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02-14 Resolution No. 02-14 RESOLUTION AUTHORIZING EXECUTION OF A PRESCRIPTION SERVICE AGREEMENT WITH WHP HEALTH INITIATIVES, INC. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Joyce A. Parker, City Manager, be and is hereby authorized and directed to execute a Prescription Service Agreement on behalf of the City of Elgin with WHP Health Initiatives, Inc . for prescription benefit management and claim processing services, a copy of which is attached hereto and made a part hereof by reference . s/ Ed Schock Ed Schock, Mayor Presented: January 9, 2002 Adopted: January 9, 2002 Vote : Yeas : 7 Nays : 0 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk PRESCRIPTION SERVICE AGREEMENT This Prescription Service Agreement("Agreement")is entered into by and between WHP Health Initiatives,Inc.,an Illinois Corporation, d/b/a Walgreens Health Initiatives ("WHI") and City of Elgin, Illinois, a municipal corporation, ("Client"). WHEREAS,WHI manages prescription benefit programs that include the dispensing of prescription drugs by and through a network of retail community pharmacies ("Participating Pharmacy(ies)")and arranges for prescription benefit management and claim processing services for sponsors of various health benefit plans or programs; WHEREAS,WHI also manages a prescription benefit that includes the dispensing of prescription drugs by a mail service pharmacy("Participating Mail Service Pharmacy"); WHEREAS, Client desires to arrange for the provision of prescription services to Members (as defined below)through Participating Pharmacies and/or Participating Mail Service Pharmacy,as well as prescription benefit management and claim processing services by and through WHI; and WHEREAS,WHI is willing to make available prescription services to Members through its network of Participating Pharmacies and Participating Mail Service Pharmacy and to provide pharmacy benefit management and claim processing services to Client upon the terms and conditions hereinafter set forth. NOW,THEREFORE,in consideration of the covenants and agreements set forth herein, Client and WHI agree as follows: A. RESPONSIBILITIES OF CLIENT 1. The term"Member"as used in this Agreement means any person(including any eligible dependent)who is enrolled or covered under a benefit plan or health care program sponsored or maintained by Client and whose enrollment, copayment and benefit coverage are communicated by Client to WHI in accordance with the terms of this Agreement. 2. Client shall provide WHI with its benefit design summary and all other information reasonably required by WHI for the implementation of services under this Agreement at least 30 days prior to their implementation. Such information will be in a format acceptable to WHI and shall include, without limitation: Member enrollment, eligibility and benefit coverage information such as,copayment, deductible limits, covered drugs, days' supply, and participating physicians. Client is further obligated, during the term of this Agreement,to provide updates to the foregoing benefit design summary and other information promptly following each change thereto. This information shall be transmitted by WHI to Participating Pharmacies and the Participating Mail Service Pharmacy at the time of dispensing through the online electronic transmission link maintained between WHI (or its processor)and Participating Pharmacies and the Participating Mail Service Pharmacy ("Online Eligibility System"). Client is solely responsible for the accuracy, completeness, reliability, and timeliness of all information provided to WHI and acknowledges WHI's reliance thereupon. Any errors or omissions in the information are the sole responsibility of Client. Client may not deny claims submitted by any Participating Pharmacy or the Participating Mail Service Pharmacy for payment subsequent to such Participating Pharmacy or the Participating Mail Service Pharmacy receiving approval via the Online Eligibility System. Whp-city-elgin.101 eb 1 3. Client shall provide all Members with a standard identification card whether issued by WHI or issued by Client and approved by Will. The identification cards will contain, without limitation, the Member's identification number and full name of Member. Identification cards shall be used only for Member identification, not for Member eligibility,which is established at the time of dispensing through the Online Eligibility System. 4. Client authorizes Will, as its prescription benefit manager,to perform formulary management and other services described in this Agreement, subject to the following terms and conditions: (a) Client represents that it has adopted WHI's formulary(list of covered drugs which may be dispensed by a pharmacy to a member)as part of its prescription benefit plan design and that its benefit plan design in no way prohibits Client from implementing formulary management services performed by WHI,the Participating Pharmacies, or the Participating Mail Service Pharmacy hereunder, such as,but not necessarily limited to,generic or therapeutic prescription drug substitutions and any other measures that may be appropriate to effectuate formulary management. Notwithstanding the foregoing,the parties acknowledge that the prescribing physician has ultimate authority to determine which drug is prescribed to a Member. Client will notify WHI in advance of any benefit plan design changes that may materially affect WHI's ability to perform formulary management and/or other services described in this Agreement. Client may not sell, distribute, or otherwise provide WHI's formulary to any third party without WHI's prior written consent, except that Client shall ensure that WHI's formulary is distributed to Members and Members' physicians, either directly or by requiring Members to provide the formulary to their physicians. (b) Client acknowledges that,as a result of the formulary management services referenced above,WHI may receive rebates or other incentive payments from certain drug manufacturers or others, either directly or indirectly, in connection with prescription drugs dispensed hereunder and reported by WHI to such manufacturers or others ("Manufacturer Incentives"). Client hereby appoints WHI as Client's exclusive agent, and certifies that WHI is authorized to act on Client's behalf, for the purpose of negotiating and arranging, either directly or indirectly, Manufacturer Incentive opportunities in connection with prescription drugs dispensed to Members under this Agreement. Accordingly, Client: (i) represents that it has no direct or indirect arrangements, either oral or written, with drug manufacturers or others for Manufacturer Incentives on prescription drugs dispensed to Members pursuant to this Agreement and agrees not to enter into any such arrangement during the term of this Agreement; and (ii) agrees to cooperate fully with WHI and execute any documents in addition to this Agreement that may reasonably be necessary for either WHI or Client to participate in any Manufacturer Incentives arrangements. (c) Client represents that to the extent funding for the provision of prescription services to Members is received from Medicaid, Medicare, or any other state or federal health care program, such funding is in accordance with the risk or capitation contract provisions of the Social Security Act or comparable state health care programs. In the event circumstances arise in which