.
"Non-Preferred Drug" means the prescription drug in a pair of prescription
drugs listed on the ExpressPreferenceSM Product List that is designated as
"non-preferred." Under the ExpressPreferenceSM program, the prescribing and/or
dispensing of the Non-Preferred Drug is discouraged in favor of the
corresponding Preferred Drug.
"Preferred Drug" means the prescription drug in a pair of prescription
drugs listed on the ExpressPreferenceSM Product List, which is designated as
"preferred." Under the ExpressPreferenceSM program, the prescribing and/or
dispensing of the Preferred Drug is encouraged in lieu of the corresponding
Non-Preferred Drug.
"Retrospective Discounts" mean the retrospective discounts or rebates
collected from drug manufacturers that are attributable to Covered Drug
utilization by Members of Clients that have elected to participate in the
ExpressPreferenceSM drug therapy management program.
2. ASSIGNMENT TO NYLCARE; CONSENT TO ASSIGNMENT; APPLICABILITY OF AGREEMENTS.
(a) NYL hereby assigns all its right, title and interest in and to the
Agreement to NYLCare, effective as of January 1, 1996, and NYLCare hereby
assumes and agrees to perform all of NYL's obligations thereunder and be bound
by the terms and provisions thereof from and after said date. ESI hereby
consents to the assignment of the Agreement by NYL to NYLCare. From and after
said January 1, 1996, the defined term "Sponsor" in the Agreement shall be
deemed to refer to NYLCare.
(b) ESI and NYLCare acknowledge that they are parties to that certain
Amended and Restated Agreement dated as of March 29, 1995, pursuant to which
various individual Managed Prescription Drug Program Agreements between ESI and
certain health plans owned or operated by NYLCare have been and may in the
future be executed (each a "Site Agreement" and collectively the "Site
Agreements"). In connection with the assignment referred to in subsection (a)
above, ESI and NYLCare desire to clarify the circumstances under which the
pricing and other terms set forth in the Agreement and the Individual Site
Agreements shall apply.
(i) The Agreement shall apply to and govern pharmaceutical
benefit management services provided by ESI for:
(A) policies issued by NYL or New York Life and
Health Insurance Company ("NYLHIC") (i.e.,
indemnity insurance and minimum premium
business);
(B) "point-of-service" policies issued by NYL or NYLHIC;
(C) indemnity/preferred provider organization
benefits under a multi-option plan under
which benefits are chosen by a member at the
time of enrollment in the plan; and
(D) administrative services only (ASO) business
for which the underlying plan or benefit
design is most similar to that described in
subpart (A), (B) or (C) of this Section
2(b)(i).
(ii) The Individual Site Agreements shall apply to:
(A) prepaid, managed care policies or agreements (i.e.,
managed care business conducted by the various NYLCare
sites);
(B) "point-of-service" plans in which both
in-network and out-of-network benefits are
offered under policies or agreements issued
by a NYLCare managed care site;
(C) dual contract "point-of-service" plans where
in-network benefits are offered under
policies or agreements issued by a NYLCare
site and out-of-network benefits available
under a NYL or NYLHIC policy;
(D) managed care benefits under a multi-option plan in which
benefits are chosen by a member at the time of
enrollment in the plan; and
(E) administrative services only (ASO) business
for which the underlying plan or benefit
design is most similar to that described in
subpart (A), (B), (C) or (D) of this Section
2(b)(ii).
It is the intention of the parties hereto that so far as practicable
the pricing under the Agreement and under the Site Agreements shall
continue to apply to those lines of business conducted by NYL and
NYLCare prior to the assignment of the Agreement to NYLCare.
