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.
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 projects
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
- "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
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.
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 Californias
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.
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 Medpins 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 DDPs 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
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
Californias "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 Californias
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 DDPs 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 products 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 Medpins 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 Companys
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
The uniqueness and limited time frame of the DDP
presented special challenges in computing each Participating Companys
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
companys "expended" vs. "remaining" product
(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 DDPs 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.
The Drug Distribution Project has been highly
successful in providing three years of direct benefits from approximately
$57 million worth of medications annually to Californias 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 DDPs 2000-2003 time period.
Although the Medpin programs more general training and education
benefits are continuing at some level, the end of the DDPs
direct benefits comes at a difficult time. California faces a severe
state budget crisis already putting unprecedented strainsdue
to reduced reimbursement plus larger numbers of uninsured patients--on
this states 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
A. Public Health Institute Settlement Advisory
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
Submitted June 2003
Copies of attachments available by request to
Medpin at email@example.com
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Program Year 2 Report»
Year 1 Report»
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