This is the text extract for Request for Proposal (RFP) for supply of nicotine replacement therapy products. Closed, browse documents here.

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30 June 2010

Dear Supplier REQUEST FOR PROPOSALS – SUPPLY OF NICOTINE REPLACEMENT THERAPY PRODUCTS PHARMAC invites proposals for the supply of nicotine replacement therapy (nicotine gum, lozenges, patches and any other formulations) in New Zealand. This request for proposals (RFP) letter incorporates the following schedules: · Schedule 1 specifies the pharmaceutical and presentations for which PHARMAC is requesting proposals and sets out the background to the RFP and the types of proposals sought; Schedule 2 describes the process that PHARMAC expects to follow in relation to the RFP; Schedule 3 sets out information about the estimated size of the current subsidised market for the pharmaceutical; and Schedule 4 contains the RFP form in which you are to provide details of your proposal.

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If you wish to submit a proposal, you must submit it to PHARMAC no later than 5:00 pm on 23 July 2010. If you have any questions about this RFP, please contact Geraldine MacGibbon at PHARMAC on (04) 916 7514 or geraldine.macgibbon@pharmac.govt.nz. We look forward to receiving your proposal. Yours sincerely

Matthew Brougham Chief Executive

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Schedule 1: Pharmaceutical, background to RFP and types of proposals sought 1. Pharmaceutical PHARMAC is interested in considering any proposal from suppliers of nicotine (nicotine replacement therapy), in the form of: · Currently funded nicotine formulations (nicotine gum, nicotine lozenges and nicotine patches); and/or Other, currently unfunded, nicotine formulations (eg nicotine microtab, nicotine inhaler, nicotine nasal spray).

·

2.

Background to RFP Nicotine gum, lozenges and patches are currently fully funded on prescription or Quitline exchange cards, subject to the restrictions outlined in the table below. These formulations are supplied under the brand name Habitrol (and Nicotinell in the case of nicotine gum) by Novartis Consumer Health Australasia Pty Limited (Novartis Consumer) under a sole supply agreement. The sole supply period ends on 31 December 2010. This means that new brand(s) of nicotine gum, lozenges or patches could be funded from 1 January 2011. Habitrol The gross prices and subsidies (ex-manufacturer, excluding GST) for the Habitrol brand of subsidised nicotine formulations, and the funding restrictions applying to these formulations, are as follows:

Nicotine formulation and presentation Gum 2 mg (Fruit) Gum 2 mg (Mint) Gum 4 mg (Fruit) Gum 4 mg (Mint) Pack size 96 OP 96 OP 96 OP 96 OP Price/ Subsidy $14.97 $14.97 $20.02 $20.02 Restriction a) Maximum of 768 piece per prescription; b) Maximum of 384 piece per dispensing; c) For the avoidance of doubt Nicotine will not be funded Close Control in amounts less than 4 weeks; and d) The maximum of 384 piece per dispensing cannot be waived via Access Exemption Criteria. Lozenge 1 mg Lozenge 2 mg 36 OP 36 OP $11.08 $11.08 a) Maximum of 432 loz per prescription; b) Maximum of 216 loz per dispensing; c) For the avoidance of doubt Nicotine will not be funded Close Control in amounts less than 4 weeks; and d) The maximum of 216 per dispensing cannot be waived via Access Exemption Criteria. Patch 7 mg Patch 14 mg Patch 21 mg 7 OP 7 OP 7 OP $10.53 $11.63 $12.32 a) Maximum of 56 patch per prescription; b) Maximum of 28 patch per dispensing; c) For the avoidance of doubt Nicotine will

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not be funded Close Control in amounts less than 4 weeks; and d) The maximum of 28 patch per dispensing cannot be waived via Access Exemption Criteria.

