Title
a. Authorize the Director of Health Services or designee to sign a Letter of Participation (LOP) with Cardinal Health 110, LLC. and Cardinal Health 112, LLC. (Cardinal) for the purchase of discounted outpatient pharmaceuticals for the County of Monterey Health Department’s Federally Qualified Health Center (FQHC) clinics, for an initial term of 5-years from October 1, 2026 through September 30, 2031 at the conclusion of which initial term the LOP shall extend coterminously with the term of the Apexus, LLC Pharmacy Distribution Agreement dated September 1, 2025 between Cardinal and Apexus, LLC, the authorized prime vendor for the 340B Prime Vendor Program ; and
b. Accept the recommendations of the Director of Health to approve the non-standard provisions in the LOP; and
c. Authorize the Director of Health Services, or designee to sign future amendments to this LOP that do not significantly change the scope of work, subject to further approval of County Counsel.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Authorize the Director of Health Services or designee to sign a Letter of Participation (LOP) with Cardinal Health 110, LLC. and Cardinal Health 112, LLC. (Cardinal) for the purchase of discounted outpatient pharmaceuticals for the County of Monterey Health Department’s Federally Qualified Health Center (FQHC) clinics, for an initial term of 5-years from October 1, 2026 through September 30, 2031 at the conclusion of which initial term the LOP shall extend coterminously with the term of the Apexus, LLC Pharmacy Distribution Agreement dated September 1, 2025 between Cardinal and Apexus, LLC, the authorized prime vendor for the 340B Prime Vendor Program ; and
b. Accept the recommendations of the Director of Health to approve the non-standard provisions in the LOP; and
c. Authorize the Director of Health Services, or designee to sign future amendments to this LOP that do not significantly change the scope of work, subject to further approval of County Counsel.
SUMMARY:
Clinic Services is seeking approval for the non-standard provisions in this LOP to maintain continued access to discounted 340B prescription drugs for Clinic Services patients, which allow Clinic Services to stretch its fiscal resources further with the discounted drug savings achieved through this contract.
DISCUSSION:
The Health Department Clinic Services Bureau (Clinic Services) operates twelve community clinic sites designated as Federally Qualified Health Centers (FQHCs) which provide preventive primary, dental and specialty medical care services.
Pursuant to Section 340B of the Public Health Services Act, the 340B Drug Pricing Program requires drug manufacturers participating in the Medicaid program to enter into agreements with HRSA to provide discounts on covered outpatient drugs to eligible health centers, including Clinic Services. Apexus is the authorized prime vendor for the 340B Prime Vendor Program (PVP) which allows covered entities to purchase products through supplier and distributor agreements under Apexus’ network of suppliers and distributors.
Cardinal is part of Apexus’ network of suppliers and distributors and has contracted with Clinic Services since June 2011 when the Board of Supervisors first approved Agreement Nos. A-12009 and A-12010 to provide Clinic Services’ access to 340B discounted drugs. The Board of Supervisors approved a new Letter of Participation with Cardinal (Agreement No. A 14005) on June 26, 2018, to continue distributing 340B discounted drugs to designated contract pharmacy arrangements in place with Clinic Services, which expires on August 31, 2026.
Clinic Services has been working with Cardinal on a new LOP for continued 340B drug distribution with Cardinal. However, due to the nature of Cardinal’s rigid nationwide 340B contract templates, attempts to negotiate certain County-wide contract provisions into this LOP were not successful. Clinic Services recommends moving forward with this nonstandard Letter of Participation to maintain critical access to the discounted drug pricing. The access to discounted drugs has allowed Clinic Services’ resources to be stretched further when providing care and services to patients, regardless of their ability to pay.
This work supports the County of Monterey Health Department 2025-2028 Strategic Plan Goal(s): 1. Deepen Organizational Effectiveness and Support Long-Term Sustainability. It also supports one or more of the ten essential public health services, specifically: 5. Develop policies and plans that support individual and community health efforts; and 7. Link people to needed personal health services and assure the provision of health care when otherwise unavailable.
OTHER AGENCY INVOLVEMENT:
County Counsel has reviewed and approved the Letter of Participation as to form. Auditor-Controller’s Office has reviewed and does not agree with the fiscal provisions.
FINANCING:
Sufficient funds are available in FY 2026-27 Adopted Budget for Clinic Services Bureau, (1001-400009) to cover the 340B medication expenses. This agreement will be funded by 340B program revenue and there is no financial impact to the General Fund resulting from approval of these Agreement.
BOARD OF SUPERVISORS STRATEGIC PLAN GOALS:
The purchase savings achieved from this contract allow Clinic Services to stretch its fiscal resources further, aligning with the Strategic Plan Goal of Well-Being and Qualify of Life.
Mark a check next to the related Board of Supervisors Strategic Plan Goals:
X Well-Being and Quality of Life
____ Sustainable Infrastructure for the Present and Future
____ Safe and Resilient Communities
____ Diverse and Thriving Economy
____ Dynamic Organization and Employer of Choice
Prepared by: Prisca Segovia, Management Analyst, 755-4939
Approved by: Elsa Mendoza Jimenez, Director of Health Services, 755-4526
Attachments:
Board Report
Cardinal 340B Letter of Participation Redacted