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HomeMy WebLinkAboutEXPRESS SCRIPTS - CONTRACT - RFP - P682 BENEFITSEXPRESS SCRIPTS, INC MANAGED PRESCRIPTION DRUG PROGRAM AGREEMENT THIS MANAGED PRESCRIPTION DRUG PROGRAM AGREEMENT (the "Agreement") is entered into as of the 1st day of January, 1999, by and between EXPRESS SCRIPTS, INC, a corporation organized under the laws of the State of Delaware ('ESP') and CITY OF FORT COLLINS, organized under the laws of the State of Colorado ("Sponsor") RECITALS 1 ESI is in the business of providing, managing and administering prescription drug programs, including the maintenance of a nationwide network of contracted retail pharmacies, pharmacy claims administration, mail service pharmacy, preparation of prescription drug management and utilization reports, and other pharmacy benefit management services 2 Sponsor desires to provide a prescription drug benefit program for Sponsor's employees and their eligible dependents 3 The parties to this Agreement desire to enter into and maintain an arrangement whereby ESI will provide prescription drug benefit programs for Sponsor's Members AGREEMENT SECTION I DEFINITIONS The following terms shall have the meanings set forth below "Agreement," "hereof' and "hereunder" and words of similar import mean this Managed Prescription Drug Program Agreement, including all exhibits hereto, each as amended from time to time in accordance with the terms hereof "Copayment" means that portion of the charge for each Covered Drug dispensed to the Member that is the responsibility of the Member, as indicated on Exhibit B hereto "Covered Drugs" means those prescription drugs, supplies and other Items that are covered under the Prescription Drug Program, as indicated on Sponsor's Include/Exclude Drug Coverage Information form which shall be consistent vnth Exhibit A hereto, as may be amended from time to time bodily injury as may arise from operation of the Mail Service Pharmacy under this Agreement ESI does not maintain liability insurance on behalf of any Participating Pharmacy, but does require such Pharmacies to maintain adequate commercial insurance, when deemed acceptable by ESI, or to have in place a self-insurance program 62 Compliance with Law Change in Law Each party shall be responsible for ensuring its compliance with any laws and regulations applicable to its business, including maintaining any necessary licenses and permits Sponsor shall be responsible for any governmental or regulatory charges imposed upon this Prescription Drug Program, other than taxes based on the net income of ESI If ESI's performance of its duties under this Agreement is made materially more burdensome or expensive due to a change in federal, state or local laws or regulations or the interpretation thereof, the parties shall negotiate an appropriate adjustment to the fees paid to ESI If the parties cannot agree on an adjusted fee, then ESI may terminate the Prescription Drug Program on 30 days' prior written notice to Sponsor 63 Disclosure of Certain Financial Matters From time to time ESI may receive market share incentive payments and other fees from pharmaceutical manufacturers with respect to certain Covered Drugs dispensed to Members by Participating Pharmacies and by ESI s Marl Service Pharmacy In addition, ESI contracts with Participating Pharmacies at various rates that are renegotiated from time to time, and charges Sponsor at a uniform rate that may be greater or less than the average rate paid to Participating Pharmacies Except as may be expressly provided otherwise in this Agreement, Sponsor acknowledges and agrees that ESI will retain all such payments from pharmaceutical manufacturers and all such provider discounts, if any, in addition to any administrative and other fees paid by Sponsor, as ESI's compensation for administering the Prescription Drug Program described herein Sponsor acknowledges that, except as may be expressly provided herein, it has no right to receive, nor possesses any beneficial interest in, any such discounts or payments SECTION VII TERM AND TERMINATION, DEFAULT AND REMEDIES 71 Term The initial term of this Agreement shall begin on January 1, 1999, and end on December 31, 1999, and may be terminated earlier or extended in accordance with the terms hereof Not less than 90 days prior to the end of the initial or any renewal term of this Agreement either party may notify the other party that it wishes to terminate this Agreement If no such notification is given this Agreement shall continue with the same terms and conditions as set forth herein for additional one-year terms, subject to the right of termination as otherwise provided herein 72 Termination for Breach or Default If either party is in default under any provision of this Agreement, the other party may give written notice of such default If the defaulting party has not used good faith efforts to cure such breach or default within 30 days after it receives such notice, or if good faith efforts to cure have begun within 30 days but such cure is not completed within 60 days after receipt of the notice, the other party shall have the right by further written 10 notice (the "Termination Notice") to terminate this Agreement as of any future designated date which is at least 60 days after the Termination Notice was sent In addition, (i) ESI may terminate or suspend its performance hereunder immediately and cease providing or authorizing provision of Covered Drugs to Members without any written notice if Sponsor fails to pay ESI in accordance with the terms of this Agreement, (n) if ESI has reasonable grounds for insecurity as to the ability of Sponsor to meet its financial commitments hereunder, ESI may require adequate assurance of Sponsor's performance, which may include the requirement that Sponsor provide security to ESI, and (ill) ESI may suspend service to a Member who is in default of payment of any Copayments or Deductibles 73 Termination for Insolvency To the extent permitted by applicable law, ESI may terminate this Agreement, or suspend performance hereunder, upon the insolvency of Sponsor, and Sponsor may terminate this Agreement upon the insolvency of ESI The "insolvency" of a party shall mean the filing of a petition commencing a voluntary case against such party under the United States Bankruptcy Code, a general assignment by such party for the benefit of creditors, the inability of such party to pay its debts as they become due, such party's seeking or consenting to, or acquiescence in, the appointment of any trustee, receiver or liquidation of it, or any material part of its property, or the commencement against such party of an involuntary case under the United States Bankruptcy Code, or a proceeding under any receivership, composition, readjustment, liquidation, insolvency, dissolution, or like law or statute, which case or proceeding is not dismissed or vacated within 60 days 74 Remedies (a) A party's right to terminate this Agreement under this Section vII shall not be exclusive of any other remedies available to the terminating party under this Agreement or otherwise, at law or in equity (b) ESI shall not be liable in any manner for any delay or failure to perform its obligations hereunder wluch are beyond ESI's reasonable control, including, without limitation, any delay or failure due to strikes, labor disputes, riots, earthquakes, storms, floods or other extreme weather conditions, fires, explosions, acts of God, embargoes, war or other outbreak of hostilities, government acts or regulations, or the failure or inability of carvers, suppliers, delivery services, or telecommunications providers to provide services necessary to enable ESI to perform its obligations hereunder (c) ESI's liability to Sponsor hereunder shall in no event exceed the actual proximate losses or damages to Sponsor caused by ESI's breach of this Agreement, up to the amount of administrative fees paid to ESI by Sponsor hereunder for the one year period preceding the date on which the claim arose In no event shall ESI or any of its affiliates directors, employees or agents, be liable for any indirect, special, incidental, consequential, exemplary or punitive damages, or any damages for lost profits, however caused or ansing, whether or not ESI has been informed of the possibility of their occurrence 11 (d) ESI will indemnify and hold Sponsor harmless from and against any liability, loss, damage, claim or expense of any kind, including costs and reasonable attorney's fees (collectively, "Costs"), incurred by Sponsor in connection with any claim by any third party (including Members) against Sponsor, solely to the extent that such Costs arise from ESI's negligent acts or omissions or wilful misconduct Sponsor shall notify ESI in writing promptly upon learning of any claim for which indemnification may be sought hereunder and shall tender the defense of such claim to ESI ESI shall not indemnify Sponsor with respect to any claim settled by Sponsor without ESI's written consent This subsection (d) shall not be construed to impose liability on ESI to the extent inconsistent with other provisions of this Agreement, including but not limited to Sections 3 2(d), 3 3, 6 2 and 7 4(b) 75 Survival The parties' rights and obligations under Sections 3 2(d) (last sentence), 3 3 (last sentence), 3 7 (last sentence), IV, V, 6 2 and 7 4(c) shall survive the termination of this Agreement for any reason SECTION VIII MISCELLANEOUS 8 1 Notice Any notice or document required or permitted to be