Specialty Pharmaceuticals Understand, Identify & Manage the Cost

www.ebrubinsteinassociates.com

Introduction to EBRA Serving: CHANNELS - Group purchasing organization - Pharmacy chain - Specialty pharmacy

MANUFACTURERS - Category launch strategy - Product positioning strategy CONSULTANTS - 1798 Consultants - Logistics Management Institute - Tag & Associates

Services provided: PAYERS - MidAtlantic Business Group - CCIIO/CMS – ACA pharmacy policy - Self-insured employer ASSOCIATIONS - Academy of Managed Care Pharmacy - National Renal Administers Association - National Business Coalition on Health

STARTUPS - Castlight Health pharmacy program - Psychiatric telemedicine

Product positioning Claims analysis

Market research/analysis Market modeling Pharmacy benefits

Pharmacy coverage policy Advisory board facilitation Program development

SPRx different from other Rx

SPRx split between pharmacy & medical benefit is ~50:50

Specialty Rx site of care varies by drug & therapeutic category

Predictive biomarkers can identify patients most likely to respond (aka ‘personalized medicine’)

Predictive biomarkers for ~20% of cancer patients today, and ~30% by 2018

High specialty pharmacy Rx trend but much less visible for the medical benefit Rx trend

Shift to hospital outpatient-coded site of care, where billing is 2x-3x higher

Biosimilars will complicate SPRx management

Brand replacement by small molecule generics

Reference pricing of drugs may take off

ACOs have high growth, visibility and hopes

But ACO SPRx management is a work in progress: Don’t expect too much yet • University HealthSystem Consortium (UHC) is an alliance of >100 academic medical centers and nearly 250 of their affiliate hospitals • UHC will launch an SPRx program to provide patients with access to the SPRx they need at the hospitals where they are treated. • The program will help members succeed in an ACO environment by coordinating care and services among inpatient settings, outpatient settings, infusion clinics, and pharmacies. • The program will use a data repository based on medical record data to track patient outcomes to promote the best therapeutic regimens and identify patients who have not responded to therapy. UHC news release: 090913

Employer Strategies for Managing Specialty Drugs

PREPARED BY Brenda Motheral, MBA, PhD President Artemetrx Specialty Drug Solutions ©2014 Artemetrx Specialty Drug Solutions

Artemetrx Overview Healthcare analytics & services company focused on pharmaceuticals Launched specialty drug services in 2012, with emphasis on the medical benefit Specialty Rx solutions span: – Analytics – Reporting

– Services Client include self-insured employers, labor groups, and health plans

17

©2014 Artemetrx Specialty Drug Solutions

Agenda

What is the specialty drug challenge? How do you measure opportunity and performance in specialty drug management? How do you manage specialty drugs?

18

©2014 Artemetrx Specialty Drug Solutions

Specialty Medication - Overview

Medications are produced via recombinant technology or biotechnology. Originally MD-injectables and infusibles but now include self-injectables, oral and inhaled drugs. High cost medications; $12,000 - $400,000 per patient per year. Complex patient care requiring intensive clinical monitoring and frequent dosing changes. Detailed patient compliance required for effective treatment. Specialized product handling requirements or REMS.

Limited or exclusive product distribution.

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Forecast

Source: Artemetrx Specialty Drug Trend Study, 2013

20

©2014 Artemetrx Specialty Drug Solutions

Pipeline

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Trend Tracking Employers

39%

MEDICAL BENEFIT

48%

14%

Yes No Not sure PHARMACY BENEFIT

8%

89%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Source: 2013-2014 PBMI Specialty Drug Benefit Report

22

©2014 Artemetrx Specialty Drug Solutions

Specialty Market Challenges

PRIORITIES

CHALLENGES

Transparency

No visibility into specialty spend billed under revenue codes. Cannot see ASP pricing under medical. Administration costs are unmeasured and unmanaged. Cannot see specialty rebates by drug under Rx or medical benefit.

Alignment

Vendor may promote higher cost distribution channels. Vendors do/ cannot manage outpatient hospital pricing. Vendors may not support copay assistance programs.

Coordination — across pharmacy and medical benefit on: Cost-sharing Medical policies Pricing Rebates Clinical care

Cost-sharing not historically coordinated. Different departments responsible for medical and pharmacy (health plan). PBM managers pharmacy while health plan manages medical (employer). Systems do not allow for integrated management

23

©2014 Artemetrx Specialty Drug Solutions

Specialty Medical Management Is Lagging Among Employers 90%

80% 70%

60% 50% Pharmacy Medical

40% 30% 20% 10% 0% PA

Care Mgt Contracted Preferred Network Products

Step Therapy

Rebates

Specialty Tier

N=306 ©2014 Artemetrx Specialty Drug Solutions

Source: PBMI Specialty Drug Benefit Report, 2013

Agenda

What is the specialty drug challenge? How do you measure opportunity and performance in specialty drug management? How do you manage specialty drugs?