either Members' drug utilization is required to be reported for Manufacturer Incentives purposes by an entity other than WHI or Members' prescription claims are to be filed for reimbursement with Medicaid, Medicare, or any other state or federal health care program, Client shall immediately notify WHI, clearly identifying all involved Members. Client agrees that to the extent WHI has Whp-city-elgin.101 eb 2 received any Manufacturer Incentives improperly as a result of Client's failure to provide such notice, Client shall pay WF1I,upon request,the full amount of any Manufacturer Incentives to be refunded and any penalties resulting therefrom. (d) Client acknowledges and agrees that WHI may retain any and all Manufacturer Incentives received as part of the reasonable compensation for pharmacy benefit management services;provided, however,that WHI will make WHI Payments (as defined in Attachment A)to Client, subject to the terms and conditions set forth in this Section A.4 and in Attachment A. Client is responsible for disclosure and/or distribution of such amounts to the entity that is ultimately responsible for the payment of pharmacy claims, if not Client. (e) Client acknowledges that the amount of WHI Payments described in Attachment A is based upon the value of Manufacturer Incentives WHI expects to receive as a result of Client's adoption and use of WHI's formulary and any benefit design requirements associated therewith (such as,but not limited to,therapeutic substitution programs, multi-tiered copay structures, etc.). Accordingly, Client shall notify WHI in writing of any changes to the formulary and, as required under Paragraph(a),above,benefit design, and WHI shall implement any such changes following WHI's receipt of such written notification;provided,however,that to the extent WHI determines, in WHI's sole discretion,that any such changes may adversely impact the value of Manufacturer Incentives WHI is likely to receive hereunder,WHI shall initiate renegotiations with Client of the WHI Payment amount. Notwithstanding anything to the contrary elsewhere in this Agreement, if no agreement can be reached within 30 days,WHI Payments shall immediately cease accruing to Client and WHI will have no obligation to continue making WHI Payments thereafter, including any WHI Payments that have accrued, but have not yet been paid. (f) Notwithstanding any provision herein to the contrary,WHI Payments shall immediately cease accruing to Client and Client hereby expressly authorizes WHI to retain any and all WHI Payments that have accrued to such date, upon the occurrence of any of the following: (i) breach by Client of any obligations set forth in this Agreement; (ii) termination of this Agreement by either party or receipt by WHI of notice from Client that Client intends to terminate any portion hereof which in WHI's sole discretion may adversely impact the value of Manufacturer Incentives WHI receives hereunder; (iii)WHI's exercise of its right to terminate any clinical program services, including formulary management, under Section B.1,below if, in WHI's sole discretion, such termination may adversely impact the value of Manufacturer Incentives WHI receives hereunder;and (iv)any change in the pharmaceutical industry practices regarding the payment of Manufacturer Incentives. (g) For those clinical programs that may require certain medical claims information(such as, but not necessarily limited to, retrospective drug utilization review), and subject to Section G.2., below, Client shall provide to WHI and/or its designee all complete and accurate Member-related medical claims and record information that WHI reasonably requests, in a format and time frame mutually acceptable to the parties. 5. Subject to Section G.5., below, Client shall accurately describe and represent the role of WHI,Participating Pharmacies, and the Participating Mail Service Pharmacy in providing services and programs that Client has retained WHI to undertake hereunder in all communications, including marketing and advertising materials,to Members and potential Members. Client acknowledges and agrees that it is Whp-city-elgin.101 eb 3 responsible for disclosing to Members any and all matters relating to Client's benefit plan as are required by applicable law to be disclosed, including any matter relating to the Manufacturer Incentives or the calculation of copayments, coinsurance amounts, deductibles,use of formulary, or any other amounts that are payable by a Member in connection with Client's benefit plan. 6. To the extent WHI has provided Client with access to the Online Eligibility System,the system on which WHI files Client's management reports ("Online Report System"), and/or any other electronic system maintained or operated by WHI (all such foregoing systems, hereinafter collectively referred to as the"System"),the following terms and conditions shall apply. For purposes of this paragraph,the term"access"means the ability of Client, as agreed to by WHI,to view, enter,and/or manipulate information residing on the System. Client acknowledges that as a condition precedent to receiving or continuing to receive access to the System, Client shall (i) comply with the manuals and other instructions provided by WHI for such access; (ii)safeguard the access code(s) and any downloads of information; (iii)comply with applicable laws, regulations, and Client's policies and procedures concerning the protection of patient information; (iv)notify WHI immediately if any information accessed online is inconsistent with Client's benefit design; (v) supervise all employees and/or third-party agents accessing such systems on Client's behalf("Users")and administer all passwords to ensure there is no misuse or abuse of the access rights granted herein; and(vi)inform all Users of the requirements set forth in this paragraph. Client is solely responsible for the accuracy, completeness, reliability, and timeliness of all information it enters into the System. Any errors or omissions in the information are the sole responsibility of Client. Client is further responsible for providing, at its own expense, any hardware and/or software that may be necessary to effectuate access to the System, and for paying all telecommunication access fees. Provided, however,that the Client shall be entitled without penalty to provide any information to any entity as may be required by law. B. RESPONSIBILITIES OF WHI 1. WHI shall provide the prescription benefit management services described in this Agreement and/or as otherwise mutually agreed to by the parties in writing, including,but not necessarily limited to,general support and consultative services regarding pharmacy benefit design and implementation, formulary management, administrative and claims processing services, standard reporting packages, marketing, quality management and utilization management functions. In addition,WHI may develop and implement certain additional clinical intervention programs that may be desired by Client, subject to terms and conditions to be agreed in writing between the parties. Notwithstanding the foregoing or any termination rights set forth in this Agreement,WHI may immediately terminate or refrain from implementing any formulary management or other clinical program services in any geographic area(in their entirety or for specific drugs only) if, in WHI's sole determination,the implementation or continued provision of such services is or may be in violation of applicable laws, rules, or regulations governing the practice of pharmacy or prescription benefits management, or may otherwise present an issue related to the practice of pharmacy or prescriptions benefits management. Client acknowledges that WHI may, from time to time,upgrade and/or make minor modifications to the services provided hereunder without notice to Client. 