HomeMy WebLinkAboutResolutions - 2002.03.13 - 26848REPORT (MISC. 102031) March 14, 2002
BY: Finance Committee, Sue Ann Douglas, Chairperson
IN RE: MR #02031 - EXPANSION OF OAKLAND COUNTY RESIDENT
PRESCRIPTION DISCOUNT PROGRAM
To: The Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
The Finance Committee, having reviewed the above referenced
resolution on February 28, 2002, reports with the recommendation
that the resolution be adopted with the following amendment:
Move the fourth, fifth and sixth WHEREAS paragraphs to be the
first, second and third BE IT FURTHER RESOLVED paragraphs;
Also, that the letter from National Prescription Administrators
dated February 5, 2002, be attached to the resolution.
Chairperson, I move acceptance of the foregoing report.
FINANCE COMMITTEE VOTE:
Motion carried unanimously on a roll call vote with Palmer and
Dingeldey absent.
February 21, 2002
MISCELLANEOUS RESOULTION # 02031
BY: Commissioner Sue Ann Douglas, District #8
IN RE: EXPANSION OF OAKLAND COUNTY RESIDENT
PRESCRIPTION DISCOUNT PROGRAM
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS the Oakland County Board of Commissioners, by Misc. Resolution
#00264 dated October 19, 2000, authorized the establishment of a Senior Resident
Prescription Discount Program, effective November 1, 2000, for Oakland County
residents who have attained the age of sixty (60); and
WHEREAS, after successfully completing the County's competitive bid process,
the Board of Commissioners authorized the selection of National Prescription
Administrators, Inc. (NPA) to administer the Senior Resident Prescription Discount
Program; and
WHEREAS NPA has developed a discount program for Oakland County
residents under the age of sixty (60) which can be used at a national network of
participating chain and independent pharmacies to receive an average savings of 40% on
generic medications and an average savings of 15% off brand name medications; and
WHEREAS, after paying an annual family fee of $20.00 or an individual fee of
$14.00, participants will pay up front the lesser of the Usual and Customary Price or
Average Wholesale Price (AWP) less 13% plus $2.25 dispensing fee for brand name
medications or the Maximum Allowable Cost (MAC) pricing, which can be up to 50%
off the AWP price, plus the $2.25 dispensing fee on generic medications; and
WHEREAS, for a minimum charge of $5.00 per prescription fill to cover mailing
and postage costs, mail order pharmacy service is also available at a savings of no less
than 16% below AWP for brand name medication and 45% below AWP for generic
medication, both requiring a $2.25 dispensing fee for each 90 days supply; and
WHEREAS the annual enrollment fee that will be billed direct to the consumer
includes the following bundled services:
• Network management of NPA's open network;
• Eligibility acquisition, maintenance and verification;
• Participant services, including toll-free access to customer service, use of
IVR systems, pharmacy locator, and NPA website data files;
• Claims adjudication at the point of sale;
• Account management during the implementation process and while the
plan is active, as well as incorporation of future design savings
suggestions;
• Formulary management, including rebate agreements with sixty (60)
manufacturers and formulary intervention with patients, pharmacists and
physicians;
• Drug utilization review programs that focus on concurrent, retrospective
and prospective review of drug use;
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• Standardized reporting package of 19 reports covering financial,
management, utilization and eligibility issues surrounding the Program;
and
WHEREAS the County Executive recommends approval of this resolution.
NOW THEREFORE BE IT RESOLVED that the Board of Commissioners
authorizes the expansion of the Oakland County Resident Prescription Discount Program,
effective April 1, 2002, to all residents under the age of sixty (60).
BE IT FURTHER RESOLVED that the firm of National Prescription
Administrators, Inc. be maintained as the administrator of the expanded program for the
remaining period of their three-year contract (expiring October 31, 2003).
BE IT FURTHER RESOLVED that, if the State or Federal government creates a
prescription program that is equal to or better than this program, the County shall
terminate this program for those who qualify for the State or federal program.
