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EXHIBIT 10.1
PHARMACY BENEFIT SERVICES AGREEMENT
This Pharmacy Benefit Services Agreement effective as of April 1, 1999,
is entered into by and between Advance Paradigm, Inc., a Delaware corporation
("Advance Paradigm"), Foundation Health Systems, Inc. ("FHS") and Integrated
Pharmaceutical Services ("IPS"), a subsidiary of FHS.
PRELIMINARY STATEMENTS
A. Pursuant to the terms and conditions of this Agreement, FHS and IPS will
retain Advance Paradigm to provide, and Advance Paradigm will provide for, or
cause to be provided, certain pharmacy benefit management services to the FHS
Affiliated Plans, including (i) Advance Paradigm and IPS will jointly negotiate
with drug manufacturers for all market share and volume-based incentive
arrangements relating to drug utilization for each party's members, (ii) claims
processing, retail network management and payment of claims to participating
pharmacies for prescription drugs furnished to Eligible Members, and (iii) mail
service pharmacy (collectively, the "PBM Services").
B. Advance Paradigm and FHS, Foundation Health Pharmaceutical Services, Inc.
("FHPS") and IPS have entered in to that certain Purchase Agreement dated
February 26, 1999 pursuant to which Advance Paradigm has agreed to purchase, and
FHS has agreed to sell to Advance Paradigm, certain of FHS pharmacy benefit
management operations (the "Purchase Agreement"). Upon consummation of the
transactions contemplated by the Purchase Agreement, in addition to the PBM
Services provided by Advance Paradigm to IPS and the FHS Affiliated Plans
pursuant to this Agreement, Advance Paradigm will acquire FHPS and will provide
certain PBM Services to all Health Plans that utilize IPS, FHPS or the FHS
Affiliated Plans for their Pharmacy Benefit (the "Non-Affiliated Business").
C. FHS is entering into this Agreement on behalf of its operating entities and
not on its own behalf. Nothing contained herein is intended to imply that FHS is
engaging in any regulated business activity for which a license would be
required.
TERMS OF AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all
purposes of this Agreement, including singular and plural forms of any
terms herein defined.
"Advance Paradigm" shall mean Advance Paradigm, Inc., a Delaware
corporation, together with its wholly-owned subsidiaries including,
without limitation, FHPS following consummation of the Purchase
Agreement.
"Agreement" shall mean this Pharmacy Benefit Services Agreement.
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"AWP" shall mean the average wholesale price of the drug dispensed, as
set forth in the current price list in recognized sources such as
Medi-Span Prescription Pricing Guide, including its supplements, or
other nationally recognized pricing sources determined by mutual
agreement of the parties. The applicable AWP for prescriptions
dispensed by retail pharmacies is based on the package size submitted.
The applicable AWP for prescriptions dispensed by the mail service
pharmacy shall be based on the package size that results in charges
that are no greater than the current mail order pharmacy arrangement in
effect as of the Effective Date, except as a result of a material
change in the pricing structure in the industry.
"Change of Control" of a company shall occur when: (i) a third party
acquires fifty percent (50%) or more of the outstanding voting stock of
such company; (ii) the company sells all or substantially all of its
assets to a third party; (iii) the company merges into or consolidates
with another party such that (a) the company is not the surviving
company, (b) if the surviving company, a majority of the Board of
Directors of the company comprising the board immediately prior to such
transaction does not also constitute a majority following such
transaction or (c) if the surviving company, a majority of the
outstanding shares of the company's stock is not held by holders who
held a majority of the shares of stock of the company immediately prior
to such transaction.
"Client" shall mean IPS and FHS, together with their subsidiaries. Each
reference to Client herein shall be deemed to include each of IPS and
FHS jointly and severally.
"Closing" shall mean the date and time that the transactions
contemplated by the Purchase Agreement are consummated.
"Drug Manufacturer Agreement (or Agreements)" shall have the meaning
set forth in Section 3(a).
"Drug Pricing/DUR Database" means the drug pricing and DUR data
provided to Advance Paradigm by a nationally recognized, third party
source.
"DUR" shall mean drug utilization review.
"Effective Date" shall mean the day that PBM Services begin for each
FHS Affiliated Plan covered by this Agreement.
"Eligibility Tape" shall have the meaning assigned to such term in
Section 2(b) hereof.
"Eligible Member" shall mean each individual who is included on the
Eligibility Tape and the updates thereto as being entitled to Pharmacy
Benefits.
"FHPS" shall mean Foundation Health Pharmaceutical Services, Inc., a
wholly-owned subsidiary of Advance Paradigm, Inc.
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"FHS Affiliated Plans" shall mean IPS and each direct and indirect
subsidiary or affiliate of FHS or IPS which presently or hereafter
provides or administers a Pharmacy Benefit for its enrollees, except
for the affiliates of FHS set forth on Schedule 1, to the extent that
after the Effective Date of this Agreement any such affiliate is
thereafter sold to a third party.
"FHS Successor" shall mean any third party that acquires FHS in a
Change of Control transaction.
"Generic Drug" means the chemical and generic name as determined by the
United States Adopted Names Council (USANC) and accepted by the Federal
Food and Drug Administration (FDA), of those drug products having the
same active ingredients as a drug product prescribed by its trade or
brand name.
"HCFA" shall mean the Health Care Financing Administration.
"Health Plan" shall mean a licensed health care plan, health
maintenance organization, and insurance carrier.
"Information Systems" shall mean all computer hardware, software, and
firmware products and other information technology at any level
(including but not limited to microcode, firmware, application
programs, files and databases, systems, services, products and
equipment other than computer hardware) that use or rely on date and
time data.
"IPS MAC" shall mean the current maximum allowable cost as defined by
IPS, as modified from time to time.
"Mission Critical Information Systems" shall mean all Information
Systems which are owned, operated and controlled by each party
(including the FHS Affiliated Plans) and which are used to communicate
or exchange data with the other party (including the FHS Affiliated
Plans) or operate in conjunction with systems of the other party
(including the FHS Affiliated Plans), or in the case of Advance
Paradigm, which are operated in conjunction with or necessary for the
performance of its functions hereunder and which materially affect the
accurate and timely performance of mission-critical functions necessary
to provide pharmaceutical benefit services in accordance with this
Agreement; provided, however, that with respect to FHS, IPS and the FHS
Affiliated Plans, such term shall refer solely to systems necessary for
the exchange of information with Advance Paradigm.
"Paid Claims" shall mean the net amounts of claims adjudicated and paid
to pharmacies and does not include denied, duplicate or reversed
claims.
"Participating Pharmacy" shall mean each retail pharmacy participating
in the Advance Paradigm Pharmacy Network.
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"PBM Services" shall mean pharmacy benefit management services as
defined in the Preliminary Statements.
"Pharmacy Benefits" shall mean all of the Client's prescription drug
benefit plans for which Advance Paradigm will provide PBM Services
under this Agreement.
"Prescription" shall mean a valid and legal order to dispense to an
Eligible Member for his or her own use a drug legally eligible for
dispensing under the laws and regulations of the United States,
including the Food and Drug Administration and the state laws in which
the dispensing facility is located.
"Quarter" shall mean each three month period of a calendar year
commencing on each January 1, April 1, July 1 and October 1.
"Rebates" shall mean the payments received from drug manufacturers as
retrospective volume based adjustments under the new Drug Manufacturer
Agreements; "value investments" and/or drug manufacturer administrative
fees, which are lawful payments relating to programs arising under any
such Drug Manufacturer Agreement or are otherwise from a drug
manufacturer, including, but not limited to payments for pharmaceutical
compliance programs, physician education programs and enrollee
education programs, shall not be considered to be "Rebates", unless
otherwise agreed to by the parties.
"Rebate Management" shall mean rebate contracting as described in
Section 3(a).
"Rebate Processing" shall mean the calculation of the amounts due from
drug manufacturers and the billing and collection of such amounts from
drug manufacturers.
"Transition Period" shall mean the period of time following execution
of the Agreement through and including the final Effective Date.
"Walgreen's MAC" shall mean the current maximum allowable cost
published by HCFA, from time to time, plus 31%. This rate shall only
apply towards mail order pharmacy claims.
"Year 2000 Compliant" shall mean:
(i) Mission Critical Information Systems are capable of accurately
processing date and time data (including, but not limited to,
calculating, sorting, indexing, comparing and sequencing)
from, into, and between the nineteenth, twentieth, and
twenty-first centuries, and the years 1999 and 2000 and leap
year calculations, without material error or interruption in
performance, individually and in combination with other
Information Systems properly exchanging date and time data.
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(ii) Mission Critical Information Systems are capable of
transitioning into and operating prior, during and after the
year 2000 without material interruption or adverse effect on
either party's operations or performance including, without
limitation, no material loss of any functionality of services
with respect to the introduction, processing or output of
records containing dates falling on or after January 1, 2000
and no material interruption of operations or other material
adverse effect on the parties' (including the FHS Affiliated
Plans) respective performance under this Agreement.
2. Transition and Eligibility.
(a) Transition Schedule.