2. WHI shall provide its standard WHI identification card and introductory materials for issuance to Members. Upon Client's request and mutual written consent of the parties,WHI shall provide customized identification cards and/or introductory materials for a mutually agreeable fee, prior to providing such cards and/or materials. 3. WHI (or its processor) shall provide to each Participating Pharmacy or the Participating Mail Service Pharmacy via the Online Eligibility System at the time of dispensing all information Whp-city-elgin.101 eb 4 necessary(as specified in Section A.2.)for such Participating Pharmacy or for the Participating Mail Service Pharmacy to provide prescription services to Members upon the following terms and conditions: (a) Upon presentation by a Member or his/her agent of the identification card, receipt of appropriate prescriptions, and any required copayment,the Participating Pharmacy or Participating Mail Service Pharmacy shall compound and dispense all qualified prescriptions and covered drugs pursuant to the pharmacy benefit information provided by Client to WHI and communicated by WHI to such Participating Pharmacy or Participating Mail Service Pharmacy via the Online Eligibility System at the time of dispensing, subject to legal restrictions and professional ethics and professional judgment. (b) The Participating Pharmacy shall collect any applicable copayment or deductible amount from each Member for each covered prescription, as indicated by the Online Eligibility System at the time of dispensing, except when the Participating Pharmacy's usual and prevailing retail charge for the prescription is less than the copayment. In these cases,the Participating Pharmacy shall collect the usual and prevailing retail charge in lieu of the copayment. In the case of mail order prescription services, each Member must transmit with the order to the Participating Mail Service Pharmacy the applicable copayment fee for each prescription or refill covered by this Agreement. (c) The Participating Pharmacy and/or Participating Mail Service Pharmacy may withhold prescription services to a Member for good cause, including,but not necessarily limited to, Client's nonpayment of prescription services provided to Members;the Member's failure to pay for services rendered(e.g., copayment); requests by Member for quantities of drugs in excess of prescribed amounts or refill limitations pursuant to the pharmacy benefit information; or where, in the professional judgment of the dispensing pharmacist,the prescription should not be filled. (d) The Participating Pharmacy and/or Participating Mail Service Pharmacy shall attempt to dispense generic drugs in lieu of prescribed brand name drugs if commercially available and consistent with the dispensing pharmacist's professional judgment and state and federal law. (e) Mail order prescriptions shall be sent to Members from the Participating Mail Service Pharmacy via United Parcel Service, United States Postal Service, or any other method the Participating Mail Service Pharmacy may select. Risk of loss or damage to covered drugs provided hereunder is on the Participating Mail Service Pharmacy until such prescription drugs have been delivered to Member. The cost of shipping will be borne by the Participating Mail Service Pharmacy, except for the following costs: (i)Members will pay,or reimburse Participating Mail Service Pharmacy, as applicable, for all additional expenses due to expedited delivery requested by Member. 4. WHI is responsible for reasonable costs associated with its development and printing of standard marketing materials that Will agrees to provide to Client in connection with this Agreement; provided,however,that all costs associated with the distribution of such materials to Members are the sole responsibility of Client. 5. WHI may add or terminate Participating Pharmacies to or from its network in WHI's sole discretion. Whp-city-elgin.101 eb 5 C. PAYMENT/BILLING 1. Client shall pay WHI for prescription services provided hereunder by Participating Pharmacies and Participating Mail Service Pharmacy at the rates set forth in Attachment A, attached hereto and incorporated herein, regardless of the amount billed by the dispensing Participating Pharmacy or Participating Mail Service Pharmacy. In addition, Client shall pay WHI any and all administrative fees and/or other costs, charges, or reimbursement amounts set forth in this Agreement. Client is solely responsible for all payments required herein, and shall make all such payments in accordance with the payment terms that follow and that may be specified elsewhere in this Agreement. (a) WHI(or its processor)shall invoice Client following the close of each twice monthly billing cycle. Such invoices may include,but not necessarily be limited to, prescription claims, administrative fees and/or any other costs and charges specified in this Agreement. (b) Client shall pay all invoices within 30 days of WHI's issuance thereof and accompanying each payment will be a complete explanation of the claims for which payment is being made. Payment date as used in this Agreement will mean the date payment is to be delivered to the location designated in this Agreement as follows: WHP Health Initiatives,Inc. P. 0. Box 93741 Chicago, IL 60673-3741 All sums owed by Client shall bear interest of one and one-half percent(1.5%)per month from the date payment is due until paid; however, in no event shall such interest rate be greater than the rate permitted by law. (c) Client acknowledges and agrees that WHI has no obligation whatsoever to pay claims for prescription services provided by Participating Pharmacies and Participating Mail Service Pharmacy until Client makes such funds available to WHI for the payment of such claims. 2. At no time may Client withhold payment for services provided by WHI, Participating Pharmacies,or Participating Mail Service Pharmacy hereunder nor pay an amount less than that billed by WHI. In the event that WHI reasonably determines that an adjustment is due Client,WHI shall make an appropriate adjustment to its invoices. 3. In the event that Client fails to remit to WHI the appropriate payment amounts on or prior to the due date specified in this Agreement,WHI will have the right, at its sole option,to suspend and/or terminate immediately all prescription benefits and services provided to Client and Members. WHI may notify Participating Pharmacies and Participating Mail Service Pharmacy immediately online that prescription services to Client and Members have been suspended or terminated, as the case may be, due to Client's failure to meet its payment obligations as set forth in this Agreement. Upon such notification, Participating Pharmacies and/or Participating Mail Service Pharmacy may cease providing prescription services to Client and Members, and Participating Pharmacies and/or Participating Mail Service Pharmacy will have the right to pursue any legal remedy directly against Client for any breach of Client's payment obligations. 