delivered pursuant to this Agreement must be in writing and shall be deemed to be effective upon receipt and must be either (1) deposited in the United States Mail, postage prepaid, certified or registered marl, return receipt requested, or (ii) sent by recognized overnight delivery service, in either case properly addressed to the other party at the address set forth below, or at such other address as such party shall specify from time to time by written notice delivered in accordance herewith Express Scripts, Inc Attn President 14000 Riverport Drive Maryland Heights, Missouri 63043 City of Fort Collins Attn James B O'Neill II, CPPO P 0 Box 580 Fort Collins, Colorado 80522-0580 82 Independent Parties No provision of this Agreement is intended to create or shall be construed to create any relationship between ESI and Sponsor, other than that of independent entities contracting with each other solely for the purpose of effecting the provisions of tins Agreement Neither party, nor any of their respective representatives, shall be construed to be the partner, agent, employee, or representative of the other and neither party shall have the right to make any representations concerning the duties, obligations or services of the other except as consistent with the express terms of this Agreement or as otherwise authorized in writing by the party about which such representation is asserted 12 83 Successors and Assigns This Agreement will be binding upon, and inure of and be enforceable by, the respective successors and permitted assie parties hereto, of ESI to the benefit gns of th provided that this Agreement may not be assigned by Sponsor without the prior written consent 84 Integration, Amendments This Agreement constitutes the entire understanding of the Parties hereto and supersedes any prior oral or written communication between the parties with respect to the subject matter hereof No modification, alteration, or waiver of any term, covenant, or condition of this Agreement shall be valid unless in writing, signed by both parties or the agents of the parties who are authorized in writing 85 Choice of Law This Agreement shall be construed and governed in all respects according to the laws in the State of Colorado, without regard to the rules of conflict of laws thereof 86 Waiver No waiver of a breach of any covenant or condition shall be construed to be a waiver of any subsequent breach No act, delay or omission done, suffered, or permitted by the parties shall be deemed to exhaust or impair any right, remedy or power of the parties hereunder 87 Severabili If any clause or provision of this Agreement (other than Section IV) shall be held to be unenforceable or ineffective, the validity or enforceability of any other clause or provision contained herein shall not be affected 88 Thud Party Beneficiary Exclusion This Agreement is not a third benefici contract, nor shall this Agreement create any rights on behalf of Members party against ESI Sponsor and ESI reserve the right to amend, cancel or terminate this Agreement without notice to or consent of any Member 89 Arbitration Except as provided below, any dispute ansing under this Agreement shall be resolved by binding arbitration, which, unless the parties otherwise agree in writing, shall be conducted in accordance with the following rules (a) Initiation of Arbitration Any party may initiate arbitration hereunder by written notice to the other parties descnbmg in detail the nature of the default or other dispute to be resolved (b) Selection of Arbitrator Unless the parties agree on the selection of the arbitrator within 15 days after initiating the arbitration proceeding, each of ESI and Sponsor shall select its own representative and the two representatives so selected shall select the arbitrator Each representative and the arbitrator shall be a person with not less than 5 years experience at a senior management level in the managed health care industry, and shall not have any present or past affiliation with ESI or Sponsor, or any major shareholder or any member of the senior management or board of directors of ESI or Sponsor 13 (c) Time and Place of Arbitration Unless the parties agree otherwise, the arbitration shall occur on a date to be set by the arbitrator, which shall be no more than 30 days after the selection of the arbitrator, and shall be held in Kansas City (d) Expenses of Arbitration The parties shall bear equally the arbitrator's fee and other costs of arbitration such as rental of the hearing room and costs of a court reporter, and each party shall bear its own costs (including attorneys' fees) incurred m preparation for the arbitration, provided, however, that the arbitrator may award costs and attorneys' fees, in whole or in part, to the prevailing party in his discretion (e) Transcript A transcript of the proceedings will be prepared by a licensed court reporter selected by the arbitrator A copy of the transcript will be made available to the parties prior to any briefing of the issues that the arbitrator may request (f) Remedies Generally The arbitrator shall grant such relief to the non -defaulting party as shall be necessary to put such party in the position such party would have been in absent default Such relief may include, without limitation, awarding monetary damages for breach, or relieving the non -defaulting party from any further obligations under this Agreement or the Ancillary Agreements No punitive damages shall be awarded (g) Rules of Arbitration Appeal Except as otherwise provided in this Section, any arbitration will be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (but not under the auspices of such organization) The arbitrator's award shall be issued within 30 days of the conclusion of the arbitration proceeding and shall be accompanied by written findings of fact and conclusions of law The arbitrator's award and opinion shall be final and binding on all parties IN WITNESS WHEREOF, the undersigned have executed this Managed Prescription Drug Program Agreement as of the day and year first above written EXPRESS SCRIPTS, INC CITY OF FORT COLLINS Printed Name Title P one m.�f pnJe- Qllr h++pysien�...c f" 2 2 i (179 Fax 770- 221-6707 A lki�',,I As,esC� 'i�nt C�.tr Att©r EXHIBIT A SAMPLE FORM OF INCLUDE/EXCLUDE DRUG COVERAGE INFORMATION Include/Exclude Drug Coverage Plan Number Place an "I" on those items that are included an "E" on those items that are excluded, and a "P" on those items that require a prior authorization Include any plan limitation that may apply to the drug coverage All legend drugs are included except those listed as excluded below All over the -counter drugs are excluded except those listed as included below V Fde # Upen ❑ Closed* ❑ * Closed FormularyBasis ESI Generic Base El ESI Closed Client Closed Note Please complete only the sections below for any exceptions to the closed formulary Should all dispensing limits be tripled for the mad order benefits/ YES NO If NO please indicate the dispensing limits for each benefit in the limitations section IF THE PLAN EXCL UDES INJECTABLES THEN ALL INJECTABLES WILL BE EXCL UDED UNLESS THEYARE SPECIFICALLYINCL UDED FOR THOSE CATEGORIES THAT HAVE BOTH ORAL & INJECTABLE DOSAGE FORM No Text No Text These are the exceptions that will be used for the base/default benefit that will apply at group level Any other exceptions which should be used in certain conditions only must be outlined in the Alternate Benefit Section of the ASF This is a sample form only An original will need to be requested via your Account Manager rd EXHIBIT B COPAYMENTS AND DEDUCTIBLES Members will be charged the following Deductibles and Copayments Copayments M At Participating Pharmacies The lesser of (1) the usual and customary charge that the Participating Pharmacy charges for the particular drug on the date dispensed or (n) the greater of Mult-Source Brand Drugs $10 00 or 20% of the applicable Participating Pharmacy Rate stated on Exhibit C Single -Source Brand Drugs $10 00 or 20% of the applicable Participating Pharmacy Rate stated on Exlubit C Generic Drugs $5 00 or 10% of the applicable Participating Pharmacy Rate stated on Exhibit C Through ESI's Mail Service Pharmacy The lesser of (i) the applicable Mail Pharmacy Rate stated on Exhibr greater of Single -Source Brand Drugs Generic Drugs II Deductibles $10 00 or 20% of the applicabl, Pharmacy Rate on Exhibit C $5 00 or 10% of the applicable Pharmacy Rate on Exhibit C Each Member shall be responsible for a $50 00 Deductible each calendar yea III Maximum Out -of -Pocket The maximum out-of-pocket expense for any individual Member is $1,000 00 in each calendar year retail char Z�L "Deductible" means the aggregate annual amount the Member is required to pay for Covered Drugs before becoming entitled to the benefits under the Prescription Drug Program, in addition to the Copayments as indicated on Exhibit B hereto "Eligibility Reports" means the reports submitted by Sponsor to ESI in accordance with Section 2 2 of this Agreement "Identification Card" means a printed identification card containing specific information about the prescription drug benefits to which the Member is entitled Regardless of whether ESI issues the Identification Card, all Identification Cards shall have ESI's PerxSelectsM and PerxCaresM logos or other method of identifying the fact that ESI is the provider of the prescription drug benefit, acceptable in form to ESI Mail Service Pharmacy" means a duly licensed pharmacy operated by ESI, where prescriptions are filled