Long Beach, CA
File #: 18-1022    Version: 1 Name: CA - Pharmaceutical Technologies, Inc. Contract
Type: Agenda Item Status: Approved
File created: 11/12/2018 In control: City Council
On agenda: 11/20/2018 Final action: 11/20/2018
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.
Sponsors: City Attorney
Attachments: 1. 112018-C-2sr.pdf
Related files: 35140_000, 35140_001, 35140_002, 35140_003

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:

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