4. The parties acknowledge that WHI may be party to a broker or consultant arrangement in connection with the services provided hereunder. Notwithstanding anything to the contrary herein,WHI is solely responsible for any and all fees that may be due such broker or consultant. Whp-city-elgin.101 eb 6 D. RELATIONSHIP BETWEEN CLIENT AND WHI 1. The parties hereto are independent contracting parties, and nothing in this Agreement is intended to nor may anything in this Agreement be construed to create an agency,partnership,joint venture, employer/employee relationship, fiduciary relationship, or any other legal relationship between the parties other than or in addition to that of independent contracting parties. 2. Will is the sole and exclusive provider of Client's non-HMO prescription benefit programs,prescription benefit management, and claim processing services to and on behalf of Client and Members. Client may not enter into or be a party to any agreement with any party or entity (other than WHI)for the provision of prescription benefit programs,prescription benefit management, and claim processing services or any other services referenced in this Agreement during the term of this Agreement or any renewal hereof. Client's printed materials, including, but not necessarily limited to, direct mailings, brochures and newsletters may not reference any other provider of prescription benefit programs, prescription benefit management, and claims processing services (except as otherwise stated in Section G.S. of this Agreement). Nothing contained in this Agreement, however, shall prohibit or limit WHI's right to participate in other health care or prescription programs or to otherwise provide prescription benefit programs,prescription benefit management, or claim processing services to other third parties. 3. This Agreement is solely between WHI and Client and may not be construed to create any rights or remedies in favor of any third party, including any Member, unless expressly stated in this Agreement. E. TERM AND TERMINATION 1. This Agreement shall remain in full force and effect for an initial term of three years commencing March 1, 2002,and ending February 28,2005. This Agreement may be terminated by either party at any time without cause upon at least 90 days prior written notice to the other party. This Section E.1. is subject to the remaining provisions of this entire Section E. and any other termination rights that may be stated elsewhere in this Agreement. 2. Notwithstanding Section E.1. above,WHI may terminate this Agreement immediately upon a material breach by Client. Material breach by Client includes,but is not necessarily limited to, Client's failure to deposit with Will security deposit amounts (if required hereunder) and/or Client's failure to pay WHI for pharmacy claims and all other required fees, costs and charges within the time period specified in this Agreement. Client may terminate this Agreement in the event of a material breach by WHI and such termination will be effective 30 days after written notice of breach has been provided to WHI,unless such breach has been cured prior to the end of the 30 day period. 3. No waiver by either party with respect to any breach or default of any right or remedy and no course of dealing may be deemed to constitute a continuous waiver of any other breach or default or of any other right or remedy unless such waiver is expressed in writing by the party to be bound. 4. Termination shall have no effect upon the rights or obligations of the parties arising out of any transactions occurring prior to the effective date of such termination, unless set forth otherwise herein. WHI shall assume no responsibility for processing claims submitted to WHI by Participating Pharmacies, Participating Mail Service Pharmacy, or Members more than 60 days following the termination date of this Agreement;WHI shall forward all such claims to Client for adjudication and payment. Whp-city-elgin.101 eb 7 5. In addition to termination rights contained elsewhere in this Agreement, each of the following acts or omissions by either party shall be considered a default, and shall give the nondefaulting party the rights herein contained: if either party to this Agreement voluntarily files a petition in or for bankruptcy, reorganization, or an arrangement with creditors; if either party makes a general assignment for the benefit of creditors; if either party fails to pay, or admits in writing its inability to pay, debts as they become due; if a trustee, receiver, or other custodian is appointed for either party; or, if any other case or proceeding under any bankruptcy is commenced in respect to either party,then the nondefaulting party may immediately terminate this Agreement and all further rights and obligations hereunder(except as otherwise provided in Section E.4. or elsewhere in this Agreement)by giving written notice to the other party. F. LIABILITY AND INDEMNITY 1. WHI shall indemnify, defend and hold harmless Client, including Client's employees and agents,from and against any and all claims or liabilities arising from the negligence of WHI, its employees or agents in carrying out WHI's duties and obligations under the terms of this Agreement. Client shall indemnify,defend and hold harmless Will,including WHI's shareholders, directors, officers, employees, delegates, agents,representatives and parent and affiliated companies, from and against any and all claims or liabilities arising from(i) Client's denial of treatment or coverage whether by omission, decision or design; (ii)the negligence of Client, its employees or agents in carrying out Client's duties and obligations under the terms of this Agreement; (iii) Client's failure to provide timely, complete, or accurate information necessary for WHI to perform services hereunder and/or administer the prescription benefit, including,but without limitation,those services set forth in Section B.1, above; and (iv) Client's breach of any representation or warranty set forth in this Agreement. Under no circumstances shall WHI be liable to Client or any third party for any indirect, special, incidental, or consequential damages, or for lost profits, notwithstanding WHI's notice thereof. Will's liability to Client under this Agreement, if any, shall not exceed the total amount of compensation due WHI for the most recently ascertainable one-year period immediately preceding the date on which the claim arose. Will shall have no liability for any claim which is asserted by Client or any third party more than 60 days after Client is or should have been reasonably aware of such claim. This Section F.1. shall survive the termination of this Agreement. 2. Client acknowledges and agrees that neither WHI, nor its shareholders, directors, officers, employees,delegates, agents,representatives, or parent and/or affiliated companies have any liability whatsoever to Client or Members for the acts or omissions of any Participating Pharmacy or the Participating Mail Service Pharmacy(including, but not necessarily limited to, the acts or omissions of any Participating Pharmacy's or Participating Mail Service Pharmacy's employees or agents)in connection with such Participating Pharmacy's or Participating Mail Service Pharmacy's provision of services to Client and/or Members,including,but not necessarily limited to, any of the following: (i)any actual or alleged malpractice,negligence or misconduct of any Participating Pharmacy or the Participating Mail Service Pharmacy; or(ii)the sale, compounding, dispensing, failure to sell,manufacture or use of any drug dispensed to a Member hereunder. This Section F.2. will survive the termination of this Agreement. 