Attachment J-1 Statement of Work.doc

Attachment J-1

STATEMENT OF WORK

Survey of Retail Prices; Payment and Utilization Rates; and Performance Rankings

I. Scope A.

Background

The Deficit Reduction Act of 2005 (DRA) (P.L., 109-171) was enacted on February 8, 2006. Section 6001 of the DRA addresses drug payment under the Medicaid program and establishes the requirement for a monthly national survey of retail community pharmacy prices of covered outpatient drugs, the reporting by the States of payment and utilization rates, and the Secretary to comparatively rank, for the 50 most widely prescribed drugs States drug payment rates compared to the national retail survey prices.

The law set out explicit requirements for firms to be considered for award of this contract.

“ (f)(1)(C) Use of Competitive Bidding. In contracting for such services, the Secretary shall competitively bid for an outside vendor that has a demonstrated history in:

(i) Surveying and determining on a representative nationwide basis, retail prices for ingredient costs of prescription drugs;

(ii) Working with retail pharmacies, commercial payers, and States in obtaining and disseminating such price information; and

(iii) Collecting and reporting such price information on at least a monthly basis.”

B. Purpose

The purpose of this project is to contract for the performance of a monthly nationwide survey of retail community pharmacy prescription drug prices and the generation of publicly available pricing databases. These databases will afford State Medicaid agencies a valid array of covered outpatient drug prices from ingredient costs paid by retail community pharmacies to those prices available to the consumer. The State agency can use this information to compare their own pricing methodologies and payments to those derived from this survey.

Additionally, on an annual basis the contractor will obtain from the State Medicaid Agencies information on their prescription drug payment and utilization rates and prepare a comparative report ranking the performance of the States’ reimbursement prices to the retail prices collected in the survey.

II. Requirements There are two parts to this requirement, Part I—Retail Community Pharmacy Consumer Prices and Part II—Retail Community Pharmacy Ingredient Costs. Each part is separate and requires its own separate Technical and Business solution/proposal.

Part I Requirements: Retail Community Pharmacy Consumer Prices The Contractor shall furnish all of the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government, as needed to perform the requirements of Part I of this Statement of Work. A complete Technical and Business Proposal shall be submitted to support Part I of this Statement of Work.

The Contractor shall develop a nationwide retail survey methodology for all 50 States and the District of Columbia that will result in the publication of a pricing database for all covered outpatient drugs that is based on actual, monthly market transactions. This survey shall incorporate the collection and calculation of drug prices from all sectors of retail pharmacies that captures and separately maintains a file of consumer drug prices for each of the following:

a. Cash paying customers,

b. Customers with commercial third party insurance,

c. Medicaid customers.

The above price lists are to be published on the CMS website.

The Contractor will be required to strictly protect the reporting pharmacies confidentiality.

A. Part I Tasks

Task 1 – Kickoff Meeting/Project Task Schedule

The Contractor shall participate in a kickoff meeting within one week of contract award. The kickoff meeting will allow the Contractor and CMS to discuss specific timelines and agree on expectations. Following the kickoff meeting, the Contractor shall provide CMS with a detailed project task schedule including but not limited to the following: individual tasks, milestones, and dates. This project task schedule shall be submitted within 10 business days after the kickoff meeting.

Task 2 - Survey of Retail Prices The Contractor shall develop a nationwide retail survey methodology for all 50 States and the District of Columbia that will provide a design that will result in a monthly publication of pricing databases for all covered outpatient drugs that is based on actual market transactions. This survey shall incorporate the collection and calculation of drug unit prices from all sectors of retail community pharmacies.

Surveys shall include:

· Applicant comments with any alternate design that will achieve the desired data collected for their inclusion in the final published prices.

· Total representation of drug pricing. In addition, the Contractor shall comment on how much additional effort would be necessary to generate regional price data and if a statistically valid sample could be obtained to produce such specific State prices.

Innovative proposals shall include the methodology to be used to calculate the listed retail community pharmacy drug prices. Survey methodology and rationale shall be included that weight the average price so that minimally, it is statistically acceptable, considering but not limited to geography and high cost outlier regions/states.

The survey is to be performed monthly beginning November 2010. The results are to be available to CMS for review beginning the 15th of December 2010 and on the 15th of each month thereafter. Once approved by CMS the Contractor will provide this information in a manner suitable for posting on CMS’s website or forward the monthly survey results to the States designated individual (provided by CMS).

The contractor will format the monthly price data in an agreed upon format during the kickoff meeting based on the recommendations provided by both parties. The final format can be anticipated to be listed by National Drug Code (NDC) number with cross references to the drug product alphabetically by generic name with one listed, national price. Additional elements may contain strength, dosage form, and average price and for single source products, brand name.

