CVS/Caremark has been our pharmacy benefit manager (PBM) since January 1, 2014. As the PBM, CVS/Caremark handles all aspects of pharmacy transactions for the City of Sparks self-funded group health plan, which includes payment of pharmacy and specialty drug claims, providing customer service and support to employees and retirees, managing the network of pharmacies, establishing the drug formulary; and, acting as rebate aggregator and issuing rebates.

NHP began hearing proposals in July 2016.  Two separate benefit models were presented to NHP members.  The first was the current model of services as provided currently by CVS/Caremark. This model provides all pharmacy services from one organization.  A renewal quote was provided to NHP by CVS Caremark for the current model.

The second was a new, more transparent model. Under the new model, three organizations manage the pharmacy services.  By having three separate companies manage the pharmacy benefit, no single company will control the process. Gateway Health Procurement, LLC., Nevada True Choice, LLC., and WellDyneRx Inc. comprise the three organizations.

After careful consideration, it was determined by the NHP voting members, that PBM services could be divided among three companies and result in significant savings to the City of Sparks self-funded group health plan.

NHP members, including but not limited to the City of Reno and the Washoe County School District are currently in the process of making recommendations to their governing boards to switch to the transparent model that incorporates Gateway, True Choice and WellDyneRx.  Washoe County has received approval and will move forward with the Gateway, True Choice and WellDyneRx model.

A financial analysis completed for the new pharmacy benefit model, estimates first year savings to be $497,833 over the current PBM contract. The actual cost of the Gateway participation agreement to the City is $22,500.  This is based on a five percent (5%) commission received on our total amount of rebates expected in the first year.  This cost is included in the savings estimate of $497,833.

Gateway, True Choice and WellDyne will provide the same services to our Group Health Plan that CVS/Caremark currently provides.  The Human Resources staff will continue to oversee this benefit.  After the initial implementation, this program will not require any greater management from Human Resources than the current model.   Services will mirror our current plan and provide continued pharmacy benefits to our employees, retirees and dependents on January 1, 2017.

The services provided will be divided as follows:

• Gateway Health Procurement, LLC (Gateway) as the rebate aggregator, will have the responsibility of seeking out the best drug rebates for the plan, and making formulary recommendations that will be cost effective for the City.
• Nevada True Choice LLC. (True Choice) as the pharmacy network administrator, will provide the network of pharmacies to be used by employees and retirees and advise the City of individual pharmacy costs and where additional savings may be realized.  The City's network of pharmacies will remain unchanged on January 1, 2017.
• WellDyneRx Inc. (WellDyne) as the pharmacy benefit administrator (PBA), will provide payment of pharmacy and specialty drug claims and provide 24/7 customer service and support to employees and retirees, as well as managing our drug formulary. The current formulary will remain unchanged on January 1, 2017.

The duration of these contracts if for a three-year period, from January 1, 2017 through December 31, 2019.  NHP has addressed performance criteria within the primary contract and has written a 90 day opt-out clause for any criteria not met, which includes but is not limited to, failure to provide rebate savings to the plan.

1.  The Council may choose to approve the proposed participation agreement with Gateway Health Procurement as outlined by staff.

2.  The Council may choose not to approve the proposed participation agreement with Gateway Health Procurement as outlined by staff.

3.  The Council may choose not to approve the proposed participation agreement with Gateway Health Procurement and direct the City Manager to provide alternatives to staff.

I move to approve participation in a three-year agreement negotiated by Nevada Health Partners (NHP) with Gateway Health Procurement (Gateway) in the amount of $22,500, to aggregate pharmacy rebates on behalf of the City of Sparks Group Health Plan; and, authorization for the City Manager to execute the agreement for this service effective January 1, 2017.