HomeMy WebLinkAboutTake Care Notice of Intent
Deschutes County Board of Commissioners
1300 NW Wall St., Suite 200, Bend, OR 97701-1960
(541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org
AGENDA REQUEST & STAFF REPORT
For Board Business Meeting of August 10, 2011
_____________________________
DATE: August 3, 2011
FROM: Dave Kanner Administrator ext. 6565
TITLE OF AGENDA ITEM:
Consideration and approval of a Notice of Intent to Award Contract to Take Care Health Systems, LLC,
for on-site pharmacy services.
PUBLIC HEARING ON THIS DATE? No.
BACKGROUND AND POLICY IMPLICATIONS:
Earlier this year, the County opened the Deschutes On-site Clinic (operated by Healthstat, Inc.) for the
purpose of providing primary care, urgent care, lab work and wellness programs for County employees
and other participants in the County’s health benefits plan. The DOC also offers a limited formulary of
prescription drugs that are provided at no cost to those who receive them at the DOC. Given the huge
expense that prescriptions represent in our health plan, and given the very high mark-ups on
prescription drugs at retail pharmacies, staff began exploring the idea of providing a full-service
pharmacy in the DOC that would provide prescriptions at no or reduced cost to plan participants.
This past spring, the County issued a request for proposals for on-site pharmacy services. While there
are many companies that offer this service, we received only one responsive proposal. That proposal
came from Take Care Health Systems, LLC (TCHS), which is owned by Walgreens. Since receiving
their proposal in May, staff has been working with representatives of TCHS to determine exactly how
this benefit should be structured so as to provide the best cost-savings to both the County and our plan
participants and to expedite the return on investment so the County can recoup its initial capital outlay
in the pharmacy as quickly as possible.
TCHS proposes to establish a full-service pharmacy in 850 square feet of space next to the DOC. The
space is currently being used by the Property & Facilities Department for storage. The pharmacy would
be staffed by a pharmacist and pharmacy technician and would offer the same range of prescription
medications available at local retail pharmacies. Generic drugs would be dispensed with no co-pay.
There would be a $10 co-pay for brand name drugs and a $20 co-pay for specialty drugs. TCHS also
proposes to offer for sale a small selection of over-the-counter items. All transactions would be via
debit and credit card only. There would be no cash handled in the pharmacy.
Rather than mark-up the price on each prescription as it’s dispensed, TCHS would bill Fund 675 (the
pharmacy line in the health benefits trust) what is essentially the average wholesale price of the
medications (minus varying percentages), along with the actual cost of operations and a “management
fee,” which is essentially a mark-up on those operating costs to cover the company’s overhead and
profit. Depending on how successful we are in convincing our plan participants to use the pharmacy
and how successful TCHS is in effecting “generic conversion” (that is, getting people to switch from
brand name drugs to lower-cost generic drugs), total cost avoidance through the on-site pharmacy,
which includes savings to both the County and the plan participants, could be as much as $600,000 by
the fifth year of operation, although actual cost avoidance is likely to be less than that.
Approval of the notice of intent to award will allow County staff to begin negotiating a contract with
Take Care Pharmacy Services for the operation of an on-site pharmacy.
FISCAL IMPLICATIONS:
Providing an on-site pharmacy will require a capital investment on the part of the County that will
probably be in the low six figures. Funds for this start-up expense are available and budgeted in the
Health Benefits Trust. Total cost avoidance from the pharmacy operation could be as high as $600,000
by the fifth year of operation.
RECOMMENDATION & ACTION REQUESTED:
Approve the Notice of Intent to Award Contract to Take Care Health Systems, LLC, for on -site
pharmacy services.
ATTENDANCE: Dave Kanner, County Administrator
DISTRIBUTION OF DOCUMENTS:
Dave Kanner