*OP = original pack, meaning that pharmacists can claim a subsidy for the entire pack even if only part of the pack is dispensed on a prescription. A confidential rebate applies to all the Habitrol presentations listed in the table above, including both community subsidies and hospital usage. Nicotinell The gross prices and subsidies (ex-manufacturer, excluding GST) for the Nicotinell brand of subsidised nicotine gum, and the funding restrictions applying to these formulations, are as follows:

Nicotine formulation and presentation Gum 2 mg (Fruit) Gum 2 mg (Mint) Gum 4 mg (Fruit) Gum 4 mg (Mint) Pack size 96 OP 96 OP 96 OP 96 OP Price/ Subsidy $23.41 $23.41 $23.41 $23.41 Restriction a) Maximum of 768 piece per prescription; b) Maximum of 384 piece per dispensing; c) For the avoidance of doubt Nicotine will not be funded Close Control in amounts less than 4 weeks; and d) The maximum of 384 piece per dispensing cannot be waived via Access Exemption Criteria.

The Nicotinell brand of nicotine gum is currently being supplied by Novartis Consumer to cover an out-of-stock situation for Habitrol gum. A confidential rebate applies to the Nicotinell presentations listed in the table above, which results in it being the same net price (ie net of rebate) as the Habitrol brand. PHARMAC now seeks proposals for community and hospital supply of nicotine gum, lozenges and patches, as well as currently unfunded presentations of nicotine, from 1 January 2011. 3. Types of proposals sought (a) Proposals for the supply of different nicotine formulations (eg gum, patch, lozenge, inhaler etc) must be capable of being accepted independently and may not be bundled. In other words, individual proposals must not contain more than one nicotine formulation and must not be tied or linked to any other proposal. · Proposals may bundle different strengths, flavours and/or pack sizes within each formulation; however, PHARMAC reserves the right to negotiate with preferred suppliers around the range of strengths, flavours and/or pack sizes for each formulation that are ultimately progressed for funding.

Proposals for the currently funded formulations (lozenges, gum, patches) must include, at a minimum, the same or similar range of strengths as the currently funded strengths for each formulation. A362354 - qA18764 3

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(b)

PHARMAC is willing to consider the following types of proposals: · proposals that include a period of subsidy protection and/or protection from delisting; and/or proposals that include expenditure caps, rebates or other expenditure risksharing mechanisms. Note that PHARMAC expects that the existence of any risk sharing mechanism would not be confidential and it would prefer that the net effect of such a mechanism (eg the net price) was able to be included in any public consultation document(s) issued by PHARMAC; and/or proposals that include a period of sole subsidised supply and hospital supply status (hereafter referred to as “sole supply”), which is not to extend beyond 30 June 2014. Note if a proposal for sole supply of a nicotine formulation is accepted and the successful supplier’s brand of that nicotine formulation is not currently listed in Section B of the Pharmaceutical Schedule, there would be a transition period (with the length to be determined at PHARMAC’s discretion) where the successful supplier’s brand is to be available for sale or supply and subsidised or purchased but would not be the sole subsidised brand of that nicotine formulation, or brand of that nicotine formulation with hospital supply status; and/or proposals with a flexible start date to allow for stock availability issues to be resolved; and/or proposals that are subject to registration approval by Medsafe.

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· (c)

PHARMAC is not willing to consider the following types of proposals: · · · proposals that include pharmaceuticals other than nicotine; or proposals that contain more than one formulation of nicotine; or proposals to amend the funding restrictions (with the exception of minor adjustments to the dispensing restrictions that may be necessary due to differences in pack sizes); or two-part pricing arrangements, whereby PHARMAC may make an up-front payment (in addition to any ongoing subsidy) in return for the listing of a pharmaceutical on specific terms.

·

(d)

Suppliers should provide PHARMAC with a sample pack of the various strengths and/or flavours of nicotine formulations included in the proposal (and, if supply is intended to be in a different form from that sample pack, information about the form in which they will be supplied) within 10 business days from the close of the RFP.