Task 3 - Notice of Available Drugs The Contractor shall monitor the marketplace and report to CMS monthly of:

a. Any new single source outpatient drugs that are generally available.

b. A brief description and approved indications for the drug.

The Contractor shall report the new drug products outlined above in Task 3 to CMS for review by the 15th day of the following month they are generally available in the marketplace.

The Contractor shall report to the States the new monthly single source drugs along with the monthly retail survey report.

Final formatting of the Notice of Available Drugs and reporting process of this notice will be decided on by CMS at the kickoff meeting with appropriate input from the Contractor. However, CMS encourages appropriate input on how best this Notice can be created, managed and distributed to States.

5. The monthly report of new single source drugs shall include but not be limited to:

a. Brand name

b. Generic name

c. Strength

d. Dosage form

e. Manufacturer

f. NDC number

Task 4 - Annual State Reporting

The DRA requires the creation of an annual state performance ranking. This ranking shall be based on a comparative analysis of the 51 State Medicaid Agencies payment and utilization rates against the results of the national retail survey for the 50 most widely prescribed drugs identified by the national retail sales pricing data.

As variation exists between the State’s various reimbursement processes and reporting structures, the Contractor shall comment on the process required and the elements needed to fulfill this comparative analysis. Minimally, the Contractor shall be required to collect from each State the following information:

a. Payment rates under the State plan for covered outpatient drugs.

b. Dispensing fees under the State plan for such drugs.

c. Utilization rates for non-innovator multiple source drugs as follows:

1) Percent utilization of generic drugs among all drugs with generic equivalents

2) Percent utilization of generic drugs dollars paid to total prescription dollars paid.

d. States monthly per unit cost represented in (a.) above for each of the top 50 prescribed drugs identified by the retail survey and determined in Task 5.

Additional elements may be necessary to carry out the necessary calculations the Contractor shall identify those elements in advance. The Contractor should comment on these additional elements in its Technical Proposal. CMS will facilitate the collection of the necessary information from the States.

Even though we acknowledge variation between the States on drug reimbursement processes and reporting, the Contractor shall develop a uniform template for data collection from the States. The Contractor should be prepared to discuss this template at the Kickoff meeting and have a version ready for review by CMS and the States. A final version shall be submitted and approved no later than May 2011.

The contractor shall provide input on when data collection should commence and end in conjunction with State reporting requirements. As well as, what twelve calendar months should constitute the annual period and by what process they expect to use to facilitate communication of this template to designated State Points-of-Contact. The final report to Congress and the States will be due to CMS no later than the 20th of March each year. Full calendar years (i.e., 2011, 2012, 2013) worth of data shall be collected from the States at the commencement of a new year and used in the comparator analysis, however, the Contractor’s experience in data collection and experience working with State Medicaid Agencies on how long this collection would take given the elements discussed above should be provided.

Task 5 - Comparative Analysis and State Ranking

The Contractor shall identify the top 50 prescribed drugs in the United States and their corresponding most frequently prescribed quantity for each of these top 50 drugs utilizing twelve months worth of retail survey data that coincides with the same period of collected State data addressed in Task 4 above.

The Contractor shall provide input on the development of the most statistically sound weighted average unit prices derived from the same twelve months of corresponding State collected data and national retail data. These resultant unit prices will be used in the comparison calculations. For discussion, this average unit price could be calculated by adding all of the individual monthly unit prices for each calendar month, and dividing by twelve to produce this average unit price. Again one unit price would be generated based on State collected data and one unit price would be obtained from the retail survey data.

Subsequently, the Contractor shall calculate for each State the total payment amount for each of the top 50 drugs identified in the retail sales price survey as follows:

a. Multiply the State average unit price times the quantity most prevalently prescribed in the retail price survey.

b. Add the appropriate State dispensing fee collected to each line item calculated in (a) to arrive at the State Payment Price (SPP) Simultaneously the Contractor shall multiply the prevalently prescribed quantity against the weighted average unit price from the retail survey data and subsequently add the dispensing fee and associated fees relevant in that State (i.e., State Tax or State pharmacy claims transmission tax, etc) to arrive at the State Retail Price.

The Contractor shall then compare each State Payment Price against the Retail Community Pharmacy Survey Price for each of the top 50 drugs by subtracting the State Payment Price from the Retail Survey Price and identifying the difference in dollars and cents (positive or negative).

The Contractor shall develop a comparative composite ranking for each State relative to the national retail sales average. This ranking shall be in State ascending order from the lowest composite differential to the highest.