Chairperson, I move adoption of the foregoing resolution.
SUE ANN DOUGLAS,
COMMISSIONER, DISTRICT #8
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February 5, 2002
Dear NP A Sponsor:
CFI7RightFax 2/6/2002 11:05 PAGE 1/4 RightFax
Twenty-five years ago, National Prescription Administrators was among the first companies
established to assist Sponsors in providing and managing prescription drug benefit programs for
their card-members and eligible dependents. -Since then, superior service, constant innovation
and independent values have defined the way we do business and enabled us to manage your
benefit dollars in the finest fashion possible. With your support, and by following these
principles, we have been successful and we're very proud — and grateful — to count you among
our valued customers.
A very important question for us, at NPA, has always been how to sustain our commitment to the
principles of superior service, constant innovation and independent values amidst continued,
dramatic changes effecting our industry's very structure. While the administrative costs which
we charge to manage your prescription benefit typically represents less than two percent of your
total spend on prescription drugs, constant and unrelenting pressures have created competitive
demands to lower these legitimate. administrative costs. At the same time, however, the
ingredient costs for prescriptions from drug manufacturers have escalated dramatically, creating
an industry in this country which now spends nearly $160 billion annually, supported by
pharmaceutical company direct-to-consumer advertising budgets in excess of $7 billion a year.
These dramatic industry prescription drug cost increases, together with consistent competitive
pressures to lower our administrative costs, has created an environment in which it is increasingly
more difficult for a company our size to realize the necessary growth and expansion necessary to
thrive and sustain those commitments to service, innovation, andindependent thinking.
Consequently, an exciting and well thought out decision has been made to link up with Express
Scripts, which shares our independent values and high commitment to service, in addition to
being one of the nation's largest PBM's. We at NPA, can think of no better PBM with which we
can confidently combine our expertise, capabilities and commitment to customers.
We are confident that whatever change you notice as a result of Express Scripts' acquisition of
NPA will only be positive — for several reasons. First, we expect little if any immediate alteration
in the team that currently serves you. Also, Express Scripts has proven its proficiency in
integrating its operations with those of acquired companies. That's largely because it is quick to
seek and adopt best practices wherever it finds them, and NPA most certainly provides Express
Scripts with a robust supply of best practices to augment its current exceptional capabilities. And
most importantly, our two companies are quite complementary, both in our strengths and in our
approach to business and customer relations. The result will be a PBM even better positioned to
serve your needs fur a long time to come.
We believed it to be important that you, our valued Sponsors, be notified of this news
immediately. Over the course of the next few days, we will look forward to talking with you
further about this new, exciting chapter in NPA's history, introducing you to the Express Scripts'
leadership and answering any questions you may have.
Sincerely,
Richard Ullman, President
Orlb.
.4•49
EXPRESS SCRIPTS'
Charting the Future of Pharmacy
CFI-RightFax 2/6/2002 11:06 p4GE 2/4 RightFax
Contact:
George Paz, Chief Financial Officer
David Myers, Investor Relations
(314)-702-7173 david.myers@express-scripts.com
Express Scripts and National Prescription Administrators
Announce Acquisition Agreement
ST. LOUIS, February 6, 2002—Express Scripts, Inc. (Nasdaq: ESRX)
announced today it has signed a definitive agreement to acquire the capital stock of
National Prescription Administrators, Inc., Central Fill Inc., CFI of New Jersey, Inc.,
NPA NY IPA, Inc., and certain real estate and equipment owned by a limited partnership,
together comprising the business of NPA for a net purchase price of $515 million. NPA,
headquartered in East Hanover, New Jersey, is the largest, privately held independent,
full-service pharmacy benefit manager. The transaction is expected to close at the end of
the first quarter of 2002, subject to customary closing conditions and the expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The acquisition
is expected to add 4 cents to Express Scripts' 2002 diluted earnings per share.
