TITLE
Recommendation to adopt Specifications No. RFP LW18-050 and award a contract to Pharmaceutical Technologies, Inc., of Omaha, Nebraska, for the administration and delivery of Workers' Compensation Pharmacy Products and Services through a network of pharmacies for the City of Long Beach Workers Compensation Program, in an annual amount of $212,865; authorize a 20 percent contingency in the amount of $42,573 annually, for a total contract amount not to exceed $255,438 annually; and authorize City Manager, or designee, to execute all documents necessary to enter into the contract, including any necessary amendments thereto, for the period beginning January 1, 2019 through December 31, 2020, with the option to renew for three additional one-year periods.
DISCUSSION
City Council approval is requested to enter into a contract with Pharmaceutical
Technologies, Inc. (PTI) to administer and deliver Workers' Compensation
Pharmacy Products and Services, as a Pharmacy Benefit Manager (PBM), through
a network of pharmacies for the City of Long Beach (City). This PBM would serve
the pharmaceutical needs of the injured workers of the City as required by the
Workers' Compensation Laws of California, ascribe to a fully disclosed and
transparent pricing structure, and include contractual provisions that would
generate measurable savings for the City's Workers' Compensation Program. If
approved, this contract will replace the prior PBM agreement.
Request for Proposal (RFP) RFP LW18-050 was advertised in the Long Beach
Press-Telegram on December 14, 2017, and 32 potential proposers specializing in
pharmacy benefit management were notified of the RFP opportunity. Of those
proposers, 30 downloaded the RFP via the City's electronic bid system. The RFP
document was made available from the Purchasing Division, located on the seventh floor of City Hall, and the Division's website at www.longbeach.gov/purchasing.
Approximately 5,311 vendors were notified of the RFP opportunity. The RFP
announcement was also included in the Purchasing Division's weekly update of
Open Bid Opportunities, which is sent to 22 local, minority and women-owned
business groups. Five proposals were received on December 21, 2017. Of those
five proposers, none were a Minority-owned Business Enterprise (MBE), none were
a Women-owned Business Enterprise (WBE), none were a certified Small Business
Enterprise (SSE), and none were a Long Beach business (Local). The selection
committee determined that Pharmaceutical Technologies, Inc., of Omaha,
Nebraska (not an MBE, WBE, SBE, or Local), was the most qualified firm to provide
the services.
After the selection committee's initial review, four respondents were invited to
participate in the selection interview, which included the expert consultant, the
Principal Deputy City Attorney, the Workers' Compensation Claims Manager and
Claims Supervisors, as well as a representative from the Financial Management
Department.
The selection committee reviewed and evaluated the four proposals in accordance
with the following criteria:
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Demonstrated competence
Experience in performance of comparable engagements
Expertise and availability of key personnel
Reasonableness of cost
Financial stability
Conformance with the terms of this RFP
PTI was selected as the most qualified vendor. PTI possesses a transparent
business model that aligns with the City's Workers' Compensation program goals
and objectives for performing pharmacy benefit management services. PTI has
demonstrated a fully-integrated PBM, using a proprietary claims processing
system, an extensive network of pharmacies, and a full suite of service offerings.
In addition, PTI can deliver a cost-effective pharmacy benefit management program
to the City.
Workers' compensation costs remain a significant statewide issue. As the City
continues to build upon its cost containment program, in an effort to reduce costs
and improve efficiencies, PTI as the selected vendor has developed a
comprehensive, electronically managed program to dispense prescription
medications, with specific customizations based upon the unique needs of the City.
PTI has a vast national network of pharmacies and mail order pharmacy program.
PTI is also able to adhere to the California formulary requirements, as well as
provide customized and flexible formulary options to the City.
This matter was reviewed by Assistant City Attorney, Michael J. Mais, on November
9, 2018, and Budget Management Officer, Rhutu Amim Gharib, on November 9,
2018.
TIMING CONSIDERATIONS
City Council action to adopt Specifications No. RFP LW18-050 and award a
contract concurrently is requested on November 20, 2018 to ensure that the
contract is in place expeditiously.
FISCAL IMPACT
In 2011, the Workers' Compensation Division spent approximately $1,989,360 in
prescription medications and related pharmaceuticals. At the end of 2014, the first
year in contract with PTI as the City's Pharmacy Benefit Manager, the pharmacy
costs decreased to $1 ,003,925, a savings of nearly $1 ,000,000, or 50 percent.
Although not as dramatic, the 2017 cost was $917,395, representing an additional
savings of 9 percent over the past 4 years. It is expected that the City will continue
to experience maximum cost savings with the ability to maintain total costs of the
pharmacy program at less than $1 ,000,000 annually. Additional cost savings will
be realized through greater mail order penetration, and programs to reduce opioid
usage.
The contract amount of $255,438 is the processing/administrative cost to PTI to
deliver the pharmacy benefit management program. There is existing appropriation
in the insurance fund {IS 390) in the Citywide Activities Department (XC).
There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
CHARLES PARKIN
CITY ATTORNEY
BY:
MICHAEL MAIS
ASSISTANT CITY ATTORNEY