and delivered to Members via the United States Postal Service, United Parcel Service, or other delivery service "Member" means each person who is eligible to receive prescription drug benefits under the Prescription Drug Program as indicated in the Eligibility Reports 'Member Submitted Claim means (i) a claim submitted by a Member for Covered Drugs dispensed by a pharmacy other than a .Participating Pharmacy (ii) a claim for Covered Drugs filled at a Participating Pharmacy for which the Member paid cash because the Member did not present an Identification Card, or (iu) subrogation claims submitted by the United States or any state under the Medicare, Medicaid or similar government health care programs "Non -Participating Pharmacy" means any pharmacy that does not have an agreement with ESI to provide Covered Drugs to Members "Participating Pharmacy" means any pharmacy with which ESI has executed an agreement to provide Covered Drugs to Members "Preferred Product List" means a list of preferred prescription drugs that Members are encouraged to request and Participating Pharmacies are encouraged to dispense, consistent with their professional judgment and applicable medical and pharmaceutical laws and procedures The Preferred Product List shall be developed by ESI and is subject to change from time to time, in ESI's sole discretion A copy of the Preferred Product List as in effect from time to time will be delivered to Sponsor on request "Prescription Drug Claim" means a claim for payment submitted to ESI by a Participating Pharmacy as a result of dispensing Covered Drugs to a Member Prescription Drug Program" means the prescription drug services that are provided to Sponsor under this Agreement 2 EXHIBIT C EXPRESS SCRIPTS PRESCRIPTION DRUG PROGRAM FEES 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 generic drug prices, in its sole discretion "Usual and Customary Retail Price" means the retail price charged by the Participating Pharmacy for the particular drug in a cash transaction on the date the drug is dispensed, as reported to ESI by the Participating Pharmacy 2 Prescription Drugs filled at ESI Participating Pharmacies in ESI's PERxSelectsm Network A Ingredient Cost and Dispensing Fee The lower of (1) An ingredient cost of AWP less 12% or, if lower, the MRA, plus a dispensing fee of $2 25 per prescription, plus any preferred product or generic incentive fee payable to the Participating Pharmacy under its provider agreement with ESI, plus applicable sales or excise tax or other governmental surcharge, if any, or (2) The Usual and Customary Retail Price of the Participating Pharmacy dispensing the prescription drugs, plus applicable sales or excise tax or other governmental surcharge, if any B If ESI pays a particular Participating Pharmacy a higher rate because Sponsor has requested such pharmacy be included in the network, the rate shall be the net ingredient cost plus the dispensing fee paid by ESI to such pharmacy, plus applicable sales or excise tax or other governmental surcharge, if any If any change to Federal or applicable state law or regulation (including the interpretation of existing laws or regulations by a court or administrative agency) first occurs after July 1, 1994, and in consequence thereof ESI increases payments Drug Program fees set forth above will be increased by the same amount C Claims Administration Fee $0 60 per submitted claim 3 Prescription Drugs filled at ESI's Mail Service Pharmacy A Ingredient Cost Brand Drugs AWP less 14%, plus applicable sales or excise tax or other governmental surcharge, if any Generic Drugs AWP less 48%, or (u) MRA, plus applicable sales or excise tax or other governmental surcharge, if any B Dispensing Fee $1 50 per prescription This fee is subject to adjustment from time to time for increases in postage and delivery charges C Claims Administration Fee No additional charge D Preferred Product List Incentive Fee $0 50 per prescription filled with a preferred drug 4 Member Submitted Claims $1 50 per submitted claim, if applicable 5 Prior Authorization Fee For prior authorization services for drugs other than the seven (7) drugs automatically included in the prior authorization program provided pursuant to Section 3 7, Sponsor shall pay ESI a prior authorization fee of $5 00 per authorized prescription 6 Implementation Fees There is no charge 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 $1 00 per Member implementation fee 7 Identification Cards ESI will provide up to two Identification Cards per employee at no charge to Sponsor Additional Identification Cards will be provided for $0 25 per card 8 Card Distribution Fee On initial implementation and renewals there is no charge for bulk shipment of Identification Cards to Sponsor If Sponsor requests that such cards be mailed to the individual Members, Sponsor will pay ESI a distribution charge of $1 00 per Member 9 Payment Method Sponsor agrees to pay ESI or cause ESI to be paid for the prescription drul program by [specify only one] x (1) A bank wire transfer by Sponsor to a bank account designated b} ESI withinWhours of receipt of ESI's bill (u) An ACH transfer bas d on Sponsor's written authorization; initiated by ESI within?ours of the date of ESI's bill (ni) A check received by ESI within 5 business days of the date of ESI's bill (iv) A check received by ESI within 15 business days of the date of ESI s bill, secured at all times by a certificate of deposit or bank letter of credit in the amount of $10 00 per Member 10 Preferred Product List Management Fee ESI will remit to Sponsor 65% of the market share incentive payments paid by drug manufacturers to ESI with respect to those drugs listed on the Preferred Product List as preferred brands and dispensed to Members and ESI will retain the balance of market share incentive payments collected by it as its fee for developing, implementing and 3 managing the Preferred Product List ESI will use its best efforts to bill drug manufacturers with whom ESI has market share incentive payment agreements for market share incentive payments due for preferred brands dispensed to Members within 75 days of the end of each calendar quarter ESI will pay Sponsor its portion of the market share incentive payment amounts so billed not later than 150 days after the end of such quarter Sponsor acknowledges that drug manufacturers may discontinue payment of market share incentive payments at will, that laws governing prescription drug pricing (including market share incentive payments) may change, and that market share incentive payment amounts are affected by physician prescribing patterns and other factors Accordingly, Sponsor acknowledges that no market share incentive payment amounts can be guaranteed 11 ExpressPreference'm Program Management Fees Sponsor shall pay ESI the following program fees, if any, in accordance with the ExpressPreferencesM program selected ESI's bills to Sponsor will reflect the applicable ExpressPreferences"i management fee for the applicable billing period, and if applicable, the savings used in the calculation of ESI's management fee Program Full Preference Select Preference #1 Select Preference #2 Physician Preference with Copay Differential Physician Preference Management Fee None None Fee to Pharmacy None None $3 00 for each Member None communication when a non - preferred product is dispensed 35% of total cost savings` $0 50 each time a preferred drug is dispensed 35% of total cost savings' $0 50 each tune a preferred drug is dispensed Percentage of the total cost savings that result from the successful interchange of the preferred drug in place of the non -preferred drug each time the Member receives the preferred drug during the 12 months beginning on the date the preferred drug is first dispensed Total cost is based upon ingredient cost plus all fees payable to the dispensing pharmacy plus any administrative fee plus applicable sales or excise tax or other governmental surcharge, if any 4 EXHIBIT D PERFORMANCE STANDARDS With respect to the measurement of all performance standards set for below, the measurement of a performance standard shall exclude those events caused by any action or inaction of Sponsor which adversely impacts or affects ESI's ability to meet such performance standard Performance penalties will apply only to periods commencing after execution of the definitive contract action steps and dates Standard Express ScnptsNalueRx guarantees program implementation substantially in accordance with a mutually agreed upon written schedule, subject to timely performance of client's scheduled obligations The client must provide all necessary information at least 30 days before the implementation date Program implementation includes • Contract delivery • ID card production • Plan startup • Initial reporting • Initial billing Guarantee Express ScnptsNalueRx places 5 percent of the administrative fee at risk Downtime Standard Express ScnptsNalueRx guarantees 98 percent availability of the point -of -sale adjudication system, except for daily scheduled maintenance and telecommunications failure This standard will be measured and reported quarterly Guarantee Express Scnpts/ValueRx places 5 percent of the administrative fee at risk if the stated standard is not met Mail Service Standard Whereas Express Scnpts/ValueRx strives for 100 percent accuracy, Express ScnptsNalueRx guarantees 99 8 percent accuracy in dispensing the correct drug, at the correct strength and at the correct dosage, unless the error is a prescriber