Exhibit 10.5(b)
EXECUTION COPY
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
MANAGED CARE AGREEMENT
Amendment No. 1, dated as of July 23, 2003 ("Amendment No. 1") to the
Amended and Restated Managed Care Agreement between Merck & Co., Inc., a New
Jersey corporation ("Merck"), and Medco Health Solutions, Inc., a Delaware
corporation ("Medco"), dated as of May 28, 2003 (the "Agreement"). Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Agreement. All section references used herein are to the Agreement.
WHEREAS, Medco, an independently managed wholly-owned subsidiary of Merck,
is in the business of providing PBM Services to corporations, health maintenance
organizations, unions, insurance carriers, government employee plans and others;
WHEREAS, Merck is a pharmaceutical company engaged in the discovery,
development, manufacturing and marketing of pharmaceutical products;
WHEREAS, the parties desire to amend the Agreement to clarify the terms
upon which Medco would be entitled to receive market share rebates from Merck
for the utilization, from and after the Effective Date, of Merck Products by
Medco Plans; and
WHEREAS, this Amendment No. 1 shall be deemed to be effective as of the
Effective Date.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:
1. The definition of "Target MAS Premium Percentage" as set forth in
Annex B of the Agreement is hereby amended to read in its entirety as follows:
"Target MAS Premium Percentage" shall be, with respect to the Calendar
Quarter ended December 31, 2001, the sum of all of the Weighted Medco
Market Share Premium Percentages for the Calendar Quarter ended December
31, 2001, excluding from such calculation Prinivil(R)/Prinzide(R) and the
Therapeutic Category that includes Prinivil(R)/Prinzide(R), and utilizing a
Weighted Medco Market Share Premium Percentage for Zocor(R) that is
calculated assuming a Medco Market Share for Zocor(R) for the Calendar
Quarter ended December 31, 2001 that is equal to the actual Medco Market
Share for Zocor(R) for the Calendar Quarter ended December 31, 2001 less
the Zocor(R) Permitted Percentage Point Reduction set forth on Schedule 4
to this Annex B. Medco shall deliver to Merck
within 30 days from the Effective Date the Quarterly Data with respect to
the Calendar Quarter ended December 31, 2001. Within 30 days after receipt
of complete and accurate Quarterly Data for the Calendar Quarter ended
December 31, 2001, Merck shall calculate the initial Target MAS Premium
Percentage referred to in the first sentence of this definition. With
respect to each given Calendar Quarter beginning with the Calendar Quarter
ended March 31, 2002, the "Target MAS Premium Percentage" shall be
adjusted, if necessary, to be equal to the sum of (x) the Target MAS
Premium Percentage for the immediately preceding Calendar Quarter, (y) the
Outgoing Medco Plans Adjustment Percentage for such given Calendar Quarter
and (z) the Incoming Medco Plans Adjustment Percentage for such given
Calendar Quarter. (It is understood that Schedules 1 and 3 to this Annex B
operate to adjust each of the percentages set forth under "Rebate Tiers" in
Schedule 3 to this Annex B and under "MAS Premium Percentage" in Schedule 1
to this Annex B simultaneously with any adjustments to the Target MAS
Premium Percentage in accordance with the foregoing.) If, at the end of any
Calendar Quarter ending after the Effective Date, the Cumulative Incoming
Sales Adjustment Amount exceeds 20% of the sum of the Aggregate Medco Cost
of all Eligible Prescriptions of all Merck Products dispensed during the
Calendar Quarter ended December 31, 2001 under all Eligible Medco Plans,
Merck shall have the right, at any time thereafter, to renegotiate with
Medco the adjustment methodology reflected above in this paragraph.
Notwithstanding the foregoing, with respect to Calendar Quarters after the
Final Zocor(R) Calendar Quarter, (a) the Target MAS Premium Percentage for
such Calendar Quarter shall be equal to the "Target (Ex-Zocor(R)) MAS
Premium Percentage (as calculated in accordance with the definition
thereof) and (b) the percentages under "Rebate Tiers" in Schedule 3 to this
Annex B and under "MAS Premium Percentage" in Schedule 1 to this Annex B
shall be adjusted so that the increment (expressed as a percentage) between
each consecutive tier shall be equal to the increment between such tiers as
of the execution date of this Restated Agreement (one percent) multiplied
by the Ex-Zocor(R) Reduction Factor (rounded to the nearest hundredth
decimal place). (It is understood that, after such adjustment to those
increments, Schedules 1 and 3 to this Annex B will operate to adjust each
of the percentages set forth under "Rebate Tiers" in Schedule 3 to this
Annex B and under "MAS Premium Percentage" in Schedule 1 to this Annex B
simultaneously with any adjustments to the Target (Ex-Zocor(R)) MAS Premium
Percentage in accordance with the foregoing.)
2. The parties agree and acknowledge that, notwithstanding anything to
the contrary contained in the Restated Agreement, in the event that, for
any Calendar Quarter, Medco is not entitled to receive a Formulary Access
Rebate Amount in respect of Eligible Prescriptions of a Merck Product
dispensed during such Calendar Quarter under a Medco Plan for any reason,
Medco shall also not be entitled to receive any MAS Rebate in respect of
such Eligible Prescriptions of
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such Merck Product dispensed during such Calendar Quarter under such Medco
Plan.
3. All references in the Agreement to "the Restated Agreement" are
references to the Agreement as amended by this Amendment No. 1. The definition
of Restated Agreement in the Agreement is hereby amended to read in its entirety
as follows:
"Restated Agreement" means this Amended and Restated Managed Care
Agreement, dated and executed on May 28, 2003, between Merck and Medco, as
further amended by Amendment No. 1 dated as of July 23, 2003, and effective
as of the Effective Date.
4. This Amendment No. 1 may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Agreement as of the date set forth above.
MERCK & CO., INC.
By: /s/ Xxxxxxxx X. XxXxxxx
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Name: Xxxxxxxx X. XxXxxxx
Title: President, U.S. Human
Health Division
MEDCO HEALTH SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxx, Xx.
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Name: Xxxxx X. Xxxx, Xx.
Title: President and Chief
Executive Officer
