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Health department seeks $8.8M increase to pharmacy management contract; budget analyst urges contingency cut
Summary
The Department of Public Health asked the committee to approve a third amendment increasing a pharmacy administration contract by $8,804,318 to a $18,704,318 total through June 30, 2014, to maintain access to community pharmacies for thousands of uninsured patients; the Budget Analyst recommended reducing the contingency calculation and amending the resolution to limit future over‑budget expenditures.
The Department of Public Health requested committee approval of a third amendment to its pharmacy administration services agreement (recorded on the agenda as with "MediPac Healthcare System, Inc.") to increase the contract by $8,804,318 to a not‑to‑exceed total of $18,704,318 for the six‑year term through June 30, 2014.
Dave Woods, Chief Pharmacy Officer for DPH, told the committee the program enables more than 50,000 uninsured clients of the Community Health Network — including Healthy San Francisco and related programs — to fill prescriptions at community pharmacies closer to home. "Without these pharmacies, patients might have to take one, two, or three buses to get to San Francisco General Hospital outpatient pharmacy," Woods said, noting that easier access may improve medication adherence.
The Budget Analyst presented an audit‑based calculation and recommended amending the proposed resolution to reduce the proposed not‑to‑exceed amount from $18.7 million to approximately $17.6 million by recalculating allowable contingency only on proposed (future) expenditures rather than prior actual expenditures. The analyst also recommended that any expenditures under the amendment that exceed 10% of the third amendment's budget be submitted to the Health Commission for approval.
DPH said it concurs with some recommendations but noted the Health Commission historically approved a 12% contingency and that department policy currently reflects that practice. Committee members discussed aligning the resolution language so the department must return to the Health Commission if expenditures exceed the commission's policy; the committee approved the analyst's first recommendation and amended language to be consistent with the Health Commission's policy and directed the Clerk to make non‑substantive amendments to the legislation. The motion passed without objection.
Next steps: the amended resolution will be forwarded to the Board of Supervisors for consideration.