error This standard will be measured quarterly Guarante Express ScnptsNalueRx places 5 percent of the administrative fee at risk, if performance is below the stated standard Claims Standard Express Scnpts/ValueRx guarantees 99 percent claim adjudication accuracy This standard will be measured quarterly uarant Express Scnpts/ValueRx places 5 percent of the administrative fee at risk if the stated standard is not met Witiun 45 business days after the end of each calendar quarter, Express Scnpts/ValueRx shall provide Sponsor with a report (a) assessing Express Scnpts/ValueRx' performance under each performance guarantee, and (b) in the event Express Scnpts/valueRx did not meet a performance guarantee, calculating the applicable amount due to the Sponsor, along with a check for any amounts due to Sponsor for such quarter In no event shall the sum of the payments to Sponsor as a result of Express Scnpts/ValueRx failure to meet any performance guarantees in any quarter exceed 20 percent of the amount of Express ScnptsNalueRx' admirnstrative fees payable by Sponsor to Express Scnpts/valueRx for such quarter EXPRESS SCRIPTS, INC MANAGED PRESCRIPTION DRUG PROGRAM AGREEMENT THIS MANAGED PRESCRIPTION DRUG PROGRAM AGREEMENT (the "Agreement") is entered into as of the 1st day of January, 1999, by and between EXPRESS SCRIPTS, INC, a corporation organized under the laws of the State of Delaware ("ESI") and CITY OF FORT COLLINS, organized under the laws of the State of Colorado ("Sponsor") RECITALS 1 ESI is in the business of providing managing and administering prescription drug programs, including the maintenance of a nationwide network of contracted retail pharmacies, pharmacy claims administration, mail service pharmacy, preparation of prescription drug management and utilization reports, and other pharmacy benefit management services 2 Sponsor desires to provide a prescription drug benefit program for Sponsor's employees and their eligible dependents 3 The parties to this Agreement desire to enter into and maintain an arrangement whereby ESI will provide prescription drug benefit programs for Sponsor's Members AGREEMENT SECTION I DEFINITIONS The following terms shall have the meanings set forth below "Agreement,' "hereof' and "hereunder' and words of similar import mean this Managed Prescription Drug Program Agreement, including all exhibits hereto, each as amended from time to time in accordance with the terms hereof "Copayment" means that portion of the charge for each Covered Drug dispensed to the Member that is the responsibility of the Member, as indicated on Exhibit B hereto "Covered Drugs" means those prescription drugs, supplies and other items that are covered under the Prescription Drug Program as indicated on Sponsor's Include/Exclude Drug Coverage Information form which shall be consistent with Exhibit A hereto, as may be amended from time to time "Deductible' means the aggregate annual amount the Member is required to pay for Covered Drugs before becoming entitled to the benefits under the Prescription Drug Program, in addition to the Copayments, as indicated on Exhibit B hereto "Eligibility Reports" means the reports submitted by Sponsor to ESI in accordance with Section 2 2 of this Agreement "Identification Card" means a printed identification card containing specific information about the prescription drug benefits to which the Member is entitled Regardless of whether ESI issues the Identification Card, all Identification Cards shall have ESI's PerxSelectsm and PerxCare® logos or other method of identifying the fact that ESI is the provider of the prescription drug benefit, acceptable in form to ESI "Mail Service Pharmacy" means a duly licensed pharmacy operated by ESI, where prescriptions are filled and delivered to Members via the United States Postal Service, United Parcel Service, or other delivery service "Member" means each person who is eligible to receive prescription drug benefits under the Prescription Drug Program, as indicated in the Eligibility Reports "Member Submitted Claim" means (i) a claim submitted by a Member for Covered Drugs dispensed by a pharmacy other than a Participating Pharmacy, (n) a claim for Covered Drugs filled at a Participating Pharmacy for which the Member paid cash because the Member did not present an Identification Card, or (in) subrogation claims submitted by the United States or any state under the Medicare, Medicaid or similar government health care programs "Non -Participating Pharmacy" means any pharmacy that does not have an agreement with ESI to provide Covered Drugs to Members "Participating Pharmacy" means any pharmacy with which ESI has executed an agreement to provide Covered Drugs to Members "Preferred Product List" means a list of preferred prescription drugs that Members are encouraged to request and Participating Pharmacies are encouraged to dispense, consistent with their professional judgment and applicable medical and pharmaceutical laws and procedures The Preferred Product List shall be developed by ESI and is subject to change from time to time in ESI's sole discretion A copy of the Preferred Product List as in effect from time to time will be delivered to Sponsor on request `Prescription Drug Claim means a claim for payment submitted to ESI by a Participating Pharmacy as a result of dispensing Covered Drugs to a Member Prescription Drug Program" means the prescnption drug services that are provided to Sponsor under this Agreement 2 SECTION II ESTABLISHMENT OF THE PRESCRIPTION DRUG PROGRAM 2 1 Exclusivity Sponsor shall use ESI as the exclusive provider of prescription drug benefits to Members during the term of this Agreement 22 Eligibility of Members Sponsor shall provide ESI with an initial Eligibility Report at least 15 days prior to the effective date of its Prescription Drug Program, containing the names of all Members and any other information specified by ESI that is necessary to administer the Prescription Drug Program From time to time thereafter, but not less frequently than monthly, Sponsor shall provide ESI with updated Eligibility Reports which shall specify the effective date for each Member that is added to or terminated from participation in the Prescription Drug Program All Eligibility Reports shall be on tape or disk in a format that is readable by ESI Not more than 3 business days after ESI has received each Eligibility Report, ESI shall enter the eligibility data into its on-line claims processing system and thereafter shall accept claims for Covered Drugs that are dispensed to new Members after the effective date of their eligibility and deny claims for Covered Drugs that are dispensed to terminated Members after the effective date of their termination Alternatively, by agreement of Sponsor and ESI, Sponsor may enter eligibility data directly on-line to ESI's claims processing system In either case, Sponsor shall be solely responsible for ensuring the accuracy of its Eligibility Reports, and shall be obligated to pay ESI for claims accepted by ESI in accordance with the eligibility procedures established in this Section Sponsor bears the risk of fraudulent claims submitted by Members or by unauthorized persons using a Member's Identification Card or identification number 23 Identification Cards Members must present Identification Cards to Participating Pharmacies in order to receive Covered Drugs under the terms of the Prescription Drug Program At the option of Sponsor and for the fees set forth in Exhibit C hereto, ESI shall issue Identification Cards for Members If ESI issues the Identification Cards, the Identification Cards will be printed and delivered to Sponsor within 15 days of the date that ESI receives the initial Eligibility Report, or the date ESI receives an updated Eligibility Report after the effective date of the Prescription Drug Program, as the case may be Sponsor shall be responsible for delivering the Identification Cards to Members, unless Sponsor requests that ESI deliver the cards and pays the fees set forth on Exhibit C for such delivery 24 Benefit Design Changes If Sponsor elects to change certain benefit design features of the Prescription Drug Program after initial setup including but not limited to changes in Copayments, Covered Drugs, prior authorization requirements, or otherwise, such change should be communicated by Sponsor to ESI by notifying the Account Service Manager for the Sponsor s Program and submitting a new or revised Include/Exclude Drug Coverage Information form ESI will acknowledge the request in writing and notify Sponsor of (1) the proposed implementation date of the benefit design change or that such change cannot be implemented as requested and (n) any additional fees due to ESI by Sponsor as a result of such change Sponsor must formally accept the change and assume the obligation of additional fees, if any, in writing prior to the implementation of any such change Such benefit design changes implemented in F accordance with this Section shall be deemed incorporated into the Agreement as of the implementation date of the change ESI will not be liable for making or failing to make benefit design changes that are communicated to ESI in any manner other than as provided in this Section SECTION III SERVICES PROVIDED BY ESI 3 1 Mail Service Pharmacy Members may have prescriptions filled through the Mail Service Pharmacy Upon presentation of a prescription by a Member, ESI shall promptly determine whether the Member is eligible under the Prescription Drug Program and whether the