Memo to File



|Contract #00412 |Pharmaceutical Pkg and Delivery Services |Connie Stacy |

|Contract Type: New Rebid Replacement WSCA Enterprise General Use |

|Restricted to:_____________ |

|Contract Duration: Initial Term: 2 years (07/01/12 thru 06/30/14) Maximum life: Six Years or 06/30/18 |

|Estimated Term Worth: $1.46 million Estimated Annual Worth: $730,000.00 |

|Number of: Bidders notified: 92 MWBE’s notified: 2 Bids received: 5 Bids Rejected: 2 |

|WEBS was used to notify bidders? Yes |

|List the WEBS (not PCMS) commodity Codes used: 269-12 |

|% DVA: 0, MWBE Goal: 3 or 3 %, MWBE Award: WBE= 0% and MBE= 0% |

|Self Identified WBE = 0 and Self Identified MBE = |

|Executive Summary: |Contract 00412 replaces Contract 02206 which has been extended the maximum years allowable and expires 06/30/12. The contract |

| |requires pharmaceutical packaging and delivery services for four DSHS facilities and various county correctional facilities with |

| |no in-house pharmacy or pharmacist to dispense prescriptions, with primary users to include: Special Commitment Center; Green Hill|

| |School; Echo Glen; and Naselle Youth Camp. These agencies do not have access to MMCAP pricing due to the lack of an in-house |

| |pharmacist. |

| |The contract requires the vendor to order medications on behalf of the customers, repackage in monthly doses (30 tablets) in a |

| |variety of packaging materials, label as appropriate, secure and deliver to end user. Also required are regularly scheduled |

| |pharmacist visits to review patient charts. |

|Bid Development |

|Stakeholder work |The IFB was premised upon the current contract and reviewed by a stakeholder committee lead by Mark Davis, Medical Director of the|

| |Special Commitment Center. Additional requirements were added to the Specifications section such as online ordering, patient |

| |medication history review, and a bar code system. An initiative was also pursued to have Western State Hospital take on the |

| |service since the recently opened new Pharmacy has access to deeply discounted meds from the MMCAP contract, and would represent |

| |significant savings. Unfortunately, this was not feasible due to current staffing levels. |

|Market Research: |Reviewed Thurston County’s IFB for similar services. |

| |Consulted with MMCAP staff analyst – Rose Stvick |

| |Performed significant market research to determine best method for developing pricing matrix under new contract. |

| |Consulted with Myra Davis, Medicaid Specialist with HCA |

|EPP Strategy: |As a result of the prebid conference, in Amendment #2, Bidders were asked to define their return policy for un-used, unexpired |

|(See EPP Guidance) |medications, which are of significant dollar value. We ensured that the meds would not be tampered with, nor in possession of an |

| |inmate. Further, we will incorporate into the portal page language regarding the proper disposal of expired meds. |

|Supplier Diversity Strategy: |Incorporated 3% mwbe goals. OMWBE was notified of bid opportunity via quarterly stakeholder meeting with DES MCC. |

|(See OSP Supplier Diversity Plan) | |

|Best Value Strategy: |Revised the method in which we requested contract pricing; current contract/IFB was based upon WAC plus a percentage markup (which|

| |is currently 5%). At the pre-bid conference, it was confirmed by attending bidders that a more cost effective method for the |

| |state would be to adopt a different pricing strategy for branded drugs (with no generic substitute available) vs. generic drugs, |

| |as generics represent more than 85% of the current usage. The industry standard pricing methodology for generic drugs would be |

| |based on Average Wholesale Price (AWP) minus a percentage discount. This information was published in Amendment #2. |

|Bid Development: |See above |

|Peer Review |Corinna Cooper (Kevyn Davidson and Cheral Jones also provided opportunity for input) |

|Management Fee? |Not applicable. This will be a PAF fee contract. |

|Bid Process |

|Pre-Bid Conference: |A pre-bid conference was held on May 9, 2012. Several vendors attended and provided valuable input on alternate pricing |

|Date: 05/09/12 |strategies that would provide more cost savings for the state. One of the proposed strategies was to use a cost plus markup |