3. FEES AND CHARGES.
Effective as of January 1, 1997, the following terms and provisions of the
Agreement, relating to fees and charges, shall be amended as follows:
(a) Subsection (a) of Section 4.1 of the Agreement is amended to read in
its entirety as follows:
"(a) The fees and charges for the Prescription Drug
Programs provided hereunder shall consist of the Covered Drug
charges and fees specified in EXHIBIT A of this Agreement,
subject to adjustment in the overall dispensing fee for
prescriptions dispensed by Participating Pharmacies, as set
forth in EXHIBIT A, effective as of the date set forth, and
the applicable ExpressPreferenceSM drug therapy management
program fees and charges set forth in Section 4 of the First
Amendment to Amended and Restated Managed Prescription Drug
Program Agreement and Consent to Assignment by and between
ESI, Sponsor and NYLCare Health Plans, Inc., dated as of
January 1, 1997. ESI will give Sponsor at least sixty (60)
days prior written notice of a proposed change in the
dispensing fee. Should Sponsor not object to the revised fees,
such revised fees will take effect as of the date set forth in
the notice."
(b) EXHIBIT A to the Agreement, relating to Prescription Drug
Program fees, is hereby deleted in its entirety and replaced by EXHIBIT
A attached hereto and made a part hereof.
(c) ESI and NYLCare each hereby waive their respective right set-forth in
Section 4.1(b) of the Agreement to request a revision to ESI's fees and charges
(other than the Participating Pharmacy dispensing fee) prior to January 1, 1999.
4. EXPRESSPREFERENCESM DRUG THERAPY MANAGEMENT PROGRAM.
(a) ESI shall make its Incentive Formulary and Physician Preference
versions of its ExpressPreferenceSM drug therapy management program available to
NYLCare and its Clients with respect to the Prescription Drug Program. For those
Clients who elect to participate in the ExpressPreferenceSM drug therapy
management program, NYLCare authorizes ESI and Participating Pharmacies to
contact Members, Members' physicians and/or Participating Pharmacies to promote
therapeutic and generic substitution opportunities to reduce drug costs. The
forms to be used for written communication from ESI to Members or their
physicians shall be subject to the prior approval of NYLCare, which approval
shall not be unreasonably withheld. NYLCare will reimburse ESI for the cost of
making any material modifications to any standard ESI Member or physician
communications. ESI will not distribute coupons to encourage ExpressPreferenceSM
product switches in the Mail Service Pharmacy to Members without the consent of
NYLCare. Except with respect to generic substitutions that may legally be made
without contacting the prescriber, the prescriber shall have final authority
over the drug that is dispensed to the Member. In addition, if the Member
attempts to refill a prescription at a Participating Pharmacy after the
prescribing physician has approved the substitution but before the Participating
Pharmacy has received the new prescription, ESI may authorize an interim
prescription for up to a four-day supply of the originally prescribed drug and
may waive the Member's Copayment for this interim supply.
(b) The Incentive Formulary and Physician Preference versions of the
ExpressPreferenceSM program are designed to identify and promote opportunities
to select Preferred Drugs over Non-Preferred Drugs from the ExpressPreferenceSM
Product List. ESI will make reasonable efforts to promote these programs to
Participating Pharmacies. [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
(i) The Incentive Formulary program involves only communication from ESI to
the Participating Pharmacy during the on-line claim adjudication process in
which the substitution opportunity is identified. The Participating Pharmacy
then decides whether to promote the substitution opportunity to the Member and
the Member's physician. ESI does not contact the Member or the Member's
physician in this program. Effective January 1, 1998, the Incentive Formulary
version of the ExpressPreferenceSM drug therapy management program shall no
longer qualify NYLCare for rebates with respect to Covered Drug utilization by
Members of Clients enrolled therein, as described in Section 5 hereof.
(ii) The Physician Preference program involves the proactive education of
Members and their physicians about substitution opportunities. ESI shall
identify the substitution opportunity to the Participating Pharmacy during the
on-line claim adjudication process. If the substitution is not made by the
Participating Pharmacy at the time of the initial fill ESI will attempt to
contact the prescriber to explain and promote the substitution opportunity. If
the prescriber's consent is obtained, ESI will communicate the change and
rationale to the Member, and "hard block" the next fill for the Non-Preferred
Drug. The hard block can be overridden by ESI if the new prescription for the
Preferred Drug is not received by the Participating Pharmacy by the time the
Participating Pharmacy is required to refill the original prescription. If the
initial attempt to contact the prescriber is unsuccessful, the prescription will
be filled as written, and ESI will attempt to effect the substitution on the
next refill. If the prescriber cannot be contacted on the next refill, or if the
prescriber is contacted and refuses consent to the substitution, ESI will not
make further attempts to effect the substitution. In order to attempt to effect
a substitution ESI must receive a valid DEA number that ties to a valid
physician name and address. Once the Preferred Drug is dispensed to the Member,
the "hard block" is removed from ESI's system.