prescription is for a Covered Drug If the prescription and applicable law do not prohibit substitution of a generic drug equivalent to the prescribed drug, or if ESI obtains the consent of the prescriber, ESI shall dispense the generic substitute to the Member Prescriptions will be dispensed from the Mail Service Pharmacy in a quantity prescribed by the prescriber but not to exceed a 90-day supply unless otherwise specified by Sponsor in writing to ESI Refills of prescriptions shall not be sent from the Mail Service Pharmacy without authorization from both the Member and the prescriber ESI shall charge and collect from each Member the applicable Copayment and any Deductible (or portion thereof) Sponsor shall be responsible for paymg for all prescriptions for Covered Drugs received by its Members from the Marl Service Pharmacy on or prior to the termination date of this Agreement ESI may promote the use of the Marl Service Pharmacy to Members, provided, that ESI shall bear the cost of any promotional incentives offered to Members 32 Claims Processing for Participating Pharmacies (a) Pharmacy Network Members can obtain prescriptions for Covered Drugs through a network of Participating Pharmacies maintained by ESI Exhibit C identifies the ESI network for Sponsor's Prescription Drug Program ESI will provide Sponsor with a list of Participating Pharmacies in such network prior to the effective date of the Prescription Drug Program and will deliver an updated list from time to time Any additions and deletions to the network shall be in ESI's sole discretion ESI shall require each Participating Pharmacy to have all licenses legally required for dispensing prescription drugs in the states in which such pharmacy operates (b) Filling a Prescription Through the Network A Member may have prescriptions filled at Participating Pharmacies upon presentation of an Identification Card Each Participating Pharmacy is required to verify the Member's eligibility through ESI's on-line claims processing system Participating Pharmacies will dispense prescriptions to Members in a quantity not to exceed a 30-day supply unless otherwise specified by Sponsor in writing to ESI ESI shall direct the Participating Pharmacies to charge and collect the applicable Copayment and any Deductible (or portion thereof) from each Member for each Covered Drug dispensed ESI will maintain a toll free number for Members to call for information regarding their benefits under the Prescription Drug Program 4 SECTION II ESTABLISHMENT OF THE PRESCRIPTION DRUG PROGRAM 2 1 Exclusivit Sponsor shall use ESI as the exclusive provider of prescription drug benefits to Members during the tern of this Agreement 22 Eligibility of Members Sponsor shall provide ESI with an initial Eligibility Report at least 15 days prior to the effective date of its Prescription Drug Program, containing the names of all Members and any other information specified by ESI that is necessary to administer the Prescription Drug Program From time to time thereafter, but not less frequently than monthly, Sponsor shall provide ESI with updated Eligibility Reports which shall specify the effective date for each Member that is added to or terminated from participation in the Prescription Drug Program All Eligibility Reports shall be on tape or disk in a format that is readable by ESI Not more than 3 business days after ESI has received each Eligibility Report, ESI shall enter the eligibility data into its on-line claims processing system and thereafter shall accept claims for Covered Drugs that are dispensed to new Members after the effective date of their eligibility and deny claims for Covered Drugs that are dispensed to terminated Members after the effective date of their termination Alternatively, by agreement of Sponsor and ESI, Sponsor may enter eligibility data directly on-line to ESI's claims processing system In either case, Sponsor shall be solely responsible for ensuring the accuracy of its Eligibility Reports, and shall be obligated to pay ESI for claims accepted by ESI in accordance with the eligibility procedures established in this Section Sponsor bears the risk of fraudulent claims submitted by Members or by unauthorized persons using a Member's Identification Card or identification number 23 Identification Cards Members must present Identification Cards to Participating Pharmacies in order to receive Covered Drugs under the terms of the Prescnption Drug Program At the option of Sponsor and for the fees set forth in Exhibit C hereto, ESI shall issue Identification Cards for Members If ESI issues the Identification Cards, the Identification Cards will be printed and delivered to Sponsor within 15 days of the date that ESI receives the initial Eligibility Report, or the date ESI receives an updated Eligibility Report after the effective date of the Prescription Drug Program, as the case may be Sponsor shall be responsible for delivering the Identification Cards to Members, unless Sponsor requests that ESI deliver the cards and pays the fees set forth on Exhibit C for such delivery 24 Benefit Design Changes If Sponsor elects to change certain benefit design features of the Prescription Drug Program after initial setup, including but not limited to changes in Copayments, Covered Drugs, prior authorization requirements, or otherwise, such change should be communicated by Sponsor to ESI by notifying the Account Service Manager for the Sponsor's Program and submitting a new or revised Include/Exclude Drug Coverage Information form ESI will acknowledge the request in writing and notify Sponsor of (i) the proposed implementation date of the benefit design change or that such change cannot be implemented as requested, and (u) any additional fees due to ESI by Sponsor as a result of such change Sponsor must formally accept the change and assume the obligation of additional fees, if any, in writing prior to the implementation of any such change Such benefit design changes implemented in 3 (c) Claims Processine ESI shall provide the following claims processing services through its on line claims processing system for all claims submitted for approval by Participating Pharmacies • Verification of the eligibility of the Member and any applicable Copayments or Deductibles • Verification that the claim is for Covered Drugs • Verification that the claim is in compliance with the Preferred Product List, if applicable In all cases Sponsor shall have the final responsibility to determine whether any rejected or disputed claim shall be allowed In determining whether ESI has complied with the performance guarantees on Exhibit D hereto, any claims that were disallowed by ESI but allowed by Sponsor shall be disregarded (d) Audits of Participating Pharmacies, No Liability for Actions of Participating Pharmacies ESI shall maintain criteria, which it may amend from time to time, to establish when a Participating Pharmacy shall be audited to determine compliance with its agreement with ESI, and the type of audit that shall be conducted The audit may be conducted by ESI's internal auditors or its outside auditors, and at the pharmacy or at ESI by a review of electronically transmitted claims To compensate ESI for the cost of conducting such audits, ESI shall charge an audit fee equal to 20% of any overpayments recovered from Participating Pharmacies, and the balance will be paid over to Sponsor Notwithstanding the foregoing or any other provision of this Agreement, Participating Pharmacies are independent contractors of ESI, and ESI shall have no liability to Sponsor, any Member or any other person or entity for any act or omission of any Participating Pharmacy or its agents or employees 33 Concurrent Drug Utilization Review (DUR) If Sponsor provides ESI with named dependents in its Eligibility Reports, ESI shall perform a concurrent DUR analysis of each prescription filled through the Mail Service Pharmacy or submitted for processing on-line by a Participating Pharmacy in order to assist the pharmacist in identifying potential drug interactions, incorrect prescriptions or dosages, and certain other circumstances that may be indicative of inappropriate prescription drug usage ESI's DUR process is an educational program designed to enhance information available to the pharmacist in filling prescriptions, and is based only on the current claim for Covered Drugs and such Member information as has been previously provided to ESI and is available in ESI's on-line claims processing system Furthermore, the DUR process depends in part, on clinical drug data and information on dispensing practices provided to ESI by third -party vendors, and is limited to certain drugs and certain analytical criteria that are established by ESI from time to time ESI's DUR process is not intended to substitute for the professional judgment of the prescriber the dispensing pharmacist or any other health care professional providing services to the Member Accordingly ESI shall have no liability to Sponsor any Member or any third party in connection with the DUR process, including, without limitation the failure of the DUR process to identify a prescription that results in injury to a Member 5 34 Claims Processing for Member Submitted Claims If provided on Exhibit C, ESI shall process claims on behalf of Members for Member Submitted Claims The Member shall be responsible for submitting such claims directly to ESI on a form provided by ESI 3 5 Management Information Reports On a quarterly basis, ESI will send Sponsor ESI's standard