The acquisition delivers a number of strategic benefits to both companies and the
customers they serve, including greater scale and diversity of membership and
specialized, complementary service capabilities. NPA, which manages approximately
$2.5 billion in annual drug spend primarily for union and government populations in the
Northeast, processes approximately 42 million retail network claims and 3 million mail
pharmacy claims, through two mail facilities. NPA's standards for overall service and
performance are among the highest in the industry as evidenced by industry-recognized
surveys.
"NPA has a 20-year track record of success and a strong reputation in our
industry, and we're very pleased to have it join Express Scripts," said Barrett Toan,
chairman and chief executive officer. "Richard Ullman and his team have built a
business anchored in superior customer service, constant innovation and strong values.
Our two companies' str tngths are complementary. Express Scripts serves primarily large
employers, managed care organizations, insurance carriers and third-party
administrators, while NPA has developed a leading position serving union and
government populations."
"Express Scripts shares our independent values and commitment to service," said
Richard Ullman, chief executive officer of NPA. "It's apparent that their approach to
integrating new companies focuses on best practices. I can think of no other PBM better
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SAFE HARBOR STATEMENT
This press release contains forward-looking statements, including, but not limited to,
statements related to the company's plans, objectives, expectations (financial and
otherwise) or intentions. Actual results may differ significantly from those projected or
suggested in any forward-looking statements. Factors that may impact these forward-
looking statements include-. but are not limited to:
• risks associated with our acquisitions of Phoenix and NPA, including integration risks
and costs, risks of client retention, and risks associated with the operations of
acquired businesses
• risks associated with our ability to maintain internal growth rates, or to control
operating or capital costs
• continued pressure on margins resulting from client demands for enhanced service
offerings and higher service levels, and the possible termination of, or unfavorable
modification to, contracts with key clients or providers
• competition, including price competition, and our ability to consummate contract
negotiations with prospective clients, as well as competition from new competitors
offering services that may in whole or in part replace services that we now provide to
our customers
• adverse results in regulatory matters, the adoption of new legislation or regulations
(including increased costs associated with compliance with new laws and regulations,
such as privacy regulations under the Health Insurance Portability and Accountability
Act (HIPAA)), more aggressive enforcement of existing legislation or regulations, or
a change in the interpretation of existing legislation or regulations
• the possible loss of relationships with pharmaceutical manufacturers, or changes in
pricing, discount or other practices of pharmaceutical manufacturers
• adverse results in litigation, including a pending case challenging Express Scripts'
business practices under the Employee Retirement Income Security Act (ERISA)
• risks associated with our leverage and debt service obligations, including the effect of
certain covenants in our borrowing agreements
• risks associated with our ability to continue to develop new products, services and
delivery channels
• general developments in the health care industry, including the impact of increases in
health care costs, changes in drug utilization and cost patterns and introductions of
new drugs
• uncertainties regarding the implementation and the ultimate terms of proposed
government initiatives, including a Medicare prescription drug benefit
• increase in credit risk relative to our clients due to adverse economic trends
• other risks described from time to time in our filings with The Securities and
Exchange Commission
We do not undertake any obligation to release publicly any revisions to such forward-
looking statements to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
CFI-RightFax 2/6/2002 11:05 PAGE 3/4 RightFax
equipped than Express Scripts to work with our clients and continue the tradition of
service that we bring to the organization. Our clients and employees will benefit from
our combined expertise, capabilities and commitment to their sectors."
Express Scripts expects to finance the acquisition with cash on hand, bank debt,
and issue approximately 552,000 shares of its common stock. The company will file an
Internal Revenue Code §338(h)(10) election. This has the effect of treating the
transaction as an asset purchase for tax purposes, which will provide a tax benefit to
Express Scripts of approximately $90 million on a present value basis.