3. WHI shall self-insure or maintain at its sole expense, and in amounts consistent with industry standards, insurance for general and professional liability and such other insurance as may be necessary to insure WHI, its employees and agents against any claim or claims for damages arising out of or in connection with its duties and obligations under this Agreement. A certificate of insurance coverage shall be provided to Client upon written request. In addition,WHI shall require Participating Pharmacies and Participating Mail Service Pharmacy either to self-insure or to acquire and maintain, at their sole expense,professional and malpractice liability insurance, as well as comprehensive general liability Whp-city-elgin.101 eb 8 insurance to insure against any claim for damages arising by reason of Participating Pharmacies' or Participating Mail Service Pharmacy's provision of prescription services to Members hereunder. G. GENERAL TERMS 1. Access to Records. WHI shall maintain records relating to its responsibilities under this Agreement for a period of one year from the date of service. Client shall maintain records relating to its responsibilities under this Agreement for a period of one year from the date of service, including,but not necessarily limited to,eligibility records for Members and payment information regarding services provided by WHI hereunder and prescription services rendered by Participating Pharmacies and Participating Mail Service Pharmacy to Members. During normal working hours and upon prior written and reasonable notice,WHI and Client shall allow the other party reasonable access to such records for audit purposes and also the right to make photocopies of such records (at the requesting party's expense), subject to all applicable state and federal laws and regulations governing the confidentiality of such records. 2. Proprietary Information/Confidentiality. (a) The parties shall maintain the confidentiality of all medical,prescription, and other patient-identifiable health information specifically relating to Members ("Patient Information") in accordance with applicable laws and regulations. The parties acknowledge that WHI shall have access to Patient Information in order to provide services and/or perform the obligations undertaken hereunder and that Patient Information may be obtained from and/or distributed to Client,Participating Pharmacies,the Participating Mail Service Pharmacy, and/or any other third party in connection with services provided hereunder, including any and all disclosures made in WHI's sole discretion, such as,but not limited to, those made in connection with provider audits conducted by WHI or its agents, and disclosures made at Client's request, such as,but not limited to,those made to third party administrators or to a new vendor upon transition of services following termination of this Agreement. To the extent any such disclosures occur at Client's request, Client acknowledges that(i)its request to WHI to disclose Patient Information to any third party constitutes Client's direction and authorization to disclose such information to the third party;and(ii) WHI shall disclose such information pursuant to Client's direction until such time as WHI receives written notice from Client to cease further disclosures. Client represents and warrants that it has a legally sufficient and binding consent and/or authorization from each Member that permits the uses and disclosures of Patient Information as referenced in this paragraph. Client further represents and warrants that it has complied with all necessary requirements set forth under applicable law to ensure the confidentiality of such disclosures. The parties acknowledge that nothing herein shall limit either party's use of any aggregated Member information that does not contain patient-identifiable health information. (b) Client acknowledges that WHI may disclose to Client certain proprietary and/or confidential technical and business information in connection with WHI's services hereunder. Such information may include,without limitation, databases,trade secrets, reporting packages and formats,manuals, computer programs, software, clinical or formulary-related operations or programs,and other innovations belonging to WHI(collectively, "WHI Information"). Client acknowledges that the value to WHI of WHI Information may be lost if its proprietary nature or confidentiality is not maintained. Accordingly, Client shall treat all WHI Information as confidential, disclosing it only to those employees who have a need to know in order to effectuate the purpose(s) of this Agreement, and only after such employees have Whp-city-elgin.101 eb 9 agreed to be bound by the terms of this Section G.2 or as may be required by law. Further, Client shall not use any WHI Information to benefit itself or others, except to the extent expressly authorized by Will in writing. Client shall maintain the confidentiality of all WHI Information taking all necessary precautions and actions to avoid the unauthorized disclosure of WHI Information, including,without limitation,those precautions which Client employs with respect to its own proprietary and confidential information. Notwithstanding the foregoing, Client shall not be liable for any disclosure or use of WHI Information which(i) is or becomes known generally known within the relevant industry(except as a result of a breach by Client of its obligations under this Agreement); (ii) Client can establish and document by competent proof was in the possession of or known by Client prior to its receipt from WHI; (iii)is rightfully disclosed to Client by another person or entity not in violation of the proprietary or other rights of WHI or any other third party; or(iv) Client becomes legally obligated to disclose,provided that Client shall first promptly notify WHI and cooperate with WHI in contesting such a disclosure. (c) This Section G.2. shall survive the termination of this Agreement. 3. Amendments. WHI shall forward a copy of any proposed amendment to Client at least 30 days prior to the effective date of such amendment. The amendment shall become effective on the date stipulated, unless prior to the indicated effective date a written objection from Client is received by WHI. If Client objects to an amendment,the amendment may not go into effect;provided, however,that WHI at its discretion may terminate this Agreement within 30 days of its receipt of Client's written objection (notwithstanding Section E.1. of this Agreement). All proposed amendments and objection(s) shall be communicated pursuant to Section G.9. of this Agreement. 4. Assignment. Will may assign this Agreement to any third party or to any direct or indirect parent, subsidiary,affiliated company or successor company. Any such assignee shall assume all obligations of WHI under this Agreement. No assignment shall relieve WHI of responsibility for the performance of any obligations which have already occurred. This Agreement shall inure to the benefit of and be binding upon WHI, its respective successors and permitted assignees. 