management information reports containing information relating to the Prescription Drug Program including reports showing pharmacy benefit savings and a utilization summary Additional reports may be provided to Sponsor from time to time for such additional fees as may be agreed to by ESI and Sponsor 36 Preferred Product List ESI shall implement and manage the Preferred Product List as part of the Prescription Drug Program Sponsor shall pay ESI the Preferred Product List incentive fees specified in Exhibit C Sponsor agrees to permit ESI to contact Members, Members' physicians and Participating Pharmacies to encourage compliance with the Preferred Product List 3 7 Prior Authorization ESI shall provide prior authorization of the seven (7) drugs and/or drug classes listed below, at no charge to Sponsor Such drugs must be authorized before such drugs are deemed to be Covered Drugs under the Prescription Drug Program Growth Hormone (Protropm, NuTropm, NuTropm AQ, Humatrope) Octreotide (Sandostatm) Alglucerase (Ceredase) Erythropoetin (Epogen) Filgrastim (Neupogen) GM-CSF (Leukme) Fertility Medications (Pergonal, Profasi) Sponsor may elect to require the prior authorization of additional drugs and/or drug classes for the fee set forth on Exhibit C Upon receiving a prescription for a drug for which prior authorization is required in the Mail Service Pharmacy, or a claim adjudication request for such drug through a Participating Pharmacy, ESI will determine whether to authorize coverage of such drug in accordance with prior authorization protocols which shall be approved by Sponsor In determining whether to authorize dispensing of such a drug, ESI may rely entirely upon information about the Member and the diagnosis of the Member's condition provided to it from sources deemed reliable by ESI at the time that the prescription is to be dispensed, and upon such prior authorization protocols Sponsor shall indemnify and hold harmless, to the extent permitted by law, ESI, its employees, directors, officers and agents from and against any and all awards, losses claims, suits, damages liability judgments, fines, penalties, settlement amounts and expenses, including reasonable attorneys fees (collectively, Damages') ansmg from or as a result of ESI s decision to authorize or deny coverage of any such drug in accordance with such prior authorization protocols, except to the extent that any such Damages anse from ESI's gross negligence or willful misconduct For purposes of the preceding sentence gross negligence shall mean ESI s failure to act in accordance with Sponsor s agreed to prior authorization protocols 2 3 8 Management Information System Enhancements At the request of Sponsor and for ESI s standard hourly rate for custom programming in effect from time to time, ESI shall provide qualified MIS personnel to meet the specific programming needs of Sponsor in connection with the Prescription Drug Program, including but not limited to developing special reporting packages and special program set-up requirements Sponsor agrees to make its personnel available to define the scope of Sponsor's programming needs and to participate in the testing and validation of any such custom programming projects 39 ExnressPreferences" Drug Therapy Management Program ESI shall implement the version of ESI's ExpressPreferences" drug therapy management program selected by Sponsor as a part of the Prescription Drug Program Sponsor agrees to permit ESI to contact Members, Members' physicians and Participating Pharmacies to promote therapeutic and generic substitution opportunities to reduce drug costs, Sponsor shall provide EST with Members' addresses and such other information as may be reasonably necessary to facilitate the substitution In those cases m which ESI's intervention with the prescribing physician or dispensing pharmacy results in a switch to a preferred drug, the Sponsor will pay ESI the fees specified on Exhibit C hereto applicable to the ExpressPreferences' program selected In all cases the prescribing physician shall have final authority over the drug that is dispensed to the Member If the Member attempts to refill a prescription for a non -preferred Covered Drug at a Participating Pharmacy after the prescribing physician has approved the substitution of the preferred Covered Drug but before the Participating Pharmacy has received the new prescription, then 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 ESI will maintain an ExpressPreferences' Product List, identifying preferred and non -preferred drugs in various therapeutic classes The applicable ExpressPreferencesm Product List can vary depending on the particular program selected, and all such product lists may be modified or amended from time to time, in ESI's sole discretion, to reflect developing clinical information, changes in FDA approved indications, pharmaceutical pricing changes, available discounts and rebates and other relevant factors 3 10 Performance Standards ESI will comply with the performance standards set forth on Exhibit D hereto With respect to the measurement of all performance standards set forth on Exhibit D, the measurement of a performance standard shall exclude those events caused by any action or inaction of Sponsor which adversely impacts or affects ESI's ability to meet such performance standard SECTION IV FEES, BILLING AND PAYMENT 41 Fees The fees for the Prescription Drug Programs provided hereunder shall consist of the fees specified in Exhibit C of this Agreement Except as otherwise provided in Section 6 2 and Section 2B of Exhibit C (i) the fees stated herein shall be guaranteed until December 31, 2001, and (n) after completion of the initial term, ESI shall provide Sponsor a 90-day notice of 7 any changes in fees Sponsor shall be responsible to ESI for payment of all such fees For any fees or cost increases, ESI will immediately notify Sponsor in writing of the fee or cost increase Should Sponsor not agree with the fee or cost increase Sponsor has the right to terminate this Agreement with ninety (90) days wntten notice 42 Billing and Payment ESI will bill Sponsor no more frequently than weekly for (1) Covered Drugs dispensed by the Mail Service Pharmacy, less applicable Copayments and Deductibles, (u) Covered Drugs dispensed to Members by Participating Pharmacies, and, if applicable, for Member Submitted Claims, less applicable Copayments and Deductibles, and (in) for all other fees specified in Exhibit C of this Agreement Sponsor agrees to pay ESI according to the method designated on Exhibit C Sponsor shall be responsible for all costs of collection, and agrees to reimburse ESI for such costs and expenses, including reasonable attorneys fees Any amounts not paid by the due date thereof shall bear interest at the rate of 18% per annum (1 5% per month) or, if lower, the highest interest rate permitted by law If Sponsor disputes any item on any invoice, Sponsor shall state the amount in dispute in writing within 30 days of the date of the invoice No interest or late charges shall be imposed during any period on any amounts that Sponsor is disputing in good faith SECTION V OWNERSHIP AND ACCESS TO RECORDS, CONFIDENTIALITY 5 1 Ownership and Use of Prescription Drug Records (a) All records and other data provided to ESI by Sponsor, other than records that ESI is required to maintain by law (including, but not limited to, records required to be maintained by the Mail Service Pharmacy) shall remain the property of Sponsor, provided, that Sponsor irrevocably grants ESI permission to use both during and after the term of this Agreement and/or transfer to third parties the drug and related medical data collected by ESI or provided to ESI by Sponsor for research, cost analyses, cost comparison or other business purposes of ESI all without charge to ESI ESI shall retain full ownership rights over all compilations, analyses and reports prepared by ESI under this Agreement In any case, ESI shall maintain Member confidentiality to the extent required by law, and shall not provide to any third party information identifiable as relating specifically to any Member without such Sponsor's written consent (b) Sponsor, at its own expense and upon not less than 10 business days prior written notice may inspect prescription drug claim data and billing records relating to Sponsors Prescription Drug Program not more frequently than once each year Such inspection shall be K conducted at ESI's offices and shall be subject to such limitations to protect the confidentiality of Member information as ESI may reasonably determine 52 ESI Proprietary Information Sponsor agrees that all confidential and proprietary information of ESI, including, but not limited to, ESI's reporting packages, system formats and other system information, proprietary software and related user documentation, clinical and other manuals, prior authorization and prescription drug evaluation criteria, information and documents related to the Preferred Product List, drug pricing information, and Participating Pharmacy agreements (collectively, "ESI Proprietary Information"), are confidential and proprietary to ESI Sponsor shall not use ESI Proprietary Information, or disclose it to any third party, at any time during or after termination of this Agreement, except as specifically contemplated by this Agreement or upon ESI's prior written consent Upon termination of this Agreement, Sponsor shall cease using all ESI Proprietary Information, and all such information, along with any other ESI