(i) On or before the Closing, the parties will complete a
transition schedule and attach it to this Agreement
as Exhibit A (the "TRANSITION SCHEDULE"). The
Transition Schedule will reflect the name, address
and date that each PBM Service is expected to
commence for each FHS Affiliated Plan and the
Non-Affiliated Business and such other transition
items as the parties mutually agree. During the
Transition Period, Advance Paradigm, FHPS and Client
shall each use its reasonable best efforts to make
available and dedicate all required systems, benefit
design administration, retail network administration,
clinical, rebate and other staff to ensure an orderly
transition of the Client's Pharmacy Benefit
requirements to Advance Paradigm. The parties shall
use, and FHS shall cause the FHS Affiliated Plans to
use, their respective reasonable best efforts to
ensure that such Pharmacy Benefit Requirements have
been transitioned to Advance Paradigm, and Advance
Paradigm is providing the PBM Services as
contemplated by this Agreement for Client, as set
forth in Exhibit B attached hereto and incorporated
herein by reference. Once transitioned to Advance
Paradigm, Advance Paradigm shall be required to
furnish all of the services set forth on Exhibit B.
Such services shall be provided in a manner
consistent with past practices of FHS, regulatory
requirements and other specific client based
requirements applicable to FHS and/or FHS Affiliated
Plans.
(ii) Advance Paradigm will have completed all necessary
programming to support enforcement of all on-line
edits (those enforced by the claims adjudicators at
the time of transition) on the Effective Date of each
plan transition. The cost of any programming required
shall be the financial responsibility of Advance
Paradigm.
(iii) For the TRICARE business, Advance Paradigm shall be
financially responsible for any reasonable costs of
programming required to the systems of the regional
claims subcontractors (Blue Cross and Blue Shield of
South Carolina and Wisconsin Physician Services) to
accommodate this transition. By the Effective Date of
the transition of the TRICARE
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business, Advance Paradigm will have completed the
necessary system programming to accommodate the
unique paid claims transmission formats for each of
the regional claims subcontractors and the remote
eligibility query.
(iv) During the Transition Period, IPS shall manage and
support the Procare system in a manner consistent
with past practices of FHS, regulatory requirements
and other specific client based requirements
applicable to the claims processed on the Procare
system. On or before the Closing, the parties shall
agree upon and enter into a management agreement
pursuant to which these services will be rendered
during the Transition Period.
(b) Eligibility Tape and Updates. At least ten (10) calendar days
prior to the Effective Date of each Plan, FHS shall cause each
of the FHS Affiliated Plans to provide Advance Paradigm with a
complete and final eligibility file which shall identify all
Eligible Members and set forth all pertinent eligibility data
specified by Advance Paradigm ("Eligibility Tape"). Such
eligibility data for each FHS Affiliated Plan shall be in the
format currently used by such FHS Affiliated Plan. FHS shall
cause each of the FHS Affiliated Plans to provide updates to
the Eligibility Tape to Advance Paradigm in a format
consistent with such FHS Affiliated Plan's requirements as
frequently as mutually agreed to by the parties hereto.
Subject to receipt of confirmation from each FHS Affiliated
Plan as to the accuracy of each update to the Eligibility
Tape, prior to the end of the business day following Advance
Paradigm's receipt of such update, Advance Paradigm shall
accept claims for covered Prescriptions that are dispensed to
Eligible Members after the effective date of their eligibility
and shall deny claims for covered Prescriptions that are
dispensed to terminated members after the effective date of
their termination. Advance Paradigm and the Participating
Pharmacies shall be entitled to rely on the accuracy and
completeness of the Eligibility Tape and updates thereto
provided by each FHS Affiliated Plan. Advance Paradigm will
accommodate the remote eligibility requirements of the TRICARE
business through an on-line, real-time query through the
regional claims subcontractors. The Advance Paradigm system
will be programmed to accept and interpret the eligibility
response and other real-time, on-line information that is
returned from the regional claims subcontractors to determine
appropriate copays, coordination of benefits and beneficiary
jurisdiction.
(c) Distribution of Materials. FHS shall cause each FHS Affiliated
Plan to provide the Eligible Members with copies of claims
forms and informational material regarding the utilization of
the pharmacy network and the mail service pharmacy. FHS shall
cause each FHS Affiliated Plan to provide each Eligible Member
with an identification card, for purposes of (among other
things) accessing the Participating Pharmacies.
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3. Formulary/Rebate Management Services. Advance Paradigm shall provide
formulary and rebate management services in accordance with this
Section 3. Nothing herein shall be construed as a limitation on Advance
Paradigm's right to provide comprehensive PBM Services to its other
clients including, without limitation, formulary management and drug
manufacturer contracting services.
(a) Rebate Contracting. In order to maximize savings on drug
spending for both the FHS Affiliated Plans and Advance
Paradigm's other pharmacy benefit management business, the
parties, acting on behalf of all entities for which they
provide formulary/rebate services, intend to negotiate
together for new Drug Manufacturer Agreements that cover all
of such business. The parties acknowledge that each is a party
to agreements with certain drug manufacturers for discounts
relating to drug utilization. Pursuant to the procedures
mutually agreed to by the parties, Advance Paradigm and Client
shall jointly negotiate with targeted manufacturers, in
accordance with the Work Plan set forth in Exhibit C in order
to improve the terms of their respective drug manufacturer
arrangements and enter into new contracts upon such terms as
mutually agreed (the "Drug Manufacturer Agreements"). The
parties shall work together to establish and thereafter
modify, as appropriate a work plan to be agreed upon prior to
the Closing and to be attached hereto as Exhibit C, regarding
negotiations with drug manufacturers to ensure that the
parties' overall intent of maximizing the relationship created
by this Service Agreement is met (the "REBATE STRATEGY WORK
PLAN"). Such work plan shall identify the responsibility of
the parties with respect to all such negotiations, the parties
to the agreement, the administration of such agreements, FHS
Affiliated Members' formulary requirements, the selection of
appropriate drug manufacturers to support formulary
requirements, the scope of drug manufacturer payments, and
other matters related thereto. The parties shall use their
reasonable best efforts to comply with the Rebate Strategy
Work Plan and schedule, in order to timely implement the joint
negotiation strategy contemplated hereby.
(b) IPS Manufacturer Agreement. FHS and IPS agree that until such
time as new Drug Manufacturer Agreements are jointly entered
into for all drugs covered by the Formulary, upon the request
of Advance Paradigm, FHS shall use its best efforts to cause
the Non-affiliated Business to be eligible for rebates under
the existing IPS rebate agreements. FHS agrees to service such
rebates in accordance with Advance Paradigm's instructions.
IPS agrees that all Rebates collected by IPS based on the
utilization of the Non-affiliated Business prior to Closing
shall be paid by IPS following Closing pursuant to the terms
and conditions of the respective agreements for the
Non-affiliated Business, and that Advance Paradigm's
obligation to pay such rebates on such business shall begin
with the rebates collected for the Quarter ending June 30,
1999.
(c) Formulary Development and Strategy. Pursuant to the terms of
the Drug Manufacturer Agreements, Advance Paradigm shall
maintain the formulary contemplated by the Work Plan referred
to in Section 3(a), for each FHS Affiliated Plan subject to
approval by such FHS Affiliated Plan, for the benefit of the
FHS Affiliated Plans (the "Formulary"), and recommend
clinically
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appropriate, cost effective strategies designed to promote
Formulary compliance. Advance Paradigm shall be entitled, from
time to time, to review the Formularies and make
recommendations to the JNC, referred to in Exhibit C, as
Advance Paradigm deems appropriate, subject to approval by FHS
and the appropriate FHS Affiliated Plan. Advance Paradigm
recognizes and agrees that FHS has a national pharmacy and
therapeutics committee, and that the establishment of, and
changes to the formulary, steerage, intervention and other
clinical decision-making will be based on this committee's
independent approval. Advance Paradigm agrees to cooperate
with Client in the implementation of Formulary steerage
controls at the point-of-sale, including without limitation,
hard edit NDC blocks, differential patient copays, soft edits
(e.g. on-line formulary messages) and pharmacist intervention
for Formulary compliance and therapeutic interchange programs,
all as approved by Client.
(d) Formulary Distribution. Advance Paradigm will provide
camera-ready art work, design and copy for the Formulary to
Client which will then publish the number of copies of such
Formulary as required for each FHS Affiliated Plan. Promptly
following the receipt of the camera-ready copy, Client hereby
agrees to distribute the copies of the Formulary to all
physicians included in the FHS Affiliated Plan's respective
preferred physician networks. Client shall be responsible for
the payment of all printing, publication and distribution
expenses associated with the Formulary, including all
printings and reprints of the Formulary as may be required by
Client and bulk mailing materials for physician education,
such as newsletters and drug monographs.
(e) Submission of Claims Data. Within fifteen (15) days following
the last day of each Quarter, for Non-affiliate Business which
has not been transitioned to Advance Paradigm and for which
FHS (or its affiliate) serves as the claims processor, Client
shall use its best efforts to provide Advance Paradigm, in a
format mutually agreeable to the parties, with documentation
of the drug utilization for the immediately preceding Quarter.
Client acknowledges that prescription claims submitted to
Advance Paradigm more than fifteen (15) days following the
last day of the Quarter during which claims arose shall not be
automatically eligible for Rebates in such quarter. If
possible, without delaying the payment of rebates to other
Health Plans, such claim shall be submitted for Rebates in the
following quarter. Client acknowledges that Advance Paradigm's
timely receipt of accurate claims data is essential for rebate
billing for all of Advance Paradigm's business, and that
Advance Paradigm has financial guarantees and penalties
associated with the timely submission of claims utilization
data.
(f) Rebate Payment. All Rebates on the FHS Affiliated Plans
Members' drug utilization shall be paid directly to IPS.