| |pricing matrix. It was determined that this methodology would not be in the best interest of the state because it would provide |

| |a disincentive for the contractor to shop around for the least expensive generics (see best value strategy section above for more|

| |information regarding pricing methodology). |

| | |

| |A vendor sign-in sheet is located in Contract File. The results of the pre-bid were published via Amendment #2. The pre-bid |

| |conference also attended by Carmen Mendez representing DSHS. |

|Amendment(s): |#1 posted 5/14/12: extended bid opening date from 05/17/12 to 05/29/12 to permit adequate time to address issues raised in |

|[pic][pic][pic] |05/09/12 prebid conference |

| |#2 posted 5/18/12: published list of prebid attendees, revised pricing methodology (originally based upon WAC plus % which was |

| |inappropriate since this publication applies to brands only, and generally accepted (industry) pricing standard for generics – |

| |which represent bulk of spend- is based upon AWP minus % )and price sheets (new Appendix G) and general clarifications/revisions|

| |to original IFB |

| |#3 posted 5/21/12: republished Appendix G due to formula errors |

|Bid Evaluation—Responsiveness |

|Bid Opening Date: |05/29/12 – 2:00 pm, 5 bids were received as follows: |

|[pic] |Costless Senior Services, Inc |

| |ODS Health Plan, Inc |

| |Evergreen Pharmaceutical, LLC |

| |Lincoln Pharmacy, LLC (nonresponsive) |

| |Premier Long Term Pharmacy, Inc dba Premier LTC Pharmacy (nonresponsive) |

|Bids Sealed & Signed? |One bid was received unsealed and was subsequently rejected (Lincoln Pharmacy, whose proposed bid pricing was |

|[pic] |significantly higher than the Apparent Successful Bidder). They also then sent an email the day after the bid |

| |closing date of May 29, 2012 providing an explanation of bid pricing as well a recommended revised pricing |

| |methodology. Premier Pharmaceutical’s bid was also rejected due to improper pricing (see below.) |

|Received all required submittals? |Bids reviewed for required submittals |

|Specification compliance? |Bids reviewed for compliance with specifications/any exceptions taken |

|Price Sheet compliance? |Bids reviewed to ensure most current version of Appendix G, Medication Cost Worksheet provided as well as Appendix|

|[pic] |D, Price Sheet. |

| | |

| |Premier Pharmaceutical’s bid was then rejected due to the fact that they submitted their own wholesale pricing |

| |rather than published AWP and WAC pricing (as required) on their price sheet submittal. |

|Other Responsiveness checks? |Not applicable |

|Bid Evaluation—Responsibility |

|Past Performance? |Not considered (no complaints received about current provider) |

|Qualifications? |Were required to be a licensed pharmacy and to be in compliance with all state pharmacy requirements. |

|OMWBE Evaluation: |Not evaluated |

|Bid Evaluation—Scoring |

|Evaluation: |As stipulated in the IFB and subsequent Amendments, bid pricing was to be based upon numerous cost factors (pkg &|

|[pic] |delivery, emergency deliveries, pharmacist visits, etc) as provided for in Appendix D, Price Sheet, and new |

| |Appendix G, Medication Cost Worksheet (which, per Amendment #2, required bidders to provide WAC plus % for |

| |brands, and AWP minus % for generics). A table for total cost prices by line item (and grand total for |

| |medications as provided in Appendix G) was provided in Appendix D for bidders to insert their line item totals, |

| |which were recalculated for accuracy prior to populating the attached “Bid Tab” (see below). |

| | |

| |Three of the 5 bids received were considered “responsive” and incorporated into the Bid Tab worksheet, which |

| |included the medication costs provided in Appendix G. |

| | |

| |Medication costs provided in Appendix G were evaluated by line item to ensure appropriate upcharge to |

| |WAC/discount to AWP (as indicated by Bidder) were applied and where necessary, recalculated (no pricing was |

| |changed, only hidden formulas corrected), as follows: |

| | |

| |For Line item #84 Citalopram HBR on Costless Senior Services bid, the formula was corrected to achieve the |