Express Scripts expects the acquisition to add $2.1 billion to revenues on a full
year basis, or $1.6 billion in 2002 assuming an April, 1, 2002 closing. The acquisition is
expected to add approximately $30 million to Express Scripts' 2002 EBITDA, after
deducting merger-related costs. After debt service charges, depreciation and amortization
expenses, taxes and assuming an April 1, 2002 closing, the acquisition is expected to add
4 cents to 2002 diluted earnings per share.
Express Scripts will hold an investor conference call on February 6, 2002 at 12:00
p.m. CST to discuss its fourth quarter 2001 earnings and the acquisition of NPA. The
call will be broadcast live as well as replayed through the Internet. The webcast can be
accessed through the Investor Relations section of Express Scripts' website at
http://www.express-scripts.corn
Express Scripts, Inc. is one of the largest pharmacy benefit management (PBM)
companies in North America. Together with NPA, the company will provide PBM
services to over 50 million members through facilities in eight states and Canada.
Express Scripts serves thousands of client groups, including managed care organizations,
insurance carriers, third-party administrators, employers and union-sponsored benefit
plans.
Express Scripts provides integrated PBM services, including network pharmacy
claims processing, mail pharmacy services, benefit design consultation, drug utilization
review, formulary management, disease management, medical and drug data analysis
services, medical information management services and informed decision counseling
services through its Express Health Line sm division. The company also provides
distribution services for specialty pharmaceuticals through its Specialty Distribution
subsidiary. Express Scripts is headquartered in St. Louis, Missouri. More information
can be found at http://www.express-scripts.com . which includes expanded investor
information and resources.
National Prescription Administrators, Inc.® (NPA) is the largest independent,
privately owned pharmacy benefit managers providing services to clients for over 20
years. NPA offers a full range of PBM services including network pharmacy claims
processing, mail pharmacy services, benefit design, and clinical and intervention
programs. NPA provides superior value through the delivery of the highest level of
customer service, utilization management and innovation. NPA's website can be found
at IIIIIV/E13TAIII,Mc.P.M
FISCAL NOTE (N1.R. #0203!) March 14, 2002
BY: FINANCE COMMITTEE, SUE ANN DOUGLAS, CHAIRPERSON
IN RE: EXPANSION OF OAKLAND COUNTY RESIDENT PRESCRIPTION DISCOUNT
PROGRAM
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Chairperson, Ladies and Gentlemen:
Pursuant to Rule XII-C of this Board, the Finance Committee has reviewed the above referenced
resolution and finds:
1. The annual enrollment fee will be billed direct to the consumer and therefore no cost to
the County.
FIN#NCE COMMITTEE
tc0t.
FINANCE COMMITTEE
Motion carried unanimously on a roll call vote with Palmer and
Dingeldey absent.
Resolution #02031 February 21, 2002
The Chairperson referred the resolution to the Finance Committee. There were no objections.
HEREBY I FOKGOING RESC;
4040 /41""' /
L. Bros Pat' =mon. County Executive Date
I HEREBY
G. William Caddell, County Clerk
Resolution #02031 March 14, 2002
Moved by Douglas supported by Palmer the Finance Committee Report be accepted.
A sufficient majority having voted therefore, the report was accepted.
Moved by Douglas supported by Taub the resolution be adopted.
Moved by Douglas supported by Taub the resolution be amended to coincide with the recommendation in
the Finance Committee Report.
A sufficient majority having voted therefore, the amendment carried.
Vote on resolution as amended:
AYES: Causey-Mitchell, Coleman, Crawford, Dingeldey, Douglas, Galloway, Garfield, Law,
McPherson, Melton, Middleton, Moffitt, Moss, Obrecht, Palmer, Patterson, Sever, Suarez, Taub, Webster,
Amos, Appel, Brian, Buckley. (24)
NAYS: None. (0)
A sufficient majority having voted therefore, the resolution, as amended, was adopted.
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, G. William Caddell, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true
and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on
March 14, 2002, with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac,
Michigan this 14th day of March, 2002.