5. Advertising. Neither party may advertise or use any trademarks, service marks and/or symbols of the other party without first receiving the written consent of the party owning the mark and/or symbol, subject to the terms and conditions set forth in this paragraph. Client may reference the name and the addresses of WHI,Participating Pharmacies, and Participating Mail Service Pharmacy in Client's informational brochures or other publications Client provides to Members or potential Members. Client represents and warrants that any and all descriptions and representations concerning WHI and the services provided hereunder as communicated to Members and potential Members are true,accurate, and consistent with the terms of this Agreement. Client shall use due diligence to ensure the accuracy of the information herein described and will immediately correct incomplete or inaccurate information whether by its own discovery or at WHI's direction. Any other reference to WHI, Participating Pharmacies, or Participating Mail Service Pharmacy in any Client materials must be pre-approved, in writing, by WHI. WHI may reference Client's name,trademark, service mark and/or symbols to inform Members and the general public(i)of WI-Ws role in providing prescription benefit management and other services and(ii)that Participating Pharmacies and Participating Mail Service Pharmacy are participating providers to Client and Members. 6. Force Majeure. The performance by either party hereunder shall be excused to the extent of circumstances beyond such party's reasonable control, such as acts of God, including but not limited to flood,tornado, earthquake, fire, or other natural disaster,as well as epidemic,war, civil disturbance, Whp-city-elgin.101 eb 10 • sabotage, criminal acts,material destruction of facilities, and failures in electricity,heat, air, or telecommunications equipment. In such event,the parties will use their best efforts to resume performance as soon as reasonably possible under the circumstances causing the party's failure to perform. 7. Enforceability. If any term or provision of this Agreement is held to be invalid, illegal or unenforceable,the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected or impaired thereby. 8. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Illinois without regard to principles of conflict of laws. 9. Notice. All notices provided for herein must be in writing and sent by U.S. Certified Mail, return receipt requested,postage prepaid, or by overnight delivery service providing proof of receipt, to the addresses of the parties as set forth below: CITY OF ELGIN WALGREENS HEALTH INITIATIVES ATTN:NICK ORITI ATTN.: CLIENT SERVICES 150 DEXTER CT. 520 LAKE COOK ROAD, SUITE 400 ELGIN,IL 60120 DEERFIELD,IL 60015 Each party may designate by notice any future or different addresses to which notices shall be sent. Notices shall be deemed delivered upon receipt or upon refusal to accept delivery. 10. Section Headings. Section headings are inserted for convenience only and may not be used in any way to construe the terms of this Agreement. 11. Entire Agreement. This Agreement,which includes any and all attachments, exhibits, riders,and other documents referenced herein, constitutes the entire and full agreement between the parties hereto and supersedes any previous contract and no changes, amendments(except as provided in Section G.3. of this Agreement)or alterations will be effective unless reduced to a writing signed by a duly authorized representative of both parties. Any prior agreements, documents, understandings, or representations relating to the subject matter of this Agreement not expressly set forth herein or referred to or incorporated herein by reference are of no force or effect. 12. Conflicting Documents. In the event of a conflict between the terms of this Agreement and any Client benefit contract, Member enrollment form/contract or Member brochure, the terms of this Agreement shall control. Such contract, enrollment or brochure may not impose any greater obligations upon Participating Pharmacies and Participating Mail Service Pharmacy for the provision of prescription services than those obligations set forth in this Agreement and to the extent such document does,they are of no force or effect. 13. Compliance with Law. Each party shall comply with all applicable laws, rules, and regulations for each jurisdiction in which services are provided pursuant to this Agreement. Notwithstanding the foregoing, Client acknowledges that WHI has no responsibility to advise Client regarding Client's compliance with any applicable law, statutes,rules or regulations relating to the services provided hereunder. Furthermore,WHI makes no representation or warranty that Client's benefit plan design is in compliance with applicable law. Client retains complete discretionary, binding and final authority to construe the terms of its health plan,to interpret ambiguous plan language,to make factual determinations regarding the payment of claims or provisions of benefits,to review denied claims, and to Whp-city-elgin.101 eb 11 resolve Member complaints. Each party will cooperate with reasonable requests by the other party for information that the requesting party may need for its compliance with applicable laws, rules, and/or regulations. If a change in applicable law imposes a material financial, legal, or operational burden on WHI's performance of services hereunder,WHI shall propose and forward to Client an amendment to address such material burden. The amendment shall become effective on the date stipulated,unless prior to the indicated effective date a written objection from Client is received by WHI. If Client objects to an amendment,the amendment may not go into effect;provided,however,that WHI,in its sole discretion, may terminate this Agreement within 30 days of its receipt of Client's written objection(notwithstanding Section E.1. of this Agreement). 14. No Third-Party Beneficiaries. This Agreement is not a third-party beneficiary contract. No provision of this Agreement is intended to create or may be construed to create any third-party beneficiary rights in any person,including,but not limited to, any provider or Member. 15. Signatory Authority. Each party represents and warrants that the individual signing this Agreement on its behalf is duly authorized to bind such party to all terms and conditions of this Agreement. IN WITNESS WHEREOF, Client and WHI have executed and delivered this Agreement by their representatives duly authorized. CITY OF ELGIN WHP HEALTH INITIATIVES, INC. By: J,:ti \ . 2o.4L1t4. By: te,;, ' - Printed Name:Jay 15N, Tinted Name 1.4 -u0.-IGkc Title: e_t.i•1 4sNA AGr� Title: 7/en\nP� t Date: — Q — O'A. Date: r2l I )00 Whp-city-elgin.101 eb 12 ATTACHMENT A PAYMENT SCHEDULE I. REIMBURSEMENT RATES FOR SERVICES A. REIMBURSEMENT FOR CLAIMS BY PARTICIPATING PHARMACIES: For each retail pharmacy prescription or refill covered by this Agreement, Client will pay WI-11 at the rates set forth in this Section I.A, reduced by the applicable copayment fee received: I. Brand Name Drugs:the lesser of(i) 86%of the Average Wholesale Price, as defined herein, of the dispensed medication plus a dispensing fee of$2.25; or(ii)the dispensing Participating Pharmacy's usual and prevailing retail charge. 2. Generic Drugs:the lesser of(i)60%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.50; or(ii)the dispensing Participating Pharmacy's usual and prevailing retail charge. 