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Final Court Report
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Final Report on the Drug Distribution Project

Re: Master Agreement of Settlement and Release, Pharmaceutical Cases I, II, and III, Superior Court of the State of California, City and County of San Francisco, J.C.C.P. Nos. 2969, 2971, 2972.

OVERVIEW

Unique and Highly Successful Project. The Drug Distribution Project ("DDP") was an unprecedented drug ordering and distribution system combining brand name drug offerings from 25 drug companies, 200 diverse "safety net" clinics serving indigent Californians, and a specially-designed, internet-based order system. Created to implement major portions of an innovative cy pres settlement, this project successfully distributed to indigent patients 99% of diverse brand name medications, whose total value exceeded $171 million. As part of the project’s final evaluation, safety net clinic staff wrote comments such as:

  • "We have a high number of indigent patients. These drugs help many!!!! patients whowould not otherwise have medications."
  • "Clinic and doctors were able to see patients that we would not otherwise have been able to handle due to the high cost of meds."
  • "It was frustrating to deal with the closure of the DDP and the fact that patients would have to be switched to less costly and possibly less effective medications."
  • "Thank you for helping us help the indigents."

From April 1, 2000-July 8, 2001, the DDP distributed products from nineteen pharmaceutical companies pursuant to the original Settlement Agreement of 1999. On July 9, 2001, six additional Participating Companies joined the DDP pursuant to a second Settlement Agreement of the aforementioned cases, resulting in an expanded list of products available through the DDP to clinics serving indigent patients. The last DDP order period occurred in February 2003, and final product shipments began the following month.

DDP’s additional benefits. In addition to directly helping indigent patients, the DDP provided a foundation for other activities in a larger Medicine for People in Need (Medpin) Program. With financial support from four charitable foundations plus a University of California research program, Medpin has complemented its drug distribution activities with targeted policy research for the state and federal government officials, and with pharmaceutical management education and training for pharmacists, physicians, and others working in California’s community and county clinics. Education activities have included bi-monthly newsletters (distributed to over 1000 clinics and interested organizations), teleconference workshops, two statewide conferences, special reports, and three series of in-person trainings offered at locations throughout California.

KEY PARTICIPANTS

DDP Participant Clinics. Before the DDP began, Medpin staff contacted approximately 700 nonprofit community clinics in every part of California, plus all 61 local health departments in the state. Attachment A lists the DDP Participants ("Eligible Recipients" in the Settlement Agreements) approved to participate in the DDP for the third and final Program Year. This list, which is smaller than the Program Year 1 list of provisionally approved clinics, includes only those California clinics that documented to Medpin’s satisfaction that they (1) are one of the types of safety net providers specified in Section 8 of the Settlement Agreements, and (2) have in-house pharmacy capacity (a drug dispensary or pharmacy) licensed by the California State Board of Pharmacy.

DDP Participating Companies. The 25 DDP Participating Companies ("Settling Defendants" in the Settlement Agreements) worked with Medpin staff under the operating procedures developed prior to the DDP’s start date. These procedures were discussed and adjusted in a February 23, 2000 conference call involving approximately 60 parties connected with the Participating Companies (legal counsel and other appropriate staff), counsel for plaintiff class members, and Medpin staff. Participating Companies that joined the DDP subsequent to February 2000 were informed of DDP operating procedures prior to their decision to become a Settling Defendant.

Counsel for Class Plaintiffs. In creating the cy pres settlement that is the basis of the Drug Distribution Project, counsel for class plaintiffs, led by attorneys from Lieff, Cabraser, Heimann & Bernstein, made notable efforts to obtain input from public health and indigent medical care experts and community providers in California. To do this, they chose an independent nonprofit organization in California called the Public Health Institute to solicit opinions and expertise from the public health and indigent medical care communities. The attached list of Public Health Institute settlement advisors includes academic experts plus leaders from California’s "safety net" clinic community (including pharmacists and physicians from county hospitals, nonprofit community clinics, and from county health care systems without a public hospital). The commitment and experience of these public health advisors helped create a settlement of significant benefit to California’s indigent patients receiving care at outpatient clinics.

Ordering Agent. The Medicine for People in Need Program (originally called Pharmaceuticals and Indigent Care Program) was selected to serve as the Ordering Agent, pursuant to Section 3 of Schedule D-1 of the Settlement Agreements. Medpin operates under guidance from its Advisory Board and as part of the non-profit Public Health Institute.

OPERATION of the DRUG DISTRIBUTION PROJECT

DDP Credit Limits. A system of "DDP credit limits" used transparent, evidence-based methods of apportioning the DDP’s total Product Balance equitably and efficiently across clinics of diverse size and circumstances. Participant clinics knew in advance the maximum amount of free product their clinic could request each year. These maximums were computed annually by Medpin and assigned to each clinic based on the most recent, publicly available records of the amount of care provided by that clinic to pharmaceutically uninsured patients. As a result, a large clinic such as Los Angeles County Medical Center had a DDP Credit Limit more than 100 times the size of a community clinic such as Mt. Shasta Medical Clinic or Casa de Salud.