| |accurate line item total on the 2nd tab of the Bid Tabulation titled “Med Totals” to arrive at a revised total |

| |which was used for bid evaluation purposes. This did not have any impact on the outcome of the bid, as it |

| |actually decreased the Costless bid by $3520.80. |

| | |

| |On Appendix G, Evergreen Pharmaceutical did not round AWP and WAC pricing to 2 decimal points on their price |

| |submittal. In addition, Evergreen submitted different WAC mark ups, based on the branded drug. The price sheet |

| |instructions specifically stated that bidders were to only fill in the yellow box at the top of the column and |

| |the rest of the column would be auto populated. As a result, 0% has been auto populated for all branded drugs to |

| |allow for bid evaluation. Evergreen's evaluated bid total has been increased by $ 1687.62 as a result. |

| | |

| |One Bidder (Costless Senior Services) submitted a prompt payment discount of 1% net 30, which was applied to the |

| |bid tabulation for evaluation purposes. |

| | |

| |A summary of the 3 responsive, responsible bid outcome is as follows: |

| | |

| |Bidder |

| |Evaluated Bid Total |

| | |

| |Costless Senior Services, Inc |

| |$ 716,994.52 |

| | |

| |Evergreen Pharmaceutical, LLC |

| |$835,594.52 |

| | |

| |ODS Health Plan, Inc |

| |$1,806,894.37 |

| | |

|Results & Recommendation |

|Savings: |Based upon the Apparent Successful Bidder’s (Costless Senior Services), grand bid total, we are|

|[pic] |estimating conservative savings of $900,000/year based upon the new pricing methodology adopted|

| |for this new contract (APW minus and WAC plus versus WAC plus only). Also, the dispensing (and |

| |delivery fee) went from $3.00 to $2.00, and other service requirements also experienced cost |

| |decreases. True savings will be monitored as the contract goes into effect, as we have |

| |received permission to subscribe to the AWP price guide utilized by the successful bidder |

| |(approx. $2000/year), and conduct routine audits of pricing charged customers (a newly adopted |

| |process for this office but considered crucial to ensure the state receives the lowest possible|

| |pricing as awarded). |

|Recommendation: |Award contract to lowest responsive, responsible bidder: Costless Senior Services. |

|Award Activities |

|Implementation Plan | |

|WEBS | Notify bidders of the award via WEBS |

| |Once contract award has been finalized, archive bid in WEBS |

|Communication | Send rejection letter to those bidders to disqualified bidders |

| |Send apparent successful bidder announcement letter |

| |Send Award Announcement letters to all bidders |

| |Email UM a brief award announcement for Bi-Weekly Broadcast |

| |Provided Debriefing to: _ |

|Contract | Model Contract updated to reflect Bid Amendment language |

|PCMS | Populate PCMS Info Tab |

| |Complete PCMS Expanded Description Tab |

| |Add Web remark in the PCMS Remarks Tab announcing the award of the contract |

| |Add at least 5-FAQ remarks in the PCMS Remarks Tab |

| |Complete PCMS Internet Tab to include relevant search terms |

| |Complete PCMS Commodities Tab |

| |Complete PCMS Vendors Tab |

| |Complete PCMS Customer Tab |

| |Complete PCMS Fees Tab |

| |Complete PCMS WBE/MBE Percents |

| |Include relevant search terms in the PCMS Internet Tab |

| |(Tip: For best results, ask your contractor(s) to provide search terms) |

|Post Contract to GA Website |Copy the following files into the G:\Shared Info\INTERNET folder: |

| |Copy Contract file (#####c.doc or pdf) |

|Link to: Current Contract Portal Training |Copy the price sheet (#####p.doc or xls or pdf) |

| |Copy the specification (#####s.doc or xls, or pdf) if applicable |

| |Copy the bid tab (#####t.doc or xls or pdf) |

| |Copy the bid document (#####b.doc or xls, or pdf ) |

| |Copy the bid Amendment (#####a.doc or pdf ) |

| |Frequently Asked Questions (FAQ) document (#####f.doc or xls or pdf) |

| |Copy the award memo to file & checklist document (#####m. doc or xls or pdf) |

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