3. Notwithstanding the rates set forth in Paragraphs 1 and 2 of this Section I.A.,and for plans requiring Member copayments only, if the total of the discounted Average Wholesale Price, plus the dispensing fee is less than the Member copayment fee, Participating Pharmacy will receive as reimbursement, at a minimum,the lesser of the Member copayment fee or the dispensing Participating Pharmacy's usual and prevailing retail charge. B. REIMBURSEMENT FOR CLAIMS BY PARTICIPATING MAIL SERVICE PHARMACY: For each mail service pharmacy prescription or refill covered by this Agreement, Client will pay WI-H at the rates set forth in this Section I.B, reduced by the applicable copayment fee received: 1. Brand Name Drugs: 80%of the Average Wholesale Price of the dispensed medication. 2. Generic Drugs: 50%of the Average Wholesale Price of the dispensed medication. 3. Notwithstanding the rates set forth in Paragraphs 1 and 2 of this Section I.B.,and for plans requiring Member copayments only, if the total of the discounted Average Wholesale Price, plus the dispensing fee is less than the Member copayment fee, Participating Mail Service Pharmacy will receive as reimbursement, at a minimum,the required Member copayment fee. C. ADMINISTRATIVE FEES AND ASSOCIATED COSTS OR CHARGES. For services provided hereunder, Client will pay WI-II an administrative fee of$0.25 per transaction. If requested by Client,WHI will provide the following additional services at the rates indicated, provided that such rates are subject to change at any time after the initial term of this Agreement: Reports Ad-Hoc $100.00 Per report Reports Customized $100.00 Per report Whp-city-elgin.101 eb 13 ID Card Initial Run,PPD's w/Vinyl Card No charge Per card ID Card Re-issuance, PPD's $1.40 Per card w/Vinyl Card Logo Scan for PPD/ID Card $150.00 Per hour Postage for Mailing $1.00 Per member mailing/letter Prior Authorizations by Client $1.00 Per authorization DMR Claims $1.75 Per submitted claim Manual Eligibility Updates $0.75 Per update Per user per month; first 2 ID's On-line PBS Access $50.00 at no charge,thereafter fee applies Per user per month; first 2 ID's On-line Management Reports $50.00 at no charge,thereafter fee applies 2"d Set of Management $100.00 Per month Reports,Paper Copy On-line Adjustments $0.75 Per claim Clinical Prior Authorization See Article VII Any other additional services may incur additional charges. Will is not required to supply any additional reports or information unless and until it has been agreed to in writing by both parties. II. SPECIALTY PHARMACY DRUGS. Client acknowledges that certain drugs available on the market will not be subject to the rates set forth in Article I, above, due to reasons such as,but not limited to, nonstandard administration,necessity for case management, limited availability, unique shipping or handling requirements, and specialized manufacturer process and/or purchase arrangements. Such drugs are referred to herein as"Specialty Pharmacy Drugs." Examples of Specialty Pharmacy Drugs include biotechnology drugs and certain compounds. The rates for the dispensing of any Specialty Pharmacy Drugs will be as set forth below in this Article II or as otherwise agreed in writing between the parties. Client further acknowledges that the dispensing of certain Specialty Pharmacy Drugs may be limited to the Participating Mail Service Pharmacy, other subcontracted mail service provider, or certain Participating Pharmacies only. Growth Hormone: Mail Rate: 90%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$50.00. (plus $25 cold pack fee at mail when needed) Cystic Fibrosis: Retail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.00. Mail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.50. (plus $25 cold pack fee at mail when needed) Whp-city-elgin.101 eb 14 HIV/AIDS: Retail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.00. Mail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.50. (plus $25 cold pack fee at mail when needed) Multiple Sclerosis: Avonex and Copaxone Retail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.00. Mail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.50. (plus $25 cold pack fee at mail when needed) Tikosyn Mail Rate: 92%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$5.00. (plus $25 cold pack fee at mail when needed) Betaseron: Mail Rate: Average Wholesale Price of the dispensed medication plus a dispensing fee of$20.00. (plus $25 cold pack fee at mail when needed) Viral Hepatitis: Retail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.00. Mail Rate: 87%of the Average Wholesale Price of the dispensed medication plus a dispensing fee of$2.50. (plus$25 cold pack fee at mail when needed) Notwithstanding the foregoing,if the rate set forth in this Article II is less than the Member copayment fee,WHI will receive as reimbursement,at a minimum,the lesser of the Member copayment fee or the dispensing pharmacy's usual and prevailing retail charge. III. DEFINITIONS: As used in this Agreement, "Average Wholesale Price"means the current wholesale cost of the dispensed medication as defined in the latest edition of any of the following: The Drug Topic Red Book with supplements,the American Druggist Blue Book with supplements, Medispan and weekly updates, or any other reference which may be agreed to in writing by the parties to this Agreement. This price is based on 100 tablets or capsules, one pint of liquid, or the closest quantity to that prescribed for ointments, creams, suppositories, or other medication not packaged in 100s or pints. IV. MULTI-SOURCE PRODUCTS. The dispensing Participating Pharmacy and the Participating Mail Service Pharmacy will dispense multi-source products using the inventory customarily maintained; the terms of reimbursement and the dispensing by the Participating Pharmacy or the Participating Mail Service Pharmacy of such multi-source products may not be restricted by formulary or any list of covered drugs which identifies multi-source drugs by the manufacturer. V. MANUFACTURER INCENTIVES. Whp-city-elgin.101 eb 15 A. PAYMENT AMOUNT. In connection with and subject to the terms and conditions of Section A.4. of the main body of the Agreement regarding Manufacturer Incentives,WHI will make payments to Client on a per paid prescription claim basis ("WHI Payment")based on the first twelve months of services provided under this Agreement("Initial Period"), regardless of the amount of Manufacturer Incentives received by WHI. Will will make such WHI Payments in the amount of$0.25,according to the payment terms set forth below. B. PAYMENT TERMS. The initial WHI Payment will be made nine months after the end of the first calendar quarter(or portion thereof, when applicable)of the Initial Period,with subsequent WHI Payments to be made quarterly thereafter. Within the 60 day period prior to the end of the Initial Period,WHI and Client will negotiate in good faith the monetary amount of any WHI Payment to apply to any subsequent period. If the parties fail to reach agreement on any WHI Payments to apply to the subsequent twenty four-month period of prescription services provided hereunder ("Second Period"),the WHI Payments for the Second Period will be in the amount of$0.25. Within the 60 day period prior to the end of the Second Period,the parties will negotiate the terms and conditions to apply to WHI Payments,if any, in the subsequent year,but in no event will any Will Payments be due to Client for any period in which the parties have not reached a written agreement as to a WHI Payment to apply for such period. VI. PRIOR AUTHORIZATION PROGRAM. 