Who We Are. 1,000,000 The number of PAs adjudicated by our team in The percent of our employees who are clinically-degreed and certified.

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2 Who We Are 4 Decades of Expertise Prior Authorization Pharmacy Data Analysis Clinical Advisory Services Who We Serve Self-Funded Employers Labor Funds Health Plans with members in Commercial, Medicare Part D, Medicaid, Exchange lines of business Mid-sized Pharmacy Benefit Management Organizations 1,000,000 The number of PAs adjudicated by our team in The percent of our employees who are clinically-degreed and certified. 35 The number of states where we serve health plans and benefit management groups. 21 The average number of hours it takes to complete a PA request. Goals Improve quality of care by simplifying PA processes Contain healthcare costs by managing drug utilization Reduce organizational risk by employing compliant systems Transform data into actionable information by monitoring clinical program performance

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4 Market Evolution Generic utilization has grown from 35% to >80% Formulary compliance and clinical program use has increased By 2018, the cost of specialty drugs will overtake the cost of traditional brand and generic drugs, even though less than 2% of your members will be utilizing a specialty drug. Member copays have increased Drug rebates continue to rise Network discounts have improved CMS has released significantly more regulations while increasing audits and fines Increase of specialty medications

5 The Rise of Specialty Pharmacy

6 Expansion of Therapeutic Categories & Breakthrough Therapies Diabetes o ~30 million Americans affected o Fastest growing therapeutic class o Better outcomes? Oral Oncology o Multiple agents o Generally cost > $120k annually Hyperlipidemia o ~71 million Americans affected o PCSK9 protein inhibitors o Priced at ~$16k annually Hepatitis C o ~3.5 million Americans affected o SVR possible, but at a cost o Average cost is $90k per 12 weeks Multiple Sclerosis o ~0.5 million Americans affected o Oral regimens and less frequent dosing o Priced at ~$80k annually Asthma o ~26 million Americans affected, ~5% with eosinophilic phenotype o First monoclonal antibody drugs recently approved o Priced at ~$36k annually Other Orphan Conditions o Pulmonary fibrosis, Non-24 sleep-wake disorder, Hereditary angioedema, Lipodystrophy o Generally cost > $100k annually Red Book 2015: 2015 Report of the Committee on Infectious Diseases. (2015). DW Kimberlin, SS Long, MT Brady, MA Jackson.

7 Misuse, Abuse, & Off-Label Use Why is this happening? Poor choice for empiric therapy Confounding factors o Marketing o Patient demand o Rapidly changing standards of practice What can you do? Ensure UM practices are supported by evidence-based medicine Analyze claims data to identify greatest opportunity for expanding UM edits Invest in current and clinically-relevant programs 73% of medications prescribed for an offlabel use have little or no scientific support. Agents Most-Commonly Used Off-Label 1. Antipsychotics Anxiety, dementia, eating disorders, obsessivecompulsive disorder, personality disorders, posttraumatic stress disorder, substance abuse 2. Anti-epileptic drugs Used for bipolar disorder, diabetes, fibromyalgia, neuropathic pain symptoms, headache, hiccups, hot flashes, restless leg syndrome 3. Antidepressants Used for alcoholism, fibromyalgia, irritable bowel syndrome, obsessive-compulsive disorder, pathologic gambling, stuttering, borderline personality disorder, diabetic neuropathy, fibromyalgia, hot flashes, premature ejaculation, Insomnia in elderly patients 4. Stimulants Weight loss, energy, performance enhancing drugs 5. Short-acting high-potent narcotics Used for non-cancer pain 6. Erectile dysfunction medications in women Radley D.C., Finkelstein S.N., Stafford R.S. Off-label prescribing among office-based physicians. Arch Intern Med. 2006;166(9):

8 The Future Expect more of the same: R&D focuses on specialty and orphan conditions Full pipeline (225 new drug molecules expected )* Biosimilars Faster FDA Approval Pathways and the illusion of extended patent protections Priority review Breakthrough therapy Accelerated approval Fast track *IMS Health, 11/12/15. Global Medicines in Use in 2020:Outlook and Implications

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10 UM Strategies Complex specialty tiering Only 1/3 of health plans report that they are planning on strengthening their UM Strategies. Partial fill strategies Enhanced prior authorization Molecular diagnostic and genetic testing EMD Serono Specialty Digest, 11 th edition: Managed Care Strategies for Specialty Pharmaceuticals. (2015). EMD Serono, Inc.