(c) The following fees and charges shall apply to Clients participating in
the ExpressPreferenceSM drug therapy management program:
(i) For both the Incentive Formulary and Physician Preference versions of
the ExpressPreferenceSM drug therapy management program, NYLCare shall pay ESI a
fee of $[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*] This fee shall be paid to ESI by offset against any
Retrospective Discounts owing to NYLCare hereunder.
(ii) For the Physician Preference version of the ExpressPreferenceSM drug
therapy management program, NYLCare shall pay ESI an additional management fee
of $[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*]
ESI's invoices to NYLCare shall reflect the administrative fees associated
with successful interventions resulting from ESI's ExpressPreferenceSM Program.
Such fees shall not be reflected as an administrative fee nor as a portion of
ingredient cost. NYLCare shall have the right, upon reasonable advance notice,
to inspect during regular working hours, ESI's records supporting the
calculation of the above-referenced fees and savings. ESI shall be responsible
for all costs associated with printing the ExpressPreferenceSM Product List for
calendar year 1998 and thereafter.
(d) NYLCare may terminate its participation in the ExpressPreferenceSM
program by giving not less than 30 days' prior written notice to ESI. ESI shall
not contact Members, Members' physicians or Participating Pharmacies to
encourage them to take advantage of new substitution opportunities after receipt
of such termination notice, but shall provide follow-up assistance concerning
substitution opportunities for which communication was begun prior to receipt of
such notice. ESI shall be entitled to receive the management fee described in
Section 4(c)(ii) above with respect to any substitutions effected prior to
termination.
(e) Within thirty (30) days of the end of each calendar month, ESI shall
provide NYLCare with its standard ExpressPreferenceSM program tracking reports.
5. RETROSPECTIVE DISCOUNTS.
(a) NYLCare hereby appoints ESI as its exclusive drug formulary manager for
those business lines identified in Section 2(b)(i) above for the remaining term
of the Agreement. NYLCare acknowledges and agrees that ESI shall have the sole
and exclusive right to develop and implement a program of retrospective
discounts/rebates from drug manufacturers. The scope of ESI's services in this
capacity shall include but not be limited to the following activities:
(i) Requesting and evaluating Retrospective Discount proposals from drug
manufacturers;
(ii) Negotiating Retrospective Discount rates and terms; and (iii) Billing
for and collecting Retrospective Discounts from drug manufacturers and remitting
certain proceeds thereof to NYLCare in accordance with the terms of Section 5(b)
below.
The ESI/NYLCare Pharmacy and Therapeutics Committee shall meet regularly to
determine the status of drugs on the formularies and the ExpressPreferenceSM
Product List applicable to the Prescription Drug Program, consistent with ESI's
contractual relationships with the various manufacturers.
(b) ESI shall remit certain proceeds of the Retrospective Discounts
collected with respect to Covered Drug utilization under the Agreement as
follows:
(i) [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*]
(ii) [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*]
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*]
(c) Within sixty (60) days of the end of each calendar quarter (or earlier
upon NYLCare's reasonable request), ESI shall use its best efforts to provide
NYLCare with an estimate of the Retrospective Discounts for such quarter, net of
any offset for fees paid to Participating Pharmacies in connection with the
ExpressPreferenceSM program.
(d) NYLCare acknowledges that state and/or federal governments may make the
payment and collection of Retrospective Discounts by drug manufacturers illegal.
In that event, ESI shall not be responsible for the payment of any amount of any
Retrospective Discounts to NYLCare, and the provisions of Section 5(b) hereof
shall be void. Additionally, pharmaceutical manufacturers may discontinue or
reduce Retrospective Discount programs at will, or applicable laws regarding
Retrospective Discounts may change. In the event of a material adverse change in
any Retrospective Discount program by a pharmaceutical manufacturer (e.g.,
manufacturer discontinues Retrospective Discount program or reduces payments
thereunder), the Retrospective Discount payments payable to NYLCare under
Section 5(b) hereof shall be modified proportionately.