systems, manuals, procedures or equipment provided to Sponsor shall be returned to ESI immediately upon ESI's request 53 Confidentiality Regarding Members The parties shall maintain the confidentiality of any information relating to Members in accordance with any applicable laws and regulations Sponsor shall insure that there is an adequate release from each Member permitting ESI to release information relating to the Member to Sponsor, or that release of information relating to Members is otherwise proper All records, reports and other data provided by ESI to Sponsor under this Agreement are solely for Sponsor's use in managing its employee benefit plans, and ESI disclaims all liability ansmg out of Sponsor's use or dissemination of such records, reports or data Sponsor shall indemnify, defend and hold ESI harmless, to the extent permitted by law, from any and all claims, penalties, liabilities, losses, damages, settlements or costs which may arise (1) from ESI s provision of Member information to Sponsor, or (u) from Sponsor's use of Member information 54 Trademarks Each party acknowledges each other party s sole and exclusive ownership of its respective trade names, commercial symbols, trademarks and servicemarks, whether presently existing or later established (collectively Marks") No party shall use the other party s Marks in advertising or promotional materials or otherwise without the owner s prior written consent, provided, however, that the parties may publicize the fact that ESI provides this Prescription Drug Program to Sponsor SECTION VI LIABILITY INSURANCE, COMPLIANCE WITH LAW 61 Liability Insurance ESI shall maintain such policies of general liability, professional liability and other insurance of the types and in amounts customarily carved by businesses such as ESI Copies of such policies shall be available to Sponsor upon request ESI agrees, at its sole expense, to maintain during the term of this Agreement or any renewal hereof, comprehensive general liability insurance coverage in an amount of not less than $2 500,000 per occurrence and in the aggregate, including pharmacist's professional liability protection from such claims for 0 accordance with this Section shall be deemed incorporated into the Agreement as of the implementation date of the change ESI will not be liable for making or failing to make benefit design changes that are communicated to ESI in any manner other than as provided in this Section SECTION III SERVICES PROVIDED BY ESI 3 1 Mail Service Pharmacy Members may have prescriptions filled through the Mail Service Pharmacy Upon presentation of a prescription by a Member, ESI shall promptly determine whether the Member is eligible under the Prescription Drug Program and whether the prescription is for a Covered Drug If the prescription and applicable law do not prohibit substitution of a generic drug equivalent to the prescribed drug, or if ESI obtains the consent of the prescriber, ESI shall dispense the generic substitute to the Member Prescriptions will be dispensed from the Mail Service Pharmacy in a quantity prescribed by the prescriber but not to exceed a 90-day supply unless otherwise specified by Sponsor in writing to ESI Refills of prescriptions shall not be sent from the Mail Service Pharmacy without authorization from both the Member and the prescriber ESI shall charge and collect from each Member the applicable Copayment and any Deductible (or portion thereof) Sponsor shall be responsible for paying for all prescriptions for Covered Drugs received by its Members from the Mail Service Pharmacy on or prior to the termination date of this Agreement ESI may promote the use of the Mail Service Pharmacy to Members, provided, that ESI shall bear the cost of any promotional incentives offered to Members 32 Claims Processing for Participating Pharmacies (a) Pharmacy Network Members can obtain prescriptions for Covered Drugs through a network of Participating Pharmacies maintained by ESI Exhibit C identifies the ESI network for Sponsor's Prescription Drug Program ESI will provide Sponsor with a list of Participating Pharmacies in such network prior to the effective date of the Prescription Drug Program and will deliver an updated list from time to time Any additions and deletions to the network shall be in ESI's sole discretion ESI shall require each Participating Pharmacy to have all licenses legally required for dispensing prescription drugs in the states in which such pharmacy operates (b) Filling a Prescription Through the Network A Member may have prescriptions filled at Participating Pharmacies upon presentation of an Identification Card Each Participating Pharmacy is required to verify the Member's eligibility through ESI's on-line claims processing system Participating Pharmacies will dispense prescriptions to Members in a quantity not to exceed a 30-day supply unless otherwise specified by Sponsor in writing to ESI ESI shall direct the Participating Pharmacies to charge and collect the applicable Copayment and any Deductible (or portion thereof) from each Member for each Covered Drug dispensed ESI will maintain a toll -free number for Members to call for information regarding their benefits under the Prescription Drug Program (c) Claims Processing ESI shall provide the following claims processing services through its on-line claims processing system for all claims submitted for approval by Participating Pharmacies • Verification of the eligibility of the Member and any applicable Copayments or Deductibles • Verification that the claim is for Covered Drugs • Verification that the claim is in compliance with the Preferred Product List, if applicable In all cases Sponsor shall have the final responsibility to determine whether any rejected or disputed claim shall be allowed In determining whether ESI has complied with the performance guarantees on Exhibit D hereto, any claims that were disallowed by ESI but allowed by Sponsor shall be disregarded (d) Audits of Participating Pharmacies No Liability for Actions of Participating Pharmacies ESI shall maintain criteria, which it may amend from time to time to establish when a Participating Pharmacy shall be audited to determine compliance with its agreement with ESI, and the type of audit that shall be conducted The audit may be conducted by ESI's internal auditors or its outside auditors, and at the pharmacy or at ESI by a review of electronically transmitted claims To compensate ESI for the cost of conducting such audits, ESI shall charge an audit fee equal to 20% of any overpayments recovered from Participating Pharmacies, and the balance will be paid over to Sponsor Notwithstanding the foregoing or any other provision of this Agreement, Participating Pharmacies are independent contractors of ESI, and ESI shall have no liability to Sponsor, any Member or any other person or entity for any act or omission of any Participating Pharmacy or its agents or employees 33 Concurrent Drug Utilization Review (DUR) If Sponsor provides ESI with named dependents in its Eligibility Reports, ESI shall perform a concurrent DUR analysis of each prescription filled through the Mail Service Pharmacy or submitted for processing on-line by a Participating Pharmacy in order to assist the pharmacist in identifying potential drug interactions, incorrect prescriptions or dosages, and certain other circumstances that may be indicative of inappropriate prescription drug usage ESI's DUR process is an educational program designed to enhance information available to the pharmacist in filling prescriptions, and is based only on the current claim for Covered Drugs and such Member information as has been previously provided to ESI and is available in ESI's on-line claims processing system Furthermore, the DUR process depends, in part, on clinical drug data and information on dispensing practices provided to ESI by third -party vendors, and is limited to certain drugs and certain analytical criteria that are established by ESI from time to time ESI's DUR process is not intended to substitute for the professional judgment of the prescriber, the dispensing pharmacist or any other health care professional providing services to the Member Accordingly, ESI shall have no liability to Sponsor, any Member or any third party in connection with the DUR process, including, without limitation the failure of the DUR process to identify a prescription that results in injury to a Member 5 Claims Processing for Member Submitted Claims If provided on Exhibit C, ESI shall cess claims on behalf of Members for Member Submitted Claims The Member shall be por e for submitting such claims directly to ESI on a form provided by ESI Management Information Reports On a quarterly basis, ESI will send Sponsor ESI's ndard management information reports containing information relating to the Prescription ig Program including reports showing pharmacy benefit savings and a utilization summary ditional reports may be provided to Sponsor from time to time for such additional fees as may agreed to by ESI and Sponsor Preferred Product List ESI shall implement and manage the Preferred Product List as t of the Prescription Drug Program Sponsor shall pay ESI the Preferred Product List entive fees specified in Exhibit C Sponsor agrees to permit ESI to contact Members, mbers' physicians and Participating Pharmacies to encourage compliance with the Preferred )duct List Prior Authorization ESI shall provide prior authorization of the seven (7) drugs and/or ig classes listed below, at no