11 Prior Authorization: A Historical Perspective Lacking in clinical rigor Narrow in clinical focus Inconsistent turn-around times Unreliable notification processes Limited to phone and fax requests Inadequate and restricted reporting Painful processes for patients and providers Many PA programs lack consistency and objectivity, thus they cannot provide effective risk mitigation or ensure efficacious therapy management.

12 Strengthening Your PA Program Why strengthen your PA program? PA is the gatekeeper to prevent unlimited cost Accreditation standards will continue to define the standards for all lines of business What to consider for the future of your PA program? Regulatory Compliance Clinical Quality Medication Cost Administrative Considerations HINT: Ensure appropriate, timely, and predictable decisions with clinicallysound, relevant logic.

13 Administrative Considerations Who is managing the process? PBM Health Plan Independent 3 rd Party Is the ROI greater than the cost to administer? High cost medications are a no-brainer Low cost high volume medications are tricky What is an appropriate cost-volume ratio? Estimated savings > program cost What is the estimated ROI? What automation is being used? How much per PA are you paying? Example: Abilify Is your program being regulated by an accrediting entity? NCQA, URAC, CMS

14 $ $ Case Study: 40,000 Member Client Implements Independent PA Program on 1/1/2017 $80.00 Average Cost per Claim $79.55 $89.64 $91.32 $97.85 $93.13 Plan spend has trended up an average of $215,000 per quarter over 9 quarters. Then number of prescriptions dispensed trended slightly down by ~500/quarter during the same period. $60.00 $40.00 $61.05 $68.53 $70.19 $71.63 Even with negative claims trend, the spend is up 44% over Q because of drug cost. $20.00 $- Q Q Q Q Q Q Q Q Q The first negative trend claim cost is seen in Q after a 1/1/17 implementation of the new PA program.

15 Case Study: Drug Class Details $80.00 Respiratory Agents Average Cost per Claim $ Dermatological Agents Average Cost per Claim $70.00 $62.08 $67.39 $70.96 $70.61 $62.22 $ $ $60.00 $50.00 $ $ $40.00 $ $30.00 $ $ $20.00 $10.00 $95.00 $- Q Q Q Q Q $90.00 Q Q Q1 2017

16 The Value of PA Carve-Out Member experience is important. Independence No relationship with pharmaceutical manufacturers or dispensing pharmacies Administrative fees are the same regardless of approval or denial No hidden revenue streams Decreased ingredient cost Objectivity Criteria developed by a P&T Committee not affiliated with a PBM, dispenser or manufacturer Determinations based solely on evidencebased clinical guidelines from peer-reviewed industry literature Plan goals are aligned with PA vendor goals creating better outcomes Transparent process allows the plan to access PA determinations The intent of new PA protocols is to drive members and providers to the right therapy, in the right dose, right time, and right price. Existing approved PAs can be grandfathered.

17 What s on the Horizon epa capabilities EHR integration Coordinating UM & adherence activities Use of combined pharmacy and medical data Quicker speed to determination Reduced administrative burden More-complete patient records Ensures appropriate and effective utilization Objective, realized outcomes

18 In Review Ensure your UM programs are objective Separate development of criteria and coverage determinations from dispensing organizations Include high-cost and specialty drugs in PA criteria Manage appropriate use of high-risk medications Reduce off-label use Improve ingredient cost management Use intuitive systems and processes that comply with regulations Timely and complete notifications which include decision rationale Document member and provider outreach for additional information Ensure appropriate time stamping Allow for complex reporting for compliance needs Effectuate consistent, appropriate, and timely clinical decisions Right Patient. Right Therapy. Right Dose. Right Doctor. Right Time. Right Price.

19 Discussion & Questions Mike McGinnity, Vice President of Sales Continue the conversation with us online: Smarter Decisions, Superior Chris Rofidal, Regional Sales Director Alex DeRuiter, Regional Sales Director 19