(e) If it should be declared unlawful by the applicable state and/or
federal government for ESI to negotiate, ▇▇▇▇ and/or collect any Retrospective
Discounts from any drug manufacturers on behalf of NYLCare, but it is not
declared unlawful for NYLCare to negotiate, ▇▇▇▇ and/or collect such
Retrospective Discounts on its own behalf, then NYLCare may negotiate, ▇▇▇▇ and
collect such Retrospective Discounts. In such event, the parties shall
negotiate, in good faith, an amendment to the Agreement to compensate ESI for
services it provides in processing claim data to enable NYLCare to collect such
Retrospective Discounts.
6. EFFECT OF AMENDMENT. Except as specifically provided herein, the terms
and provisions of the Agreement shall remain in full force and effect. In the
event of a conflict between the Agreement and this Amendment, the terms and
provisions of this Amendment shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
EXPRESS SCRIPTS, INC.
By:/S/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President and Chief
Executive Officer
NYLCARE HEALTH PLANS, INC.
By:/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and CEO
NEW YORK LIFE INSURANCE COMPANY
By:/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT A
EXPRESS SCRIPTS PRESCRIPTION DRUG PROGRAM FEES
1. Prescription Drugs filled at ESI Participating Pharmacies in ESI's PERxSM
and PERxSelectSM Networks:
A. INGREDIENT COST AND DISPENSING FEE
(1) [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*], plus applicable sales or
excise tax or other governmental surcharge, if any.
(2) [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT*]
B. CLAIMS ADMINISTRATION FEE
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
C. ADDITIONAL NETWORK
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
2. Prescription Drugs filled at ESI's Mail Service Pharmacy:
A. INGREDIENT COST
Brand Drugs: [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM
THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT*],
plus applicable sales or excise tax or other
governmental surcharge, if any.
Generic Drugs: [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM
THIS DOCUMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT*], plus
in either case applicable sales or excise tax
or other governmental surcharge, if any.
B. DISPENSING FEE
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
C. CLAIMS ADMINISTRATION FEE
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]
D. ADDITIONAL DEFINITIONS
"Average Wholesale Price" or "AWP" means the average wholesale
price of a prescription drug as determined by ESI from the
most current information provided to ESI by First DataBank
drug pricing service. The applicable AWP for prescriptions
filled in the Mail Service Pharmacy will be the AWP for the
most commonly dispensed size for such drug. If such pricing
service ceases to be reasonably commercially available, AWP
shall be determined from an alternative source generally
recognized in the retail prescription drug industry selected
by ESI.
"Maximum Reimbursement Amount" or "MRA" means the maximum
allowable price for a generic drug established by ESI using a
variety of factors, including but not limited to the First
DataBank drug pricing service's published baseline price and
the "maximum allowable cost" determined by the U.S. Health
Care Financing Administration. ESI periodically updates the
MRA to reflect changes in drug prices, in its sole discretion.
"Usual and Customary Retail Price" means the usual and
customary retail price to the general public at the pharmacy
dispensing the Covered Drug on the date such Covered Drug is
dispensed.
3. Member-Submitted Claims
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]
4. Implementation Fees:
[*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*] for implementation of the Prescription Drug Program if
Sponsor provides Express Scripts with Member eligibility on electronic medium in
ESI's format. If ESI must create a Member eligibility file by manually entering
employee data, there will be a [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*] implementation fee.
5. Identification Cards:
ESI will provide [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT*]. Additional Identification Cards will be
provided for [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM THIS DOCUMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT*]
6. Materials Distribution Fee:
On initial implementation and renewals [*CONFIDENTIAL TERMS HAVE BEEN
OMITTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*]. If Sponsor
requests that such materials be mailed to the individual Members, Sponsor will
pay ESI a distribution charge of [*CONFIDENTIAL TERMS HAVE BEEN OMITTED FROM
THIS DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT*].