1. Client desires that WHI provide a prior authorization program that is consistent with the benefit design Client currently offers to Members("Prior Authorization Program"). The Prior Authorization Program is designed to promote appropriate utilization of potentially expensive, misprescribed and/or abused medications based upon generally accepted current pharmacy practices. Accordingly,pursuant to Client's direction, commencing upon the effective date of this Agreement, and continuing for a mutually agreeable time period,WHI will implement the Prior Authorization Program on Client's behalf and in accordance with the protocols, criteria, forms, and related documents approved by Client("Approved Protocols"). The Approved Protocols are hereby incorporated into this Agreement. 2. Upon presentation by a Member of a prescription that requires prior authorization pursuant to Client's benefit design,Will will attempt(at least two times within a 16 business hour period)to have the Member's prescriber respond to questions specific to the prescription presented ("Physician Form"). Completed Physician Forms will be reviewed by WHI's pharmacist and compared to the Approved Protocols for the applicable prior authorization category. Based upon the results, Client hereby directs WHI's pharmacists either to authorize or deny the dispensing of the medication and WHI will notify the Member accordingly. WHI will charge Client$30.00 for each prior authorization review. A"prior authorization review"will be deemed to have occurred whenever WHI has attempted(at least two times within a 16 business hour period)to have the Member's prescriber complete the applicable Physician Form. If after two attempts WHI is unable obtain a completed Physician Form from the Member's prescriber, Client directs WHI's pharmacists to deny the dispensing of the medication and to notify the Member accordingly. 3. WHI or WHI's designee will bill Client monthly for the Prior Authorization Program and Client will pay WHI within 30 days of WHI's issuance of each invoice. 4. It is expressly understood that Client is solely responsible for construing the terms and conditions of its health benefit plan and the selection of medications that require prior authorization. Further, Client retains complete discretionary and final authority to make all determinations Whp-city-elgin.101 eb 16 regarding its health benefit plan and prior authorization requests,including,without limitation: (i)payment of claims; (ii)provision of benefits; (iii)review and/or denial of prior authorization claims or requests by Members; and(iv)resolution of Member complaints, including the establishment of an appeal and/or grievance process. Client will comply with all Federal and State laws, rules, and regulations regarding the denial of benefits. Whp-city-elgin.101 eb 17 �.�Oak ESC ° ; fi City of Elgin Agenda Item No. (::: ail G L January 4 , 2002 G N TO: Mayor and Members of the City Council SAFE COMMUNITY FROM: Joyce A. Parker, City Manager SUBJECT: Prescription Drug Plan PURPOSE The purpose of this memorandum is to provide information to the Mayor and members of the City Council relative to the implementation of a Prescription Drug Card Program with Walgreen' s Health Initiative which will be available to all employees and their covered dependents who are part of the City' s Preferred Provider Organization (PPO) plan. BACKGROUND The City currently offers employees a choice of two (2) medical benefit plans : an HMO and a PPO. The HMO plan offers a Prescription Drug Program, while the PPO plan does not . Employees who are on the PPO plan, purchase needed prescriptions, submit a claim and are reimbursed for 80% of their expense . The prescription is filled and dispensed at retail cost . PPO covered employees are experiencing an annual fill rate of 10, 200 prescriptions at an average annual cost of $566, 796 . Walgreen' s Health Initiatives offers a Prescription Drug Card program which would allow employees the ability to fill their prescription needs at virtually any pharmacy, at wholesale, rather than retail pricing. Employees would have a co-pay of $5 . 00 for generic drugs and $10 . 00 for brand name drugs . Additionally, mail order prescription service is available and a three (3) month drug supply would be mailed to the employees home . COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED Leadership of all union organizations have been apprised of this plan and have been a part of its development . All Union presidents have voiced their approval and desire for implementation. r • _ ..*. . . 000"k Prescription Drug Plan January 4 , 2002 Page 2 FINANCIAL IMPACT Prescription drugs and their costs were reviewed from the previous year. Based on an average prescription cost of $65, it is estimated that the City may save approximately $70 , 000 per year under this plan. 0.00\7 GAL IMPACT None . ALTERNATIVES None . RECOMMENDATION It is recommended that the City Council approve the Walgreen' s Health Initiative Prescription Drug Program for an implementation date of March 1, 2002 for a three (3) year program. rk Respectfully submitted, %.,10 co_ Qii • e..4tR-t.s 1 Joyce\ A. Parker City Manager NAO/mgh Attachment rill ���OFE�Ci City of Elgin Agenda Item No. .$5 I' n 5 °RATEo P'sb - E Ezx December 14, 2001 G N TO: Mayor and Members of the City Council SAFE COMMUNITY FROM: Joyce A. Parker, City Manager SUBJECT: Prescription Drug Plan PURPOSE The purpose of this memorandum is to provide information to the Mayor and members of the City Council relative to the implementation of a Prescription Drug Card Program with Walgreen' s Health Initiative which will be available to all employees and their covered dependents who are part of the City' s Preferred Provider Organization (PPO) plan. eft- BACKGROUND The City currently offers employees a choice of two (2) medical benefit plans : an HMO and a PPO. The HMO plan offers a Prescription Drug Program, while the PPO plan does not . Employees who are on the PPO plan, purchase needed prescriptions, submit a claim and are reimbursed for 80% of their expense. The prescription is filled and dispensed at retail cost . PPO covered employees are experiencing an annual fill rate of 10, 200 prescriptions at an average annual cost of $566, 796 . Walgreen' s Health Initiatives offers a Prescription Drug Card program which would allow employees the ability to fill their prescription needs at virtually any pharmacy, at wholesale, rather than retail pricing. Employees would have a co-pay of $10 for generic drugs and $20 for brand name drugs . Additionally, mail order prescription service is available and a three (3) month drug supply would be mailed to the employees home . COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED Leadership of all union organizations have been apprised of this plan and have been a part of its development . All Union presidents have voiced their approval and desire for implementation. . . Prescription Drug Plan tow December 14 , 2001 Page 2 _FINANCIAL IMPACT Prescription drugs and their costs were reviewed from the previous year. Based on an average prescription cost of $65, it is estimated that the City may save $128 , 000 per year under this plan. LEGAL IMPACT 0/None. ALTERNATIVES None . RECOMMENDATION It is recommended that the City Council approve the Walgreen' s Health Initiative Prescription Drug Program for an implementation date of March 1, 2002 for a three (3) year program. eRespectfully submitted, J41 � 1•1%.,• `G4. Joy A. Parker City Manager NAO/mgh Attachment ew