©2014 Artemetrx Specialty Drug Solutions

Specialty Pharmacy Performance

26

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Outcomes of Care

27

©2014 Artemetrx Specialty Drug Solutions

Specialty Billing Basics

Claim Type

Drug Billing

Pricing Source

Pharmacy

Physician Office, Clinic, Home Health, etc.

Outpatient Hospital

National Council for Prescription Drug Programs (NCPDP)

HCFA 1500 Medicare’s standard form

UB 92 Used for hospital and other facility billing

National Drug Code (NDC)

HCPCs J or Q codes

Revenue code

Code unique to drug, manufacturer, form, strength, and size

Code unique to drug or drug class

Code unique to infusions only

Average wholesale price (AWP)

Average sales price (ASP)

Percent of billed charges

Transparency & precision decreases ©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Spend PMPY Spend

$30

$100

Pharmacy MD Office, Home Health $205

Outpatient Hospital Drug Administration

$95

29

©2014 Artemetrx Specialty Drug Solutions

2011-2012 Specialty Trend, Sample Client

35% 30% 25% 20%

PMPM Claims

15%

Cost per Claim 10%

PMPM Net Cost

5% 0% -5%

OVERALL

RX

OFFICE/HOME INFUSION

OUTPATIENT HOSPITAL

-10% COMPONENT

PMPM CLAIMS

COST PER CLAIM

PMPM NET COST

Overall

19%

2%

22%

Rx

7%

15%

22%

Office/Home Infusion

22%

-3%

17%

Outpatient Hospital

32%

-6%

24% Source: Artemetrx client data

30

©2014 Artemetrx Specialty Drug Solutions

Metric

PLAN A

Range*

Spend Profile

2012

Lo

High

PMPY Specialty Spend

$333

$205

$620

% of Specialty in Medical

47%

28%

59%

% Outpatient Hospital

33%

11%

32%

Specialty Medical Trend

47%

18%

47%

Physician Office, % of ASP

107%

97%

167%

Outpatient Hospital, % of ASP

201%

95%

295%

7%

5%

14%

Inappropriate Use, as % of Medical

17%

3%

17%

Savings, as % of Medical

39%

10%

>40%

Pricing Under Medical

Administrative Costs, As % of Medical Savings Opportunity

©2014 Artemetrx Specialty Drug Solutions

* Range is based on Artemetrx BOB clients (commercial, Medicare, Managed Medicaid and employer)

Agenda

What is the specialty drug challenge? How do you measure opportunity and performance in specialty drug management? How do you manage specialty drugs?

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Management Roadmap

Should not do – Expect a biosimilars windfall – Rely on deeper pharmacy discounts – Make decisions without reviewing your own data

©2014 Artemetrx Specialty Drug Solutions

Savings Waterfall for Specialty Medical Spend (PMPY) $250 Admin Medical $200

> 30% Savings Opportunity In Medical Management $150

1-5% in Pharmacy Management $100

$50

$0

Spend

Site of Care

Clinical Mgt

Admin Costs

MD Pricing

Pharmacy Pricing ©2014 Artemetrx Specialty Drug Solutions

Specialty Pricing Study

Percentage difference between mean allowed amount per unit in the pharmacy benefit relative to the physician office.

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Management Roadmap

Should do – Implement site of care for the outpatient hospital – Implement clinical policies under medical – Optimize your medical vendor contract – Coordinate the pharmacy and medical benefit

©2014 Artemetrx Specialty Drug Solutions

Medical Specialty Drug Spend

The administration of specialty drugs is shifting from the physician office to higher cost outpatient facilities and is driving up overall costs.

Source: Express Scripts 2011 Drug Trend Report

37

©2014 Artemetrx Specialty Drug Solutions

Artemetrx Study of Price Differences for Specialty Drugs ASP % 300% 267%

Outpatient Hospital

250%

Physician Office 227%

Site of Care Management focuses on redirecting specialty patients to the lowest cost and most clinically appropriate location for their infusions.

200%

150%

128% 107%

100%

50%

0% Generic Oncology

All Other Drugs

38

©2014 Artemetrx Specialty Drug Solutions

Implement Clinical Policies Under Medical