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Schedule 2: RFP process PHARMAC expects to follow the process set out below in the sequence indicated. 1. Submission (a) (b) You may submit more than one proposal. Each proposal will be considered as a separate proposal. Proposals must be submitted no later than 5:00 pm (New Zealand time) on Friday 23 July 2010. Late proposals will only be considered at PHARMAC’s discretion. You cannot withdraw your proposal, once submitted, while the RFP process is continuing. All proposals must be submitted to PHARMAC to the attention of Geraldine MacGibbon, either by facsimile (+64 4 460 4995) or email (geraldine.macgibbon@pharmac.govt.nz). Email is preferred.

(c) (d)

2.

Evaluation (a) Following the deadline for submitting proposals an Evaluation Committee comprising PHARMAC staff (including PHARMAC’s Legal Counsel) will evaluate each proposal to select its preferred proposal(s). The basis on which the Evaluation Committee will evaluate proposals, and the weight to be given to the criteria and other matters that it considers, are to be determined by the Evaluation Committee at its sole discretion. The matters to be taken into account by the Evaluation Committee will, however, include: (i) the decision criteria set out in PHARMAC’s then current Operating Policies and Procedures (OPPs), as published on PHARMAC’s website (www.pharmac.govt.nz), to the extent applicable; any clinical advice from PTAC or its relevant Subcommittee; any other matters that the Evaluation Committee considers to be relevant (provided that PHARMAC will notify such matters and allow an opportunity for submitters of proposals to address them).

(b)

(ii) (iii)

(c)

Each proposal will be evaluated on the basis that the price offered, the expenditure entailed, and any other terms included in the proposal, are the best that the supplier is able to offer. If you do not put forward your best terms you risk having your proposal excluded at the evaluation stage. PHARMAC is not bound to select the lowest priced proposal or any proposal.

(d) 3.

PHARMAC may request further information (a) PHARMAC may request such further information as it considers necessary from or about you for the purposes of clarifying or evaluating your proposal, in which case you must supply that information within 10 business days of PHARMAC requesting it. 5

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(b)

If PHARMAC requests further information from or about you it is not obliged to request the same or any other information from or about any other party.

4.

Negotiation (a) PHARMAC may negotiate with the submitter(s) of one or more preferred proposals, in the latter case whether or not the acceptance of either supplier’s proposal would exclude acceptance of the other proposal. Negotiations will proceed on the basis that PHARMAC’s standard terms and conditions for supply of pharmaceuticals, which are available on request from PHARMAC, will apply. Given that PHARMAC expects your proposal to be the best you can offer, PHARMAC does not intend to initiate negotiation with you on price. However, PHARMAC does not exclude the possibility that the final price agreed will be different from the price put forward in your proposal, as a result of the impact that other negotiated terms may have on price. PHARMAC may negotiate and enter into a provisional agreement with a preferred supplier(s) on whatever special terms, in addition to PHARMAC’s standard terms and conditions, PHARMAC considers appropriate. If PHARMAC and the supplier(s) are unable to reach a provisional agreement within what PHARMAC considers to be a reasonable time, PHARMAC may terminate those negotiations and negotiate with a different supplier(s).

(b)

(c)

(d)

(e)

5.

Consultation and approval (a) Any provisional agreement will be conditional on consultation with suppliers and other interested parties, to the extent PHARMAC considers consultation to be necessary or appropriate, and on Board approval (or approval by PHARMAC's Chief Executive under delegated authority). PHARMAC will not consider any counter-offers received during consultation. The provisional agreement and responses to consultation will be considered by PHARMAC's Board (or by PHARMAC’s Chief Executive under delegated authority) in accordance with the decision criteria in PHARMAC’s then current OPPs. If the Board or the Chief Executive does not approve the provisional agreement, then PHARMAC may initiate negotiations for a provisional agreement with any other supplier(s). The RFP process will be complete once PHARMAC has notified suppliers of either: (i) the Board's or its Chief Executive's decision to accept a negotiated agreement; or the termination of the RFP process.

(b) (c)

(d)

(e)

(ii) 6.