charge to Sponsor Such drugs must be authorized before such igs are deemed to be Covered Drugs under the Prescription Drug Program Growth Hormone (Protropin, NuTropm, NuTropm AQ, Humatrope) Octreotide (Sandostatm) Alglucerase (Ceredase) fthropoetin (Epogen) Filgrastim (Neupogen) GM-CSF (Leukine) Fertility Medications (Pergonal, Profasi) ylanagement Information System Enhancements At the request of Sponsor and for andard hourly rate for custom programming in effect from time to time, ESI shall provide i MT, personnel to meet the specific programming needs of Sponsor in connection with scri n Drug Program, including but not limited to developing special reporting s and special program set-up requirements Sponsor agrees to make its personnel e to define the scope of Sponsor's programming needs and to participate in the testing dation of any such custom programming projects ­�,Qauu ijrug inerapy management Program ESI shall implement the of ESI's ExpressPreference6m drug therapy management program selected by Sponsor as f the Prescription Drug Program Sponsor agrees to permit ESI to contact Members, s' physicians and Participating Pharmacies to promote therapeutic and generic Uon opportunities to reduce drug costs, Sponsor shall provide ESI with Members' s and such other information as may be reasonably necessary to facilitate the .ion In those cases in which ESI's intervention with the prescribing physician or ng pharmacy results in a switch to a preferred drug, the Sponsor will pay ESI the fees I on Exhibit C hereto applicable to the ExpressPreferences' program selected In all e prescribing physician shall have final authority over the drug that is dispensed to the If the Member attempts to refill a prescription for a non -preferred Covered Drug at a itmg Pharmacy after the prescribing physician has approved the substitution of the i Covered Drug but before the Participating Pharmacy has received the new prescription, I may authorize an interim prescription for up to a four -day supply of the originally -d drug and may waive the Member's Copayment for this interim supply ESI will i an FxpressPreferences' Product List, identifying preferred and non -preferred drugs in the -utic classes The applicable ExpressPreferences"' Product List can vary ig on the particular program selected, and all such product lists may be modified or i from time to time, in ESI's sole discretion, to reflect developing clinical information, in FDA approved indications, pharmaceutical pricing changes, available discounts and ind other relevant factors Performance Standards ESI will comply with the performance standards set forth on D hereto With respect to the measurement of all performance standards set forth on D, the measurement of a performance standard shall exclude those events caused by pm, r inaction of Sponsor which adversely impacts or affects ESI's ability to in 3 nice standard r } 4 k e ti w SECTION IV FEES, BILLING AND PAYMENT vvR ^A ivt � r ees The fees for the Prescription Drug Programs provided hereunder shall d,c a t1 specified in Exhibit C of this Agreement Except as otherwise provided in Sed ion 2B of Exhibit C, (1) the fees stated herein shall be guaranteed until DeceA _ d (ii) after completion of the initial term, ESI shall provide Sponsor a'day notice of ( bv_� ges in fees Sponsor shall be responsible to ESI for payment of all such fees For any 7 120 dy,lf« fees or cost increases, ESI will immediately notify Sponsor in writing of the fee or cost increase �/ Should Sponsor not agree with the fee or cost increase, Sponsor has the right to terminate this I Agreement wrthspktq 46649) days written notice h"Wfy /Q 42 Billing and Payment ESI will bill Sponsor no more frequently than weekly for I W 3 (i) Covered Drugs dispensed by the Marl Service Pharmacy, less app ++ p Copayments and Deductibles, Y , Vu (u) Coveted Drug dispensed k s dis ensed to Members by Participating Pharmacies, 4 , r applicable, for Member Submitted Claims, less applicable %Copayment , ,�J sh � Deductibles, and i , t , S (rii) for all other fees specified in Exhibit C of this Agreement Sponsor agrees to pay ESI according to the method designated on Exhibit C Sponsor shall be responsible for all costs of collection, and agrees to reimburse ESI for such costs and expenses, including reasonable attorneys' fees Any amounts not paid by the due date thereof shall bear interest at the rate of 18% per annum (1 5% per month) or, if lower, the highest interest rate permitted by law If Sponsor disputes any item on any invoice, Sponsor shall state the amount in dispute in writing within 30 days of the date of the invoice No interest or late charges shall be imposed during any period on any amounts that Sponsor is disputing in good faith SECTION V OWNERSHIP AND ACCESS TO RECORDS, CONFIDENTIALITY 5 1 Ownership and Use of Prescription Drug Records (a) All records and other data provided to EST by Sponsor, other than records that ESI is required to maintain by law (including, but not limited to, records required to be maintained by the Mail Service Pharmacy) shall remain the property of Sponsor, provided, that Sponsor irrevocably grants ESI permission to use both during and after the term of this Agreement and/or transfer to third parties the drug and related medical data collected by ESI or provided to ESI by Sponsor for research, cost analyses, cost comparison or other business purposes of ESI, all without charge to ESI ESI shall retain full ownership rights over all compilations analyses and reports prepared by ESI under this Agreement In any case, ESI shall maintain Member confidentiality to the extent required by law, and shall not provide to any third party informati identifiable as relating specifically to any Member without such Sponsor's consent (b) Sponsor, at its own expense and upon not less than 10 business days' prior written notice, may inspect prescription drug claim data and billing records relating to Sponsor's Prescription Drug Program not more frequently than once each year Such inspection shall be conducted at ESI's offices and shall be subject to such limitations to protect the confidentiality of Member information as ESI may reasonably determine 3 52 E_SI Proprietary Information Sponsor agrees that all confidential and proprietary information of ESI, including, but not limited to, ESI's reporting packages, system formats and other system information, proprietary software and related user documentation clinical and other manuals, prior authorization and prescription drug evaluation criteria, information and documents related to the Preferred Product List, drug pricing information, and Participating Pharmacy agreements (collectively, "ESI Proprietary Information"), are confidential and proprietary to ESI Sponsor shall not use ESI Proprietary Information, or disclose it to any third party, at any time during or after termination of this Agreement, except as specifically contemplated by this Agreement or upon ESI s prior written consent Upon termination of this Agreement, Sponsor shall cease using all ESI Proprietary Information, and all such information, along with any other ESI systems, manuals, procedures or egmpment provided to Sponsor shall be returned to ESI immediately upon ESI's request 53 _Confidentiality Regarding Members The parties shall maintain the confidentiality of any information relating to Members in accordance with any applicable laws and regulations Sponsor shall insure that there is an adequate release from each Member permitting ESI to release information relating to the Member to Sponsor, or that release of information relating to Members is otherwise proper All records, reports and other data provided by ESI to Sponsor under this Agreement are solely for Sponsor's use in managing rts employee benefit plans, and ESI disclaims all liability arising out of Sponsor's use or dissemination of such records reports or data Sponsor shall indemnify, defend and hold ESI harmless, (to the extent permitted by law), from any and all claims, penalties, liabilities, losses, damages, settlements or costs which may arse (i) from ESI's provision of Member information to Sponsor provided that ESI's actions are consistent with the terms of this Agreement and not otherwise contrary to law, or (n) from Sponsor's use of Member information provided that ESI's actions are consistent with the terms of this Agreement and not otherwise contrary to law 54 Trademarks Each party acknowledges each other party's sole and exclusive ownership of its respective trade names, commercial symbols, trademarks and servicemarks, whether presently existing or later established (collectively "Marks") No party shall use the other party's Marks in advertising or promotional materials or otherwise without the owner's prior written consent, provided, however, that the parties may publicize the fact that ESI provides this Prescription Drug Program to Sponsor SECTION VI LIABILITY INSURANCE, COMPLIANCE WITH LAW 61 Liability Insurance ESI shall maintain such policies of general liability, professional liability and other insurance of the types and in amounts customarily carved by businesses such as ES Copies of such policies shall be available to Sponsor upon request ESI agrees at its sole expense, to maintain during the term of this Agreement or any renewal hereof, comprehensive general liability insurance coverage in an amount of not less than $2,500,000 per occurrence, and in the aggregate, including pharmacist's professional liability protection from such claims for E