The Pharmaceutical Assistance Contract for the Elderly, the PACE Program, was enacted on November 4, 1983, Act 1983-63. The statute required the Pennsylvania Department of Aging (PDA) to implement a comprehensive pharmacy benefit program (open formulary, nominal copayments, no coverage gaps, no deductibles). The Department contracts with a pharmacy benefit administrator (PBA) to conduct the day-to-day activities of the Program. The Program enrollees are individuals, age 65 and over, who usually have other insurance coverage for their medication expenses. Any such insurance is primary before PACE coverage. The PDA receives restricted revenue account funds to serve as the administrative and fiscal agent for other Commonwealth sponsored drug reimbursement programs.
Act 1983-63 authorizes the Department of Aging to select a private contractor to assist in the administration of this Program. In 1983, a request for proposal (RFP) was issued requesting firms to submit a three-year proposal. A three-year contract was subsequently awarded. The initial contract expired on June 30, 1987. Following a re-bid in late 1986 and early 1987, a second three-year contract was awarded which expired on June 30, 1990. A five-year contract was let in 1990 based upon a re-bid. A subsequent re-bid, occurring in late 1994 and early 1995, resulted in a contract for a five-year period, which expired on June 30, 2000. A fourth re-bid was commenced in late 1999, the results of which were contested in a formal bid protest to the Department in February 2000. An injunction action filed with the U.S. District Court, Middle District of Pennsylvania, by the aggrieved Offeror, caused the Department to suspend the re-bid process until the federal court made a determination. However, the opinion reached by the federal court in August 2001 did not conclusively resolve the issues before the Department in the Bid Protest. As such, the possibility of a timely resolution by the federal courts appeared remote.
This factor combined with the additional state and federal mandates impacting the program, which were not addressed in the 1999 RFP, was the rationale behind the Department’s decision to begin the RFP process anew. As a result of the rebid, a five and one-half year contract was let in January 2003, with an expiration date of June 2008. However, following the implementation of a new federal out-patient prescription drug benefit under Medicare in January 2006 and amendments to the Pennsylvania PACE statute in July 2006, administrative and operational aspects of the Program changed considerably. In an effort to permit time to stabilize the operating environment and assure continuity of services to the PACE enrollment, it was decided that a two year no-bid contract extension would be awarded to the incumbent.