Miscellaneous (a) PHARMAC reserves the right: 6

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(i)

to make such adjustments to the above RFP process as it considers appropriate, at any time during the process, provided that it notifies suppliers affected by those changes; not to accept any proposal; to seek clarification of any proposal; to meet with any supplier in relation to its proposal; to enter into an agreement or arrangement that differs in material respects from that envisaged in this RFP letter; to suspend this RFP process. For example, if during the RFP process (and before a provisional agreement is entered into) it becomes apparent to PHARMAC that further consultation is appropriate or required we may suspend the RFP process in order to consult. In this situation we may ask you to adapt and resubmit your proposal in light of consultation, or alternatively we may request that new proposals be submitted; to terminate this RFP process at any time, by notifying suppliers who submitted proposals, and, following termination, to negotiate with any supplier(s) on whatever terms PHARMAC thinks fit; to readvertise for proposals.

(ii) (iii) (iv) (v)

(vi)

(vii)

(viii) (b)

PHARMAC may consult or seek clinical advice from PTAC or its relevant Subcommittee at any stage of the RFP process. PHARMAC will notify you if the clinical advice results in any changes to the terms of the RFP. You must not initiate or engage in any communication with other suppliers in relation to the RFP, whether before or after submitting their proposal(s), until such time as a provisional agreement is accepted by PHARMAC’s Board or Chief Executive. You must not at any time initiate any communication with PHARMAC’s directors or officers (including PHARMAC staff), the Ministry of Health, the Minister of Health or District Health Boards, with a view to influencing the outcome of this RFP process. You must pay your own costs for preparing and submitting your proposal. Proposals are submitted in reliance on your own knowledge, skill, and independent advice, and not in reliance on any representations made by PHARMAC. Your submission of a proposal will be taken as acceptance of the terms contained in this RFP letter. PHARMAC may exclude your proposal if you do not comply with any of the terms contained in this RFP letter. This is an RFP and not a tender. Your proposal is not an offer capable of being converted into a contract for the supply of nicotine (nicotine replacement therapy) by PHARMAC's apparent acceptance and instead a separate agreement needs to be negotiated.

(c)

(d)

(e) (f)

(g)

(h)

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(i)

PHARMAC is not liable in any way whatsoever for any direct or indirect loss (including loss of profit), damage or cost of any kind incurred by you or any other person in relation to this RFP. PHARMAC will consider your proposal and information exchanged between us in any negotiations relating to your proposal, excluding information already in the public domain, to be confidential to us and our employees, legal advisors and other consultants, the Ministry of Health and DHBs (Confidential Information). However, you acknowledge that it may be necessary or appropriate for PHARMAC to release Confidential Information: (i) (ii) pursuant to the Official Information Act 1982; or in the course of consultation on a provisional agreement entered into with a supplier; or in publicly notifying any approval by the PHARMAC Board of that agreement; or otherwise pursuant to PHARMAC’s public law or any other legal obligations.

(j)

(iii)

(iv)

PHARMAC may consult with you before deciding whether to disclose Confidential Information for the purposes described in sub-clauses (i) to (iv) above. You acknowledge, however, that it is for PHARMAC to decide, in its absolute discretion, whether it is necessary or appropriate to disclose information for any of the above purposes, provided that PHARMAC shall act in good faith in disclosing any Confidential Information. 7. Anticipated timetable (a) Following receipt of proposals, PHARMAC anticipates: (i) (ii) the Evaluation Committee evaluating proposals in August 2010; negotiating with submitter(s) of one or more preferred proposals in August/September 2010; consulting on a provisional agreement in September 2010; PHARMAC’s Board or Chief Executive considering any provisional agreement in or after September/October 2010,

(iii) (iv)

provided that the above time frames are only approximate and may be extended, without notice being required from PHARMAC, if any stages of the RFP process take longer than anticipated. (b) Under this indicative timetable, and taking into account the agreement with the existing supplier, the earliest that changes to the Pharmaceutical Schedule could be implemented is 1 January 2011. Please note that if a proposal for sole supply is accepted, the date of implementation may be later to allow for an orderly transition to any sole supply arrangement. 8