DDP Ordering Periods. In Settlement Schedule D, different Participating Drug Companies specified different time periods as the maximum frequency at which they would accept DDP orders. To move toward a more consolidated and cost-effective system, the DDP specified dates for DDP Order Periods, typically occurring three to four months apart, applicable for orders to all companies.

DDP Drug List. In the same spirit of centralizing and standardizing DDP operations as much as possible, Medpin presented all clinic participants with a single list of drugs available through the DDP for the upcoming DDP Order Period. This list was based on the specific products enumerated in the original Settlement Agreements, then revised before each new order period.

  • No controlled substances were included in any versions of the DDP drug list.
  • The list of available drugs was continually revised to remove any products deleted due to products’ purchase by another company, discontinuance or similar circumstances.
  • Drug names were displayed in "strike-out" type once their annual or total dollar limit had been reached.
  • Other visual cues were used on revised versions to indicate a product’s limited availability (often for mental health drugs), or extensive availability (because the product was generally less popular).
  • Products voluntarily added to the drug list at Medpin’s request, subsequent to the Settlement Agreement, were typically given extra attention through visual cues in the actual drug list or through e-mail messages periodically sent by Medpin to Participant Clinics as they prepared for the next DDP Order Request Period

Computing and Expending Each Company’s Product Balance. Medpin contracted with Kentucky-based ChoiceSystems Inc. to create a custom-designed, internet-based website that handled DDP order requests and tracked those requests. This system also helped Medpin cut back on order requests in an equitable and systematic manner, so that no
product totals exceeded the appropriate dollar amount for that drug company nor, when applicable, for that particular product or class of products.

The uniqueness and limited time frame of the DDP presented special challenges in computing each Participating Company’s remaining DDP Product Balance. In addition to the glitches expected in any new information system, the following issues sometimes arose in computation of DDP Product Balances and the processing of DDP orders: (1) Different companies track and present product shipping information in different manners and with differing degrees of centralization and automation. (2) Backorders presented complications, confusion and sometimes inconsistencies in the methods of accounting for a company’s "expended" vs. "remaining" product balance.
(3) Differences between amount of product ordered and amount of product shipped created challenges in reconciling Medpin and company figures. (4) DDP Program Year dates did not coincide with many drug companies’ existing time frames for tracking products. (5) Some companies did not consistently use the same WAC price throughout a DDP Program Year. (6) Some companies’ figures on their DDP product balance may have reflected individual product shipments, debits, or credits mistakenly sent or attributed to Medpin staff or to the wrong clinic. (7) Medpin was not always able to confirm reconciled figures for all companies’ remaining product balances in time to use those figures in calculating order limits for the following DDP program year.

Throughout the DDP’s three years, but especially toward the end of the final year, Medpin worked with companies having higher-than-average remaining DDP Product Balances to suggest how those companies could reduce their remaining DDP Product Balance by improving the value of the product mix available through the DDP. As a result, the DDP ends with a record of all companies, excepting only one, having expended all or very nearly all of their total DDP Product Balance.

CONCLUSION

The Drug Distribution Project has been highly successful in providing three years of direct benefits from approximately $57 million worth of medications annually to California’s indigent patients. This has translated into a total of 2.6 million one-month medication supplies filled for indigent patients who might not have otherwise received those medications.

Medpin and other safety net provider groups have asked the DDP Participant Companies to follow up on their litigation-related DDP participation with a separate, voluntary commitment to ongoing levels of drug assistance for California indigents similar to those companies’ efforts during the DDP’s 2000-2003 time period. Although the Medpin program’s more general training and education benefits are continuing at some level, the end of the DDP’s direct benefits comes at a difficult time. California faces a severe state budget crisis already putting unprecedented strains—due to reduced reimbursement plus larger numbers of uninsured patients--on this state’s outpatient, "safety net" clinics at exactly the same time that the DDP is no longer available to help them. The future of pharmaceutical care for indigent California patients holds many uncertainties; Medpin will continue its efforts to help reduce barriers for patients in need of medication they cannot afford.

Attachments:

A. Public Health Institute Settlement Advisory Committee
B. Medpin Advisory Board Members
C. DDP Participant Clinics
D. DDP Participating Companies
E. DDP Operating Procedures
F. Companies’ Choice of DDP Order Transmission Methods
G. Drugs Available Through the DDP
H. Additions and Deletions to DDP Drug List
I. The Safety Net Community Speaks about the DDP
J. DDP Survey Results
K. Medpin Program Summary
L. DDP Final Product Balances
M. DDP Order Requests vs. Amounts Actually Ordered
N. 30-Day Supplies of Products Distributed Through DDP
O. Sample of "five commitments" letters sent to all Participating Companies

Submitted June 2003

Copies of attachments available by request to Medpin at info@medpin.org

Program Year 3 Report»
Program Year 2 Report»

Program Year 1 Report»

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