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(g) Warranty by Client. Client represents and warrants to Advance
Paradigm that any Prescription claims which it submits to
Advance Paradigm for Rebate adjudication shall be
Prescriptions that were dispensed to Eligible Members for
their "own use" under a Pharmacy Benefit for which the FHS
Affiliated Plan bears the risk of payment. Client further
represents and warrants that it shall promptly distribute
copies of the Formulary in accordance with Section 3(d)
hereof. In the event the foregoing warranty is not true with
respect to any Eligible Member, the Rebates received as a
result of such Member's drug utilization will be deemed to be
"improper rebates" under Section 3(h) hereof.
(h) Eligible Data. Drug utilization which has been submitted by
any entity other than Advance Paradigm to drug manufacturers
for discounts, Rebates or other price reduction, specifically
including Medicaid, Medicare or other state or federal health
care program which receives Rebates directly from drug
manufacturers, shall not be eligible for Rebates from Advance
Paradigm. Client shall clearly identify to Advance Paradigm
those Eligible Members whose drug utilization has been
otherwise submitted to drug manufacturers or whose claims have
been or will be filed for reimbursement with Medicaid,
Medicare or any other state or federal health care program. If
Client fails to identify such members or claims and any drug
manufacturer's audit of its Rebate program reveals improperly
calculated Rebates involving such members and claims, then
Client shall be solely responsible for the reimbursement of
any Rebates to the respective drug manufacturers and will
indemnify Advance Paradigm against any damages suffered as a
result of Client's failure to make such reimbursement.
Notwithstanding the foregoing, this provision shall not be
construed to prohibit Client from participating in Medicare
risk contracting.
4. Advance Paradigm Retail Pharmacy Network Services and Claims
Adjudication. Advance Paradigm shall adjudicate claims for
Prescriptions furnished by pharmacies under the Plan in
accordance with the following terms and conditions:
(a) Network Contract Negotiations. During the Transition Period
and thereafter, Advance Paradigm will renegotiate network
pharmacy contract rates for those pharmacies located in the
respective service areas of a Health Plan, for such Health
Plan (the "Primary Network"). Such contracts shall meet
applicable statutory and regulatory requirements and mutually
agreed access and service levels. As of the Closing Date,
however, IPS will assign all of its rights and obligations
under, and Advance Paradigm will assume responsibility for
performance of, the IPS' network pharmacy contracts; and, to
the extent such assignment does not include a novation of
Advance Paradigm for IPS, Advance Paradigm shall indemnify and
hold IPS and FHS harmless for any liability arising under such
agreements, in accordance with Section 13, below. In the event
that Advance Paradigm has failed or is otherwise unable to pay
any such pharmacies in accordance with such agreements (a
"DEFAULT IN PHARMACY PAYMENT"). Upon written notice to Advance
Paradigm and unless Advance Paradigm notifies FHS within five
(5) business days that such amounts have not been paid to the
pharmacies or to the pharmacies' affiliates or designees, FHS,
or an FHS Affiliated Plan may make payment in order to remedy
any such Default in
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Pharmacy Payment and FHS shall have the right to offset any
amounts that would have been due to Advance Paradigm for such
claims under this Service Agreement. Except as provided
herein, Client agrees that during the term of this Agreement,
unless this Section 4 is earlier terminated pursuant to
Section 11(c)(ii) hereof, Client shall not, and shall cause
the FHS Affiliated Plans not to negotiate, contract or
otherwise agree with any retail pharmacy for purposes of
establishing a pharmacy network, except to the extent required
by applicable law or regulation. Client shall reimburse
Advance Paradigm for network pharmacy claims at the rates set
forth in Exhibit D. Notwithstanding the foregoing, under no
circumstances will the Pharmacy Network rates exceed the rates
in Exhibit D, except as a result of any material change in the
pricing structure in the industry.
Notwithstanding the foregoing, Advance Paradigm understands
and agrees that pursuant to California law, Health Net, an FHS
Affiliated Plan, must have direct agreements with its Primary
Network. Health Net agrees that it shall amend all of Health
Net's pharmacy agreements with the Primary Network in
California to include Advance Paradigm as a party to such
agreements. Health Net and Advance Paradigm shall cooperate in
order to obtain regulatory approval of such amendment. Advance
Paradigm further understands and agrees that if these
amendments do not comply with California regulatory
requirements, this Section 4(a) shall not apply to Health Net.
Advance Paradigm further understands and agrees that in the
event any applicable state law requires that an FHS Affiliated
Plan have direct agreements with its Pharmacy Network, Advance
Paradigm will amend all Pharmacy Network agreements to include
such FHS Affiliated Plan as a party. Advance Paradigm shall,
and FHS shall cause any such FHS Affiliated Plans to,
cooperate in order to obtain regulatory approval of such
amendments. If these amendments do not comply with applicable
state law, this Section 4(a) shall not apply to such FHS
Affiliated Plan.
(b) Advance Paradigm National Network. In addition to the Primary
Network, the Eligible Members shall have the option, but not
the obligation, to access to the nationwide Advance Paradigm
Network to obtain Prescriptions outside of the service areas.
Advance Paradigm shall process claims submitted by the Advance
Paradigm Network in accordance with Advance Paradigm's
agreements with such pharmacies, and Client shall reimburse
Advance Paradigm for such claims at the rates set forth in
Exhibit D. Notwithstanding the foregoing, under no
circumstances will the Pharmacy Network rate exceed the rates
in Exhibit D, except as a result of any material change in the
pricing structure in the industry.
(c) Release of Information. Advance Paradigm shall furnish to each
Network Pharmacy such information regarding the Eligible
Members as is necessary for the operation of the Advance
Rx(TM) claims adjudication system. Client hereby authorizes
Advance Paradigm to release any necessary information to the
Network Pharmacies regarding the applicable Plan and Eligible
Members.
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(d) Claims Adjudication. Through its Advance Rx(TM)on-line claims
adjudication system, Advance Paradigm shall (A) process
electronic or manual claims submitted by pharmacies; (B)
process Advance Paradigm claim forms submitted by Eligible
Members; (C) determine whether the claim qualifies for
reimbursement in accordance with the terms of the applicable
Plan and the Eligibility Tape; (D) calculate the payment of
such claims pursuant to the applicable Plan (each such claim
an "Approved Claim"), and (E) calculate the payment of such
claims pursuant to the IPS MAC. Advance Paradigm shall
transmit to the submitting Participating Pharmacy the
calculated reimbursement for the submitted claims. Advance
Paradigm shall provide IPS and FHS with on-line and real-time
access to all claims adjudication data in the format described
below in paragraphs 4(h), (i), (j). (k), and (l).
(e) Concurrent Drug Utilization Review. Through its Advance
Rx(TM)system, Advance Paradigm shall provide on-line
concurrent DUR messaging to the Participating Pharmacies and
will take appropriate action based on Plan specifications.
Concurrent DUR may include the following edits: (A) duplicate
therapy; (B) early refills and frequency limitations; (C)
duplicate drug; (D) potential drug interaction(s), in which
case the provider is notified on-line and the level of
severity would be indicated; and (E) minimum/maximum dose
range (which includes on-line alert of pharmacist). All such
edits shall be developed and implemented only at the explicit
direction of IPS.
(f) Management Information Reports. Advance Paradigm shall provide
each of the FHS Affiliated Plans with up to ten (10) reports,
both electronically and in hard copy, selected from Advance
Paradigm's standard reporting package (as updated from time to
time). Each monthly report shall be provided to the
appropriate FHS Affiliated Plan and IPS within ten (10)
business days of the end of each month. Any reports requested
by Client other than Advance Paradigm's standard reports shall
be considered "Special Reports". Should Client request
additional reports or Special Reports, Client shall pay
Advance Paradigm for such reports in accordance with Section
7(d) set forth below.
(g) Online Access to Data. Advance Paradigm shall provide IPS
and/or its designees, which may include some or all of the FHS
Affiliated Plans, on-line access to its claims adjudication
system for information and data relating to the FHS Affiliated
Plans. The claims adjudication system features and functions
for help-desk, plan design lookup, prior-authorization
over-rides and other features that are available to other
Advance Paradigm clients. Access shall be restricted to IPS
users that have been approved by IPS management and limited to
only those functions which IPS management has deemed
appropriate for each user or user class. Access security shall
be maintained by Advance Paradigm pursuant to the written
procedure as mutually agreed upon by IPS and Advance Paradigm.
Access requests shall be processed within two (2) business
days of written request from IPS.
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(h) System Documentation. Advance Paradigm shall provide detailed
system documentation for the claims processing system with
which the claims for FHS Affiliated Plans will be processed.
Such documentation shall include, but not be limited to, a
complete data dictionary (including, but not limited to valid
value tables) for all data elements and files delivered to
IPS. Advance Paradigm shall also provide IPS with complete
systems documentation, including technical documentation and
complete processing descriptions for all new system
enhancements provided to IPS outside of the existing services
specified in this Agreement.
Advance Paradigm shall be responsible for maintaining Client's
systems documentation. Updates to the data dictionary and
other reasonably requested documentation shall by provided to
IPS within ten (10) business days prior to the implementation
of system changes for which the updates have been prepared.
Advance Paradigm shall provide, in writing, responses to
reasonable written questions from designated IPS personnel
regarding clarification of documentation issues within two (2)
business days.
(i) Downloads of IPS Client Data. Advance Paradigm shall provide
the following data files and tables to IPS for all FHS
Affiliated Plans via dedicated lease line and within the
timeframe indicated. IPS shall be responsible for the costs of
such lease line and any applicable licensing fees. Data
elements to be supplied are specified by logical data file in
Exhibit E. In addition, Advance Paradigm shall provide a data
dictionary of the data elements requested within each of the
following files or tables, or provide sufficient mapping of
these data elements to the data dictionary provided for the
claims processing system:
o Claims Transactions - Daily
o Eligibility Data (date-sensitive historical file) -
Monthly within five (5) calendar days after the end of
month
o Member Demographic Data (current file) - Monthly within
five (5) calendar days after the end of month
o Physician Demographic Data (current file) - Monthly
within five (5) calendar days after the end of month
o Formulary Tables (current file) - Monthly within five (5)
calendar days after the end of month
o Pharmacy Master File (current file) - Monthly within five
(5) calendar days after the end of month
o Benefit Design table (current file) - Monthly within five
(5) calendar days after the end of month
o NDDF or equivalent file - As released (10 calendar days
after receipt)
o Established Paid Claims Transmission formats for TRICARE
- twice weekly via NDM transfer to the regional claims
subcontractors
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In addition, Advance Paradigm shall exercise a good faith
effort to develop a process to provide real-time data
replication of claims and other transaction data upon request
by IPS for specific data elements. Thereafter, Advance
Paradigm shall maintain the ability to provide IPS with
real-time replication of claims and other transaction data
upon request by IPS for specific data elements.
Advance Paradigm shall provide other files and tables on
request and IPS will pay One Hundred Twenty-five Dollars
($125) per hour required to provide the additional data
required.
IPS shall apply certain data quality test and edits to the
data files received from Advance Paradigm. These tests are
listed in Exhibit F. Should data records fail these tests,
Advance Paradigm shall provide replacement records within two
(2) business days upon written notification from IPS of which
records failed and the specific reasons for the failure. For
purposes of the Performance Guarantees attached hereto as
Exhibit G, data files that are materially inaccurate or
materially incomplete, as determined by reference to Exhibit
E, will be deemed to have not been received during the period
beginning on the business day of IPS' written notification to
Advance Paradigm of such inaccuracy or incompletion and ending
upon Advance Paradigm's delivery of the revised data file.
(j) Technical Support. Advance Paradigm shall provide IPS with
technical support for the claims adjudication system. This
support shall include providing responses to reasonable,
written technical and data-related questions, in writing
within five (5) business days (depending on the complexity of
the request). Advance Paradigm shall also provide the
programming support necessary to timely implement changes
needed to accurately process claims and other transactions on
the current claims adjudication system, and Client agrees to
pay for such support in accordance with Section 7(d) hereof.
(k) Reporting. Advance Paradigm shall provide IPS with certain
standard and ad hoc reports as listed below:
Standard reports shall include, but not be limited to, certain
system-generated reports selected by IPS from within the
following categories:
o Financial reports - Per check cycle
o Membership reports
o Cost and Utilization
o Pricing
o Benefit matrix reporting
Advance Paradigm shall endeavor to provide ad hoc reports to
IPS within five (5) to ten (10) business days (depending on
the complexity of the report) of written request from IPS
which describes the report requested. IPS shall pay Advance
Paradigm for such reports in accordance with Section 7(d) set
forth below.
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(l) Advance Insight(TM). Upon the request of Client, the parties
will enter into a license agreement pursuant to which Advance
Paradigm will grant each FHS Affiliated Plan a license for use
of Advance Insight, a desktop division support software
program created and designed by Advance Paradigm. Client will,
and will cause the FHS Affiliated Plans to, agree that each
such entity will not copy or duplicate the Advance
Insight(TM)software. Client agrees, and will cause each FHS
Affiliated Plan to agree to surrender to Advance Paradigm the
software upon termination of this Agreement. Advance Paradigm
agrees not to charge Client or the FHS Affiliated Plans for
the Advance Insight(TM)software, provided that Client or the
FHS Affiliated Plans shall be responsible for the costs of the
hardware and software necessary to run Advance Insight(TM).
(m) Year 2000 Readiness. Each party, including FHS on behalf of
each FHS Affiliated Plan, represents and warrants that on or
before July 1, 1999, such party will be Year 2000 Compliant;
provided, however, that with respect to FHS, IPS and the FHS
Affiliated Plans, such representation and warranty shall be
limited to Y2K Compliant with regard to data and information
supplied to Advance Paradigm and not to their respective
businesses, generally. Each party, including FHS on behalf of
each FHS Affiliated Plan, further represents and warrants that
as of July 1, 1999 it has taken and will take all reasonable
steps to obtain assurances from third parties that any
Information Systems provided, supplied, delivered, furnished
or maintained by third parties and upon which such party
relies in performing this Agreement are or will be Year 2000
Compliant; provided, however, that with respect to FHS, IPS
and the FHS Affiliated Plans, such representation and warranty
shall be limited to Y2K Compliant with regard to data and
information supplied to Advance Paradigm and not to their
respective businesses, generally. Without limiting the
generality of the foregoing, each party, including FHS on
behalf of each FHS Affiliated Plans, shall ensure that all
necessary actions and system changes to its Mission-Critical
Information Systems have been made and tested so that such
party is Year 2000 Compliant on or before July 1, 1999
provided, however, that with respect to FHS, IPS and the FHS
Affiliated Plans, such representation and warranty shall be
limited to Y2K Compliant with regard to data and information
supplied to Advance Paradigm and not to their respective
businesses, generally.
This Certification constitutes a Year 2000 Readiness
Disclosure in accordance with federal law.
5. Mail Service. Subject to this Section 5, during the term of this
Agreement, Advance Paradigm or its designee shall exclusively provide
mail service pharmacy for Client:
(a) Performance of Services. Pursuant to the arrangement between
FHPS and Walgreens (the "Walgreens Arrangement") or such other
arrangement as may be approved by FHS from time to time,
Advance Paradigm shall provide mail service pharmacy to
Client. Advance Paradigm shall use commercially reasonable
efforts
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to continue to use Walgreens as the vendor of mail service
pharmacy for the FHS Affiliated Plans under substantially
similar terms to the Walgreens Arrangement. In the event
Walgreens ceases to use Advance Paradigm as its exclusive
vendor for formulary/rebate services, then (i) subject to FHS'
approval which will not be unreasonably withheld so long as
Advance Paradigm has demonstrated that it will provide
substantially similar types of services at substantially the
same, but no greater cost, Advance Paradigm may perform the
mail services for the FHS Affiliated Plans or (ii) Advance
Paradigm may place the business with a third party vendor
acceptable to FHS, which acceptance will not be unreasonably
withheld. In the event either Advance Paradigm or a third
party vendor replaces Walgreens, Client and Advance Paradigm
shall use best efforts to facilitate the transition from
Walgreens to Advance Paradigm or such third party.
(b) Right of First Refusal. FHS shall, during the term of this
Agreement, have the right to solicit from and/or consider
proposals received from third parties to provide substantially
similar mail order pharmacy services as are provided under
this Agreement. Such right to solicit and/or consider shall be
limited to three (3) times during the term of this Agreement,
and no more frequently than once in any twelve (12) calendar
month period. Upon receipt of any such bona fide third party
offer (the "OFFER"), FHS shall promptly notify Advance
Paradigm of the terms and conditions of such Offer. Within ten
(10) days of Advance Paradigm's receipt of the Offer, the
parties shall meet to review the Offer. Following such
meeting, Advance Paradigm shall have the right, but not the
obligation to: (I) match the Offer directly; (II) enter into
the proposed agreement with the third party in accordance with
the Offer, for the purposes of providing such mail order
pharmacy services in accordance with this Agreement; or (III)
enter into an agreement with another party, reasonably
acceptable to FHS, on the same terms and conditions as
contained in the Offer. In the event that Advance Paradigm
does not elect to exercise any of the options described
herein, FHS shall be free to accept the Offer, and the
obligations regarding mail order pharmacy services hereunder
(including any limitations under Section 12) shall terminate.
Except as expressly permitted by this Section 5, Client shall
not, and FHS shall cause the FHS Affiliated Plans not to,
enter into a contract for mail service pharmacy.
6. Performance Guarantees. Advance Paradigm agrees that the PBM Services
performed pursuant to this Agreement shall be in accordance with the
Performance Guarantees set forth in Exhibit G attached hereto.
7. Fees and Rates.
(a) Fees for Services. Beginning on the Closing, unless otherwise
specified in Exhibit D, FHS agrees to pay Advance Paradigm fees
in the amounts set forth in Exhibit D attached hereto. In order
to permit Advance Paradigm to calculate fees owed, within five
(5) business days of each billing cycle, FHS shall deliver to
Advance Paradigm a claims detail tape that reflects all pharmacy
claims processed on IPS' "Procare" system as well as pharmacy
claims processed for the FHS Affiliated Plans by third party
vendors.
Page 15
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(b) Rates for Prescription Claims. During the term of this
Agreement, FHS agrees to pay for Prescriptions dispensed to
Eligible Members by the mail service pharmacy or the
Participating Pharmacies, as the case may be, at the rates set
forth in Exhibit D attached hereto.
(c) Savings Goals. The parties will cooperate in negotiations and
contracting with retail pharmacies and drug manufacturers in
order to maximize savings in Client's pharmacy spend. Rebate
savings and retail network savings shall be measured pursuant to
a methodology mutually agreed to by the parties prior to
Closing.
(i) Retail Network Savings. Retail Network Savings will
be measured on a Quarter by Quarter basis by
comparing (A) the network discount rate, plus
dispensing fee, received for the Prescriptions for
the current quarter, to (B) the Baseline network
discount rate plus dispensing fee for retail
Prescriptions for the Baseline Period. In the event
the retail network savings exceeds $0.12 per paid
claim in any Quarter, Advance Paradigm shall be
entitled to 20% of such excess. The Baseline Period
for retail network savings shall be the calendar
quarter ending June 30, 1999.
(ii) Rebate Savings. Savings from Rebate contracting will
be measured on a Quarter by Quarter basis by
comparing (A) the aggregate rebates earned divided by
the total number of paid pharmacy claims for each
quarter to (B) the aggregate rebates earned divided
by the total number of paid pharmacy claims for the
Baseline Period, subject to any modification thereof
as agreed to by the parties prior to Closing. In the
event the rebate savings exceeds $0.15 per paid claim
in any Quarter, then Advance Paradigm shall be
entitled to 20% of such excess. Advance Paradigm
shall not be entitled to any portion of Rebate
savings unless a lower net pharmaceutical cost is
achieved by Client, subject to a mutually agreed upon
adjustment for changes in utilization and new
therapeutic entities, covered by FHS and/or the FHS
Affiliated Plans.
(d) Special Services or Materials. Upon Client's request, Advance
Paradigm will provide Client with identification cards or
non-standard services, forms, materials or documents, at a
rate mutually agreed upon in writing. In the event Client
requests a service, including Special Reports, that require
computer programming, Advance Paradigm shall provide Client an
estimate of the costs for such computer programming. Advance
Paradigm shall not proceed with such programming until Client
has agreed to the estimated costs. Client shall pay for all
reasonable associated costs including but not limited to
Advance Paradigm's internal programming time at a rate of $125
per hour or, if Advance Paradigm must engage an outside vendor
for programming, at the rate actually incurred by
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Advance Paradigm for such service. Except as otherwise
specifically provided herein, Client shall be responsible for
the reasonable costs and expenses incurred in the production
of forms, materials and documents and the distribution thereof
to Client or Eligible Members and for special handling of
certain mail service prescriptions.
(e) Best Price. Advance Paradigm agrees that, to the extent it
participates in any bidding process with the same purchaser of
services with which FHS and/or the FHS Affiliated Plans are
bidding, at a compensation rate that is more favorable to such
third party than the rates charged hereunder, Advance Paradigm
shall offer such compensation arrangement to FHS. FHS shall
notify Advance Paradigm of any bids submitted under which, if
awarded, Advance Paradigm would be providing services.
8. Payment.
(a) Statement of Account. Advance Paradigm shall submit to Client
on a semi-monthly basis a statement of account (the "Statement
of Account") that reflects the amount due for the
Prescriptions dispensed and the fees due for the applicable
period.
(b) Payment of Statement of Account. Client agrees to pay the
amount due reflected on the Statement of Account within two
(2) business days of receipt of the Statement of Account by
wire or electronic funds transfer to an account designated by
Advance Paradigm.
(c) Cessation of Services. Should Client, for any reason, fail to
pay timely any Statement of Account in accordance with Section
8(b) hereof, or become insolvent or generally unable to pay
its creditors when due, Advance Paradigm shall be entitled to
cease adjudication of claims and/or the dispensing of
Prescriptions under this Agreement while maintaining all of
Advance Paradigm's rights hereunder.
(d) Additional Services. Advance Paradigm shall invoice Client for
any additional services performed under this Agreement. Client
shall pay such invoice within thirty (30) days of receipt.
(e) Interest on Late Payments. Unless Client has disputed an
invoice, Client shall pay a finance charge on any unpaid
balance which becomes past due until paid in full. Amounts due
for Prescriptions dispensed are past due if not paid by the
fifteenth (15th) day following receipt of a Statement of
Account. Amounts due for fees and other charges hereunder are
past due if not paid by the thirtieth (30th) day following
receipt of an invoice or Statement of Account. The finance
charge for past due amounts shall be in an amount equal to one
and one-half percent (1.5%) per month, unless such rate
exceeds the maximum rate allowable by applicable law, in which
case such amounts shall bear interest at the maximum legally
allowable rate.
Page 17
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(f) Payments By Advance Paradigm. Any payments due to Client from
Advance Paradigm under Exhibit G or otherwise shall be payable
to Client within fifteen days of the date of notice from the
Client that such amounts are due. Unless Advance Paradigm has
a disputed invoice, amounts due for such charges hereunder are
past due if not paid by the thirtieth (30th) day following
receipt of the notice from Client, subject to any resolution
of a dispute relating thereto. The finance charge for past due
amounts shall be in an amount equal to one and one-half
percent (1.5%) per month, unless such rate exceeds the maximum
rate allowable by applicable law, in which case such amounts
shall bear interest at the maximum legally allowable rate.
(g) Right of Offset. In the event of any uncured payment default,
either party shall be entitled, and the parties hereby
authorize each other, to offset the amount of such payment
defaults against any amounts otherwise payable to such party;
provided, however, that in the event of any dispute over the
underlying claim giving rise to such setoff, such dispute
shall have been resolved in accordance with the dispute
resolution procedure set forth in this Agreement.
9. Records.
(a) Advance Paradigm shall maintain, in original form, on
microfilm or computer tape, documentation of all claims
processed in accordance with applicable law and for a minimum
period of seven (7) years. Subject to Section 14 hereof, all
such records, while maintained by Advance Paradigm, shall be
accessible to Client, and to any governmental or regulatory
agency with jurisdiction over Client, for examination and
audit during the term of this Agreement. In addition, Advance
Paradigm shall maintain, in original form, on microfilm or
computer tape, a copy of this Agreement in accordance with
applicable law.
(b) During and after the term of this Agreement, Advance Paradigm
shall be entitled to use on a non-exclusive basis the drug and
related data collected by Advance Paradigm for research, cost
analyses, cost comparison or other business purposes of
Advance Paradigm, all without charge to Advance Paradigm.
Advance Paradigm shall comply with all applicable federal and
state laws, including but not limited to, confidentiality laws
regarding medical records, in the use of such data.
10. Term and Renewal. Unless otherwise terminated in accordance with
Section 11 herein, or otherwise extended, this Agreement shall commence
on April 1, 1999 and end on the tenth anniversary of the CLOSING. This
Agreement shall renew for a twelve-month period following the tenth
anniversary of the Closing, and on each anniversary of the Closing
thereafter (each a "renewal date"), upon the affirmative agreement of
the parties.
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11. Termination and Default.
(a) Termination. In addition to Advance Paradigm's right under
Section 8(c) hereof, this Agreement may be terminated as
follows:
(i) Upon the mutual written consent of the parties
hereto.
(ii) Advance Paradigm may terminate this Agreement at any
time in the event of a material default by Client.
Such termination shall be effective sixty (60) days
after receipt by Client of written notice specifying
the default, unless the default is cured before the
end of the sixty-day period.
(iii) Client may deliver three (3) months' written notice
to Advance Paradigm that identifies any material and
persistent failure to process claims for the FHS
Affiliated Plans (the "Performance Notice"). As soon
as reasonably possible following receipt of such
notice, the parties will meet to discuss in good
faith the identified issues and develop a plan for
resolution. During the three (3) month period, both
parties shall provide good faith cooperation in
resolving the identified issues. If, within two (2)
months of delivery of the Performance Notice, Client
determines in its good faith business judgment that
the issues have not been resolved, Client shall
deliver written notice of its intent to terminate
this Agreement with respect to claims processing
services, as of the end of the three (3)-month period
if the issues are not resolved during the final
month. In such termination notice, the party shall
specify in writing any additional remedial actions it
believes need to be taken to remedy the continuing
breach. Advance Paradigm shall have opportunity to
cure, to Client's reasonable satisfaction, the
identified issues during this three (3)-month period,
and such cure shall cancel the termination notice
previously delivered. Termination pursuant to this
clause (iii) shall only apply to the claims
processing services, and Client shall be released
from the applicable "Exclusivity" obligations set
forth in Section 12 hereof applicable to claims
processing services.
(iv) Upon written notice delivered to Advance Paradigm at
least 180 days prior to the fifth anniversary of this
Agreement, FHS may terminate this Agreement effective
on the fifth anniversary hereof provided FHS pays to
Advance Paradigm in cash an amount equal to the
Network Access Fees and Formulary/Rebate
Administrative Fees that would have been due to
Advance Paradigm had this Agreement remained in
effect for twelve (12) additional months, calculated
by annualizing such fees based upon the month in
which such termination occurs, but in no event less
than $8,886,000. At the sixth anniversary of this
Agreement or any time thereafter, upon written notice
delivered to Advance Paradigm at least 180 days prior
to the effective date of termination, FHS may
terminate this Agreement at any time upon payment in
cash to Advance Paradigm of $2 million. The payments
contemplated by this Section 11(a)(iv) are defined as
the "Early Termination Payments."
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(v) Following a Change of Control of Advance Paradigm,
upon 180 days written notice, FHS may terminate this
Agreement effective on or after the fifth
anniversary, and no Early Termination Payment will be
due; provided that this provision shall not apply if
there is a Change of Control of FHS at any time prior
to the effective date of such early termination. In
addition, if Advance Paradigm is acquired by any
company a substantial portion of whose business
directly competes with FHS' for health insurance
services, FHS may terminate this Agreement with
respect to claims processing and/or mail service
(including termination of any payment obligation for
such services) and network management services,
provided that all other terms of this Agreement will
remain in full force and effect (including Network
Access Fees and Formulary/Rebate Administrative
Fees). In the event of a Change of Control of FHS,
the FHS Successor shall not be required to utilize
Advance Paradigm as its vendor for pharmacy benefit
services, other than for the business attributable to
FHS and the FHS Affiliated Plans at the time of the
acquisition or business that would have been
attributable to FHS and the FHS Affiliated Plans as
if the acquisition had not occurred; provided, that
the terms, conditions and payment obligations of
Client under this Agreement shall become the
obligations of such FHS Successor.
In the event this Agreement terminates pursuant to
this Section 11(a)(v), Advance Paradigm, or its
successor, shall provide the FHS Affiliated Plans
with reasonable assistance to transition all Eligible
Members.
(vi) In the event any governmental or regulatory agency or
body having jurisdiction over an FHS Affiliated Plan
notifies such Plan that Advance Paradigm shall not be
permitted to provide all or part of the PBM Services
set forth under this Agreement to such Plan, this
Agreement shall terminate as to such services for
such Plan unless Advance Paradigm is able to satisfy
the concerns of and obtain approval from such
governmental or regulatory body. Such Plan agrees to
provide reasonable assistance to Advance Paradigm in
responding to any such notification. Under such
circumstances, the minimum payment for claims
processing services set forth in Exhibit D shall be
equitably adjusted to account for any material change
in claims processing volume as a consequence thereof.
(vii) This Agreement shall terminate immediately in the
event Advance Paradigm becomes insolvent or is
generally unable to perform because of its financial
condition.
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(b) Effect of Termination.
(i) Except as specifically set forth in Section
11(a)(iv), termination of this Agreement or Change of
Control of FHS shall not restrict or limit the
obligation of FHS (or any successor), to continue to
make, if applicable, through the tenth anniversary of
the Closing, the Formulary/Rebate Payments and the
Network Access Payments, except as otherwise provided
herein.
(ii) In the event either Advance Paradigm or Client
terminate this Agreement in accordance with the terms
of Section 11(a), all unfulfilled payment obligations
for any of the services provided herein shall be paid
within thirty (30) days of the effective date of such
termination.
(c) Termination of Specific Services.
(i) Termination of Section 3. Upon 180 days written
notice, either party may terminate Section 3 of this
Agreement. Upon the effective date of such
termination, the parties shall be released from their
respective obligations under Section 3, and Client
shall be released from the "Exclusivity" obligations
applicable to formulary/rebate services set forth in
Section 12 hereof. Upon termination of Section 3 by
FHS, FHS (or any FHS Successor) shall be required to
pay Advance Paradigm, on the date of termination and
on each anniversary thereof through the term of this
Agreement unless earlier terminated pursuant to
Section 11(a)(iv), an amount equal to the
Formulary/Rebate Administrative Fees that would have
been due to Advance Paradigm had this Agreement
remained in effect for twelve (12) additional months,
calculated by annualizing such fees based upon the
month in which such termination occurs (the "Rebate
Termination Payments"). At FHS' election, it may pay
such amount in a lump sum. Upon payment by FHS to
Advance Paradigm of the Early Termination Payment
under Section 11(a)(iv) of this Agreement, FHS shall
no longer be required to make additional Rebate
Termination Payments. In the event either party
terminates this provision, the parties will cooperate
and make best efforts to ensure that the Drug
Manufacturer Agreements remain in full force and
effect for both parties following the effective date
of termination.
(ii) Termination of Section 4(a)-(c). Client may deliver
three (3) months' written notice to Advance Paradigm
that identifies any material and persistent failure
to manage the Primary Network or otherwise meet the
obligations set forth in Section 4(a)-(c) (the
"Network Termination Notice"). For purposes of this
Section 11(c)(ii), the failure to provide FHS and the
FHS Affiliated Plans the best available rates, as
reasonably determined by FHS, shall constitute a
material and persistent failure to meet the
obligations of Section 4(a)-(c). As soon as
reasonably possible
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following receipt of such notice, the parties will
meet to discuss in good faith the identified issues
and develop a plan for resolution. During the three
(3) month period, both parties shall provide good
faith cooperation in resolving the identified issues.
If, within two (2) months of delivery of the Network
Termination Notice, Client determines in its good
faith business judgment that the issues have not been
resolved, Client shall deliver written notice of its
intent to terminate this Agreement with respect to
network management services, as of the end of the
three (3)-month period if the issues are not resolved
during the final month. In such termination notice,
FHS shall specify in writing any additional remedial
actions it believes need to be taken to remedy the
continuing breach and Advance Paradigm will have
opportunity to cure to the reasonable satisfaction of
FHS the identified issues during this three (3)-month
period, and such cure shall cancel the termination
notice previously delivered. Termination pursuant to
this Section 11(c)(ii) shall only apply to the
services specified in the notice. In the event of a
material change in the pricing in the industry, the
parties shall meet and confer regarding such changes;
and, if the parties are unable to agree on any change
in such rate, as contemplated in Section 4(a), FHS
shall have the right to terminate Sections 4(a)-(c)
upon 180 prior written notice.
Upon the effective date of such termination, the
parties will be released from their respective
obligations under Section 4(a) - (c) hereof, and
Client shall be released from the applicable
"Exclusivity" obligations set forth in Section 12
hereof applicable to retail pharmacy network
management. Upon termination of Sections 4(a)-(c),
Client shall be required to continue to pay Advance
Paradigm, on the date of termination and each
anniversary thereof through the term of this
Agreement unless earlier terminated pursuant to
Section 11(a)(iv), an amount equal to the Network
Access Fees that would have been due to Advance
Paradigm had this Agreement remained in effect for
twelve (12) additional months, calculated by
annualizing such fees based upon the month in which
such termination occurs ("Network Termination
Payments"). At FHS' election, it may pay such amount
in a lump sum. Upon payment by FHS to Advance
Paradigm of the Early Termination Payments set forth
in Section 11(a)(iv) of this Agreement, FHS shall no
longer be required to make any additional Network
Termination Payments.
12. Restrictive Covenants and Exclusivity.
(a) Non-compete. In order to assure that Advance Paradigm
will realize the benefits of the transactions
contemplated hereby, subject to FHS's right to
terminate this Agreement after five (5) years, during
the term of this Agreement, but in any event not less
than the five-year period following the Closing Date,
FHS and its affiliates shall not engage in pharmacy
claims processing, retail pharmacy network
management, mail service pharmacy, rebate management
or (subject to
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Section 3 of this Agreement) the negotiation and
performance of drug manufacturer agreements.
Notwithstanding the foregoing, (i) if the parties'
obligations regarding formulary management and drug
manufacturer agreements are terminated in accordance
with Section 11(c)(i) of this Agreement, then, so
long as FHS complies with Section 11(c)(i)) of this
Agreement, FHS may thereafter provide such services
for the FHS Affiliated Plans; and (ii) if FHS
releases Advance Paradigm from its obligations to
perform the retail pharmacy network management
services in accordance with Section 11(c)(ii) of this
Agreement, then, so long as FHS is in compliance with
Section 11(c)(ii) of this Agreement, FHS may
thereafter provide such services for the FHS
Affiliated Plans; both (i) and (ii) including
participation (which may include minority ownership
interests representing not more than twenty percent
(20%) of the equity or voting control) in cooperative
groups or alliances, provided FHS shall not market
such services to third parties. This section shall
not be deemed to be a limitation on providing
clinical services (including pharmacy formulary and
rebate management services in accordance with Section
3 of this Agreement) to the FHS Affiliated Plans and
FHS's contracting medical groups, or the disease
management services offered by FHS, or otherwise
limit FHS or any Affiliate from undertaking
activities relating to the processing and payment of
medical claims generally as a payor of such claims.
(b) Exclusivity. Client hereby grants Advance Paradigm during the
term of this Agreement, and any renewals hereof, the exclusive
right to provide PBM Services to Client, including without
limitation formulary/rebate services, mail service subject to
Section 5(a), claims adjudication and retail pharmacy network
management. Client further agrees that, except as set forth in
Section 3 hereof, during the term of this Agreement, it will
not negotiate, contract, or agree with any drug manufacturer
for the purpose of obtaining drug Rebates. The foregoing
notwithstanding, if either party terminates Section 3 pursuant
to Section 11(c)(i) or Section 4 (a)-(c) pursuant to Section
11(c)(ii), FHS may thereafter provide or otherwise obtain from
a third party such terminated services to the FHS Affiliated
Plans, which may include FHS' participation in cooperative
groups or alliances (including minority ownership
participation representing not more than twenty percent (20%)
of the equity or voting control), provided FHS is not
marketing such services to third parties. The parties
acknowledge and agree that the intended purpose of this
provision is to provide for the exclusive services of Advance
Paradigm for the Pharmacy Benefits of FHS and the FHS
Affiliated Plans, including enrollees, employer groups, and
other payors, enrolled with Client in the ordinary course of
business.
(i) This Section 15(b) shall not preclude FHS from
participating in formulary/rebate services, in
accordance with Section 3 and Exhibit C.
(ii) The parties agree that certain clients, potential
clients or product lines of FHS or its FHS Affiliated
Plans, such as under the CHAMPUS program, may have
separate operational requirements relating to
pharmacy benefits.
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FHS and the FHS Affiliated Plans shall be free to
enter into agreements with such clients in
conformance with such client's request; provided,
however, that prior to entering into any agreement
that includes any or all of the services that are
substantially the same as any of the PBM Services
provided hereunder, FHS shall first provide Advance
Paradigm with the opportunity to participate in such
program on terms and conditions no less favorable
than FHS could obtain from any third party provider
of such services.
(iii) The provisions of this Section 12 shall not apply to
the provision of pharmacy services through the
Internet; provided that Advance Paradigm shall have
the exclusive right to fulfill the mail order
pharmacy service requirements of FHS' web site. The
parties shall work together to develop pharmacy
related Internet applications for FHS.
(c) Limitations on Restrictive Covenants. Section 12 shall not be
deemed to be a limitation on (i) providing clinical services
(including pharmacy formulary and rebate management services
in accordance with Section 3 of this Agreement) to the FHS
Affiliated Plans or FHS' contracting medical groups, or (ii)
the disease management services offered by FHS, or (iii)
otherwise limit FHS or any Affiliate from undertaking
activities relating to the processing and payment of medical
claims generally as a payor of such claims. Further, nothing
contained in this Section 12 shall limit any FHS Successor
from owning and operating any business (or line of business),
for the benefit of the enrollees of the FHS Successor or third
parties with whom the FHS Successor contracts, which would
otherwise be construed as violating the provisions of this
Section 12; provided that the FHS Successor shall be bound to
this Section 12 with respect to the business of FHS and the
FHS Affiliated Plans; and provided further that, except as
expressly otherwise stated herein, all terms, conditions and
obligations of this Agreement shall become the obligations of
any FHS Successor. Advance Paradigm and the FHS Successor
shall use their respective best efforts to agree on the
allocation of enrollees between FHS and the FHS Successor that
are subject to this provision. To the extent that FHS acquires
any managed care company that has an ownership in or otherwise
provides services that would conflict with this provision, the
provision shall not apply to the enrollees of such managed
care organization as of the effective date of such
acquisition; provided that the provisions of this Section 12
shall continue to apply to any and all current and additional
Pharmacy Benefit business of the FHS Affiliated Plans.
Further, in the event that such acquired managed care company
has, in place, any agreements with third parties that would
conflict with or otherwise violate the terms of this
Agreement, such other agreements shall continue in force until
the first opportunity on which such agreements may be
terminated by their terms without any financial penalty to be
incurred by such acquired organization or FHS. In addition,
prior to consummating any acquisition of a managed care
company that has an ownership interest in or otherwise provide
services that shall conflict with this Section 12, FHS will
notify Advance Paradigm of such acquisition, and FHS and
Advance Paradigm shall engage in good faith negotiations
regarding cooperative efforts with such entity, including
Advance Paradigm's opportunity to acquire such business.
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(d) Notwithstanding anything contained herein to the contrary, in
the event of a breach or threatened breach of the covenants
contained in this Section 12, Advance Paradigm may, in
addition to any other available remedies, be entitled to an
injunction enjoining FHS and its Affiliates or any person or
persons acting for or with FHS in any capacity whatsoever from
violating any of the terms herein, in accordance with
applicable law regarding the award of an equitable remedy.
13. Indemnification. Each party and its officers, directors, employees,
agents, successors and assigns (each an "Indemnitee") shall be
indemnified and held harmless by the other party (the "Indemnifying
Party") against any and all claims, loss, damage, costs and expenses
("Loss"), including, without limitation, attorneys' fees and expenses,
actually incurred by any Indemnitee arising out of or resulting from
the actions or omissions of the Indemnifying Party.
14. Audit.
(a) Audits of Eligible Members and Business Records. Client shall
have the right to inspect and audit, or cause to be inspected
and audited, the books and records of Advance Paradigm which
directly relate to ▇▇▇▇▇▇▇▇ made to Client for claims
reimbursement. Advance Paradigm shall have the right to
inspect and audit, or cause to be inspected and audited, the
books and records of Client directly relating to the validity
of the drug utilization data. Client and Advance Paradigm
shall fully cooperate with representatives of each other and
with independent accountants hired by either party to conduct
any such inspection or audit. Such audits shall be at the
auditing party's sole expense and shall only be made during
normal business hours, following fifteen (15) days written
notice, and without undue interference to the audited party's
business activity. If, after completion of the audit under
this Section 14(a), the audit reveals a discrepancy in the
results of the audit and the previous calculations of the
audited party, then the auditing party shall deliver written
notice which sets forth in reasonable detail the basis of such
discrepancy. The parties shall use reasonable efforts to
resolve the discrepancy within 30 days following delivery of
such notice, and such resolution shall be final, binding and
conclusive upon the parties hereto. If Advance Paradigm and
Client are unable to reach a resolution within such 30-day
period, the parties shall resolve such dispute in accordance
with Section 18 hereof.
(b) Payment of Discrepancies. Upon a final and conclusive
determination of a discrepancy revealed by an audit procedure
under this Section 14, the party which owes money shall pay
such sums to the other party within fifteen (15) days of the
delivery of the conclusive audit findings.
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15. Limitation of Liability.
ADVANCE PARADIGM RELIES ON MEDI-SPAN OR INDUSTRY COMPARABLE DATABASES
IN PROVIDING CLIENT AND ELIGIBLE MEMBERS WITH DRUG UTILIZATION REVIEW
SERVICES. ADVANCE PARADIGM HAS UTILIZED DUE DILIGENCE IN COLLECTING AND
REPORTING THE INFORMATION CONTAINED IN THE DATABASES AND HAS OBTAINED
SUCH INFORMATION FROM SOURCES BELIEVED TO BE RELIABLE. ADVANCE
PARADIGM, HOWEVER, DOES NOT WARRANT THE ACCURACY OF REPORTS, ALERTS,
CODES, PRICES OR OTHER DATA CONTAINED IN THE DATABASES. THE CLINICAL
INFORMATION CONTAINED IN THE DATABASES AND THE FORMULARY IS INTENDED AS
A SUPPLEMENT TO, AND NOT A SUBSTITUTE FOR, THE KNOWLEDGE, EXPERTISE,
SKILL, AND JUDGMENT OF PHYSICIANS, PHARMACISTS, OR OTHER HEALTH-CARE
PROFESSIONALS INVOLVED IN ELIGIBLE MEMBERS' CARE. THE ABSENCE OF A
WARNING FOR A GIVEN DRUG OR DRUG COMBINATION SHALL NOT BE CONSTRUED TO
INDICATE THAT THE DRUG OR DRUG COMBINATION IS SAFE, APPROPRIATE OR
EFFECTIVE IN ANY ELIGIBLE MEMBER.
16. Confidentiality.
(a) Confidential and Proprietary Information. Client and Advance
Paradigm each recognize and acknowledge that, by receipt and
possession of certain information relating to the business
operations of the other, each will discover certain of the
other's confidential and proprietary information, skills,
know-how, technical expertise, and methods. This confidential
and proprietary information includes, but is not limited to:
(a) the terms of this Agreement, (b) the terms of each
parties' agreements with drug manufacturers, (c) the Drug
Manufacturer Agreements, and (d) trade secrets relating to the
operations of the PBM Services. Each party acknowledges and
agrees that such information is confidential, valuable and
proprietary to the business of the other party, and that each
party's success and ability to compete depends on keeping such
information confidential. Each party hereto covenants and
agrees not to, directly or indirectly, and agrees to cause its
officers, directors, employees, agents and affiliates not to,
use, publish, disseminate or otherwise disclose, any of the
other party's confidential or proprietary information now or
later possessed by each, without prior written consent of the
other party. Advance Paradigm and Client acknowledge that any
violation or breach of confidentiality would cause irreparable
harm and that such harm cannot be adequately compensated in
money damages. Advance Paradigm and Client agree that any such
violation or breach may be enjoined by any court of competent
jurisdiction, without waiver of any other right to claim
damages incurred by either Advance Paradigm or Client in
connection with such a violation.
(b) Confidentiality of Eligible Members. The parties shall
maintain the confidentiality of any patient identifiable
information in accordance with applicable laws and
regulations. Client shall insure that the release of patient
identifiable information to
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Advance Paradigm and Client is duly authorized. Upon receipt
of a validly issued subpoena, court or administrative order or
a request for information that is signed by an Eligible
Member, Advance Paradigm shall be entitled to release such
information in accordance with the subpoena, order or request.
Advance Paradigm shall be entitled to assume the genuineness
of all signatures, the authenticity of all such requests,
orders or subpoenas, the conformity of copies of such
requests, orders or subpoenas to the original and that the
persons executing such requests, orders and subpoenas have
full power and authority to deliver same.
17. Regulatory and Other Approvals.
(a) Regulatory Approvals. Advance Paradigm understands and agrees
that this Agreement shall be effective for each FHS Affiliated
Plan in accordance with applicable state law. In the event any
governmental or regulatory agency with jurisdiction over a FHS
Affiliated Plan denies approval for this Agreement and such
approval is required under applicable state law, this
Agreement shall not be effective with respect to the services
identified by the regulatory body, and shall not apply to such
FHS Affiliated Plan unless Advance Paradigm is able to satisfy
the concerns of and obtain approval of such governmental or
regulatory body within the applicable time. FHS agrees to
cause such FHS Affiliated Plan to provide reasonable
assistance to Advance Paradigm in responding to any such
notification. In the event that Advance Paradigm is unable or
unwilling to satisfy such concerns, the provisions of Section
12 shall be deemed inapplicable to such FHS Affiliate Plan or
FHS or IPS, to the extent that any of them provide or arrange
for the provision of such services to such FHS Affiliate Plan.
(b) Existence of Pre-existing Agreements/Approvals. Advance
Paradigm further understands that FHS, IPS or an FHS
Affiliated Plan has existing agreements, set forth in Schedule
17, to obtain services substantially similar to the PBM
Services (or any of them) provided hereunder. To the extent
such agreement may not be terminated without breach by the FHS
party, such agreement may continue in force without being
construed as a violation of any provision of this Agreement
until such time as the agreement may be terminated or
otherwise expires without financial penalty to the FHS party.
18. Binding Arbitration. Advance Paradigm and FHS agree to meet and confer
in good faith to resolve any problems or disputes that may arise under
this Agreement. Such good faith meeting and conference shall be a
condition precedent to the filing of any arbitration demand by either
party. In addition, should the parties, prior to submitting a dispute
to arbitration, desire to utilize other impartial dispute settlement
techniques such as mediation or fact-finding, a joint request for such
services may be made to the American Arbitration Association ("AAA") or
Judicial Arbitration and Mediation Services ("JAMS"), or the parties
may initiate such other procedures as they may mutually agree upon at
such time.
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(a) The parties further agree that any controversy or claim
arising out of or relating to this Agreement, or the breach
thereof, whether involving a claim in tort, contract, or
otherwise, shall be settled by final and binding arbitration,
upon the motion of either party, to arbitration under the
appropriate rules of the AAA or JAMS, as agreed by the
parties. The arbitration shall be conducted by a single,
neutral arbitrator who is licensed to practice law. The
written demand shall contain a detailed statement of the
matter and facts and include copies of all related documents
supporting the demand.
(b) All such arbitration proceedings shall be administered by the
AAA or JAMS, as agreed by the parties; however, the arbitrator
shall be bound by applicable state and federal law, and shall
issue a written opinion setting forth findings of fact and
conclusions of law. The parties agree that the decision of the
arbitrator shall be final and binding as to each of them.
Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction. The arbitrator shall
have no authority to make material errors of law or to award
punitive damages or to add to, modify, or refuse to enforce
any agreements between the parties. The arbitrator shall make
findings of fact and conclusions of law and shall have no
authority to make any award which could have been made by a
court of law. The party against whom the award is rendered
shall pay any monetary award and/or comply with any other
order of the arbitrator within sixty (60) days of the entry of
judgment on the award.
(c) In all cases submitted to arbitration, the parties agree to
share equally the administrative fee as well as the
arbitrator's fee, if any, unless otherwise assessed by the
arbitrator. The administrative fees shall be advanced by the
initiating party subject to final apportionment by the
arbitrator in this award.
19. General.
(a) Notice. Any notice required to be given pursuant to the terms
and provisions of this Agreement shall be in writing and shall
be sent by certified mail, return receipt requested, or by
overnight delivery service or by facsimile transmission
confirmed by telephone conversation (recorded message is not
sufficient), at the addresses and facsimile numbers below or
such other address or number as shall be specified by the
parties by like notice.
to Advance Paradigm at:
Advance Paradigm, Inc.
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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and to Client at:
Foundation Health Systems
Attn: President, Specialty Services
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to:
Foundation Health Systems
Attn: Senior Vice President, and General Counsel
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Binding Nature and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, together
with any other health benefit plan acquired by FHS or its
affiliates during the term hereof, and the FHS Successors,
except with respect to FHS successors as specifically set
forth herein.
(c) Assignment. Neither party may assign this Agreement without
the prior written consent of the other; provided, however,
that Advance Paradigm may transfer or assign its rights and
obligations under this Agreement, to any affiliate and Client
may transfer its rights and obligations hereunder to an FHS
Successor, and provided further that no such assignment shall
have the effect of releasing such party from any of its
obligations under this Agreement.
(d) Entire Agreement. This Agreement contains all the terms and
conditions agreed upon by the parties with regard to the
subject matter herein, and supersedes all prior
understandings, writings, proposals, representations, or
communications, oral or written, of the parties hereto. This
Agreement may not be modified, amended or changed except by a
written agreement signed by the parties.
(e) Authority. Advance Paradigm and Client warrant that each has
full power and authority to enter into and perform this
Agreement, and the person signing this Agreement on behalf of
each party certifies that such person has been properly
authorized and empowered to enter into this Agreement on
behalf of such party.
(f) Non-Solicitation of Employees. During the term of this
Agreement, and for a period of one (1) year thereafter,
neither party shall, without the prior written consent of the
other party, knowingly solicit for employment any employees of
the other party.
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(g) Non-Waiver. The failure of either party to insist, in any one
or more instances, upon performance of any of the terms,
covenants or conditions of this Agreement shall not be
construed as a waiver or a relinquishment of any right or
claim granted or arising hereunder or of the future
performance of any such term, covenant, or condition, and such
failure shall in no way affect the validity of this Agreement
or the rights and obligations of the parties hereunder.
(h) Relationship of Parties. This Agreement shall not constitute
or otherwise imply a joint venture, pooling arrangement,
partnership or formal business organization of any kind. Both
parties shall be considered independent contractors and
neither party shall be considered an agent of the other. Under
no circumstances shall employees of one party be deemed the
employees of the other party.
(i) Force Majeure. Neither party shall be liable for any failure
or delay in performing all or part of its obligations under
the terms of this Agreement resulting from unavailability of
pharmaceuticals, legislative action, war, acts of any person
engaged in a subversive activity, sabotage, riot, strikes,
slow-downs, lock-outs, or labor stoppage, freight embargoes,
fires, explosions, flood, earthquake or other acts of God,
failure of electrical power or telecommunications services
(other than as a result of a Y2K failure of Advance Paradigm)
or by reason of the judgment, filing or order of any court or
agency of competent jurisdiction occurring subsequent to the
signing of this Agreement, or any other circumstances beyond
its control; provided, however, that any such action is not as
a result of the negligence of the party seeking to be excused
from performance.
(j) Authority of Advance Paradigm. Client acknowledges that it has
the sole authority to control and administer the Plan. Client
further acknowledges that Advance Paradigm is engaged to
perform the services under this Agreement as an independent
contractor and not as a fiduciary of the Plan or as an
employee or agent of Client, or any Plan contract
administrator. Nothing in this Agreement shall be construed or
deemed to confer upon Advance Paradigm any responsibility for
or control over the terms or validity of the Plan. Advance
Paradigm shall have no final discretionary authority over or
responsibility for the Plan's administration. Further, because
Advance Paradigm is not an insurer, plan sponsor, third party
administrator, plan contract administrator, or a provider of
health services to Eligible Members, Advance Paradigm shall
have no responsibility for (i) any funding of Plan benefits;
(ii) any insurance coverage relating to Client or any Plan
contract administrator, the Plan or Eligible Members; or (iii)
the nature or quality of professional health services rendered
to Eligible Members.
(k) Survival. Should any part, term or condition of this Agreement
be declared illegal or unenforceable or in conflict with any
other laws, the remaining provisions shall be valid and not
affected thereby.
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(l) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and
all of which taken together shall constitute one and the same
instrument.
(m) Headings and Interpretation. The headings of the various
sections of this Agreement are inserted for convenience only
and do not, expressly or by implication, limit, define or
extend the specific terms of the section so designated.
(n) Departments of Insurance. The parties acknowledge that each
party is subject to the statutes and regulations in the states
in which this Agreement will be performed. The parties
acknowledge that, and shall comply with, the laws and
regulations of several states permitting Departments of
Insurance, Departments of Health, and Departments of
Corporations to have access to Advance Paradigm's books and
records relating to this Agreement for purpose of examination,
audit and inspection, subject to confidentiality obligations.
(o) Further Assurances. From time to time upon request and without
further consideration, the parties hereto shall, and shall
cause their subsidiaries, to execute, deliver or acknowledge
such documents and do such further acts as the other party
hereto may reasonably require to effectuate its obligations
contemplated by this Agreement.
(p) Fraud and Abuse. To the knowledge of Advance Paradigm, Advance
Paradigm and its respective executive officers and directors
have not (a) engaged in any activities which are prohibited
under 42 U.S.C. Section 1320a-7 (exclusionary authority) or
Section 1320a-7a (civil monetary penalties), or the
regulations promulgated pursuant to such statutes, or under
corresponding provisions of any applicable state law or
regulation, or (b) knowingly and willfully engaged in any
activities which are prohibited under 42 U.S.C. Section
1320a-7b (false claims and anti-kickback), or the regulations
promulgated pursuant to such statute, or under corresponding
provisions of any applicable state law or regulation, or (c)
engaged in any activities which are prohibited under any state
law or regulation corresponding to (a) or (b) above. To the
knowledge of Advance Paradigm, persons who provide
professional services under agreements with any of Advance
Paradigm or its Affiliates have not been excluded from the
Medicare program or any state health care program under 42
U.S.C. Section 1320-7 and Advance Paradigm is not aware of any
pending or threatened exclusion action against such
professional persons.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their proper and duly authorized officers on the date
first above written. By executing the Agreement, the undersigned individuals
hereby warrant and represent that they have read this Agreement in its entirety
and agree to all its terms.
ADVANCE PARADIGM, INC. INTEGRATED PHARMACEUTICAL SERVICES
By: By:
------------------------------ --------------------------------
Name: Name:
---------------------------- ------------------------------
Title: Title:
--------------------------- ----------------------------
FOUNDATION HEALTH SYSTEMS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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