(c)

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Schedule 3: Current listing and market information The following information relates to the estimated subsidised market size of nicotine replacement therapy. The information is approximate and indicative only. PHARMAC makes no representation as to the accuracy of this information or as to the level of sales or likely sales of nicotine replacement therapy and, while PHARMAC has taken all reasonable care in preparing the information set out below, it accepts no liability for any errors or omissions in the information. PHARMAC is not obliged to notify you in the event of any change to the figures below. The number of subsidised units (pieces of gum and individual lozenges and patches) for nicotine in the community for the years ending 31 December 2007, 31 December 2008 and 31 December 2009 is shown below:

Pharmaceutical/form/strength Nicotine gum 2 mg Nicotine gum 4 mg Nicotine lozenge 1 mg Nicotine lozenge 2 mg Nicotine patch 7 mg Nicotine patch 14 mg Nicotine patch 21 mg Jan to Dec 2007 2,334,470 1,698,347 – – 213,285 447,195 755,328 Jan to Dec 2008 4,109,190 4,787,063 637,433 740,379 181,721 608,085 1,701,135 Jan to Dec 2009 7,225,948 4,923,005 3,865,941 3,425,179 190,381 636,480 2,135,326

The number of units (pieces of gum and individual lozenges and patches) of nicotine purchased by DHB hospitals for the years ending 31 December 2007, 31 December 2008 and 31 December 2009 is shown below:

Pharmaceutical/form/strength Nicotine gum 2 mg Nicotine gum 4 mg Nicotine lozenge 1 mg Nicotine lozenge 2 mg Nicotine patch 7 mg Nicotine patch 14 mg Nicotine patch 21 mg Jan to Dec 2007 40,952 17,262 – – 8,498 22,197 28,726 Jan to Dec 2008 24,658 18,431 3,634 7,164 10,801 28,228 33,906 Jan to Dec 2009 57,216 47,741 17,050 47,208 8,637 31,567 46,726

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Schedule 4: Proposal form An electronic version of this form is available on request from lauren.abernethy@pharmac.govt.nz. You should expand the boxes as necessary. [Supplier to insert date] Chief Executive C/- Geraldine MacGibbon PHARMAC Level 9, 40 Mercer Street PO Box 10-254 Wellington 6143 NEW ZEALAND By email geraldine.macgibbon@pharmac.govt.nz or facsimile (+64) 04 460 4995. Dear Geraldine Proposal for the supply of nicotine (nicotine replacement therapy) In response to your request for proposals (RFP) dated 30 June 2010 we put forward the following proposal in respect of nicotine. Set out below is further information in support of our proposal. (a) Our contact details: Name of supplier Contact person Address Phone Facsimile Email address

(b)

Details of pharmaceutical presentation: Chemical name Strength (e.g. 2 mg) Form (e.g. gum) Flavour (where relevant) (e.g. Mint) Brand name Pack size (e.g. 96) Packaging type (e.g. blister)

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(c)

Key features of our proposal:

(d)

Information relating to pricing ($NZ, GST exclusive), including any related conditions or proposed terms affecting cost for PHARMAC (e.g. price in return for sole supply, reference price protection, risk sharing mechanisms, etc.):

(e)

Evidence of market approval and any other required consents: Date of market approval (please attach copy of Medsafe Gazette notice) OR Date of submission of dossier (please attach confirmation from Medsafe that dossier has been submitted) OR Expected date of dossier submission to Medsafe Insert any other consents required for pharmaceutical

(f)

Information about our ability to ensure the continuity of supply of the pharmaceutical:

(g)

Information about our previous supply performance and relevant expertise:

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(h)

Reasons why PHARMAC should accept our proposal:

(i)

Additional information that PHARMAC should consider when evaluating our proposal:

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