Task 6 - Annual Report Upon completion of the analysis, the Contractor shall prepare a full report of the annual rankings. This report shall include but not be limited to:

a. Each States payment rates, dispensing fees and utilization rates for non-innovator multiple source drugs.

b. Comparative analysis and State ranking relative to the national average retail survey reported.

Final formatting will be directed by CMS, but are open to comment from the Contractor on the best statistically sound calculation that provides the most relevant comparison of State payment versus retail price.

The report shall be completed by March 20, 2012 and every March 20 for each year of the contract.

CMS shall notify the Contractor when the Secretary officially submits the final report to Congress. At that time the Contractor shall be required provide copies to all the designated State Medicaid Points-of-Contacts within 1 business day.

Reporting Requirements (Part I ONLY) All written documents for Part I of this contract shall be delivered via 5 hard copies plus an electronic version via E-mail attachment, or compact disk. The Contracting Officer Technical Representative (COTR) may request additional hard copies as necessary. All electronic files shall be submitted in a format that is compatible with Microsoft Office 2007. Reporting requirements are subject to change and the Contractor shall be prepared to submit deliverables in any new CMS standard.

The COTR shall provide the Contractor with comments on draft reports within two (2) weeks of receipt of the draft report(s), unless otherwise identified herein. If no response is received within two (2) weeks, the Contractor shall assume that the draft report is approved for development of final report(s) unless otherwise identified herein.

1. Monthly Status Report: The Monthly Status Report shall include at a minimum, the following information:

For new single source drugs:

· Brand Name;

· Generic name;

· Strength;

· Dosage form; and

· Manufacturer.

Brief description of the drug product

List of approved FDA indications

2. Annual State Report: The Annual State Report shall include, at a minimum, the following information:

· Payment rates for covered outpatient drugs;

· Dispensing fees;

· Utilization rates for non-innovator multiple source drugs broken out as follows:

· Percent utilization of generic drugs based on number of generic prescriptions to total number of prescriptions with generic alternatives

· Percent utilization of generic drug dollars paid to total prescription dollars paid.

▪ Listing of the state monthly per unit cost for each of the Top 50 drugs

3. Comparative Analysis and State Ranking Report: The Comparative Analysis and State Ranking Report shall include, at a minimum, the following information:

· List of 12 months used in data calculation

· Name of the top 50 drugs;

· Weighted average retail survey per unit price

· Weighted average State per unit price;

· Quantity most prevalently prescribed in the retail price survey;

· State Dispensing fee;

· Other relevant state fees incurred from the retail survey (retail survey dispensing fee, state taxes, state tax on claims transactions, etc…)

· Total State Payment Price (SP)

· Total State Retail Price (SR)

4. Annual Report: The Annual Report shall include, at a minimum, the following information:

For non-innovator multiple source drugs, identify the following:

· Name of State;

· Payment rates per State;

· Dispensing fee per State; and

· Utilization rates.

The Contractor shall provide a comparative analysis and State ranking relative to the national average retail survey reported.

CMS will notify the Contractor that the Secretary has submitted the analysis to Congress, thus giving the Contractor one business day to distribute the analysis to the States.

Part II Requirements: Retail Community Pharmacy Ingredient Costs

The Contractor shall develop a nationwide retail survey methodology for all 50 States and the District of Columbia that will result in the publication of an ingredient cost file of all covered outpatient drugs purchased by retail community pharmacies.

Innovative proposals shall include the methodology to be used to calculate and report timely the listed retail community pharmacy ingredient costs. Methodology and rationale shall be included that minimally, it is statistically acceptable, considering but not limited to geography and high cost outlier regions/states.

In order to perform, maintain and provide a monthly national price list of ingredient costs of Medicaid covered outpatient drugs (see http://www.cms.hhs.gov/MedicaidDrugRebateProgram/09_DrugProdData.asp# for a current list of these drugs) the Contractor shall:

· Possess a thorough knowledge of retail pharmacy drug purchasing and the factors that affect those purchasing costs

· Possess the ability to obtain net drug costs on-invoice and off-invoice by surveying and performing on a sample basis that will be valid nationwide audits of retail pharmacy purchases

· Be able to maintain separate files of prices of retail community pharmacies, chain pharmacies and specialty pharmacies

· Be able to look at geographic variation in pricing, if any, to provide reliable nationwide data

· Be able to support and maintain files of current drug ingredient cost prices on an ongoing basis

· Be able to provide updated pricing information on very tight time schedules The Contractor shall compare ingredient costs derived from the survey to existing reference pricing used by States such as wholesale acquisition cost (WAC) and average wholesale price and also to the Part I prices to demonstrate potential savings in detail and summary reports.

Once approved by CMS the Contractor will provide this information in a manner suitable for posting on CMS’s website or forward the monthly survey results to the States designated individual (provided by CMS).

The Contractor shall furnish all of the necessary services, qualified personnel, material, equipment, and facilities, not otherwise provided by the Government, as needed to perform the requirements of Part II of this Statement of Work. A complete Technical and Business Proposal shall be submitted to support Part II of this Statement of Work.

III. Reporting Requirements (Part I and Part II) All written documents for Part I and Part II of this contract shall be delivered via 5 hard copies plus an electronic version via E-mail attachment, or compact disk. The Contracting Officer Technical Representative (COTR) may request additional hard copies as necessary. All electronic files shall be submitted in a format that is compatible with Microsoft Office 2007. Reporting requirements are subject to change and the Contractor shall be prepared to submit deliverables in any new CMS standard.

The COTR shall provide the Contractor with comments on draft reports within two (2) weeks of receipt of the draft report(s), unless otherwise identified herein. If no response is received within two (2) weeks, the Contractor shall assume that the draft report is approved for development of final report(s) unless otherwise identified herein.

1. Survey of Retail Prices Plan: The Survey of Retail Prices Plan shall include at a minimum, the following information:

· Description of methodology used to conduct the retail survey separately for Requirement Parts I and II all covered outpatient drugs in the United States

· Description of assumptions and constraints;

· Description of pharmacies and retail outlets and the associated prices to be surveyed

· Description of survey and data collection process with an analysis of data elements to be collected

· List and description of associated pharmacy costs, i.e. dispensing fees, state taxes, etc…

· Description of assurance of pharmacy confidentially

· List and description of data files necessary to identify the top 50 prescribed drugs;

· Schedule of how often new or updated data would be needed;

· Proposed reporting format of national pricing file listed by NDC number cross referenced by alphabetical generic name including strength, brand name, dosage form.

2. Cost Report: The Contractor shall submit a Cost Report in hard copy with the monthly voucher. The Cost Report shall include, at a minimum: (If doing cost reimbursement type contract)

· A summary of costs incurred during the previous month;

· Cumulative costs incurred to date on the contract;

· Funds remaining to be incurred on the contract;

· Costs by Labor Category, Labor Hours, Labor Rates, Travel, Subcontracts, Overhead, Profit, etc.;

· Itemization of Other Direct Costs incurred; and,

· A narrative report of expenditures that exceed 10% either above or below the estimated expenditures for the period of time that is being reported

IV. Project Plan (Part I and Part II) The project plan for Part I and Part II shall include, at a minimum, the following information (not necessarily in the order presented here):

· Work Breakdown Structure;

· Key staff types devoted to each task or activity, if appropriate, and time allocation for each; and,

· Key milestones signifying successful completion of each task and periodic internal assessment/progress reports planned.

V. Personnel Requirements (Part I and Part II) The Contractor shall provide the following Key Personnel for Part I and Part II of this contract (Key personnel are not required to be full-time employees):

1. Project Manager

2. Lead Scientist or Researcher charged with method development

3. Lead Statistician (if different from lead Scientist)

4. IT Specialist or Liaison

5. Contracting Specialist

VI. Quality Assurance(Part I and Part II)

The Contracting Officer Technical Representative (COTR) shall review and approve all work products and deliverables submitted by the contractor. Progress meetings shall be held between the Contractor and COTR monthly. The meetings shall take place each month on a day mutually agreed upon by the Contractor and CMS at the Kickoff Meeting. These meetings will be used to review the status of the project, upcoming events, outstanding issues and money expenditures.

Form and Content – The Contractor shall provide timely deliverables that are clearly written, well organized, correct in grammar and spelling, and that are specific to the contract requirements and CMS needs.

Timeliness – The Contractor shall meet established time lines. The Contractor shall submit all deliverables to CMS so that they are received on or before the due dates specified.

Quality - Appropriateness, completeness and error free nature of all activities conducted by the Contractor. The Contractor shall maintain the highest degree of quality for all activities performed throughout the period of performance of this contract. CMS shall evaluate the Contractor performance using measures such as the following:

· Completeness and accuracy of data analysis;

· Completeness and accuracy of establishing the relevant prices; and

· Completeness and accuracy of all deliverables.

Integrity - Ability of the Contractor to uphold the highest standards of professional integrity and act in the best interest of the Medicaid program. The Contractor or any subcontractor, shall not engage in fraud or abuse or be found to have non-disclosed conflicts of interest while work is performed on this contract or other government contracts. CMS shall evaluate the Contractor performance using measures such as the following:

· Demonstration that the Contractor continuously maintained professionalism and honesty in its business activities.

· Demonstration that all activities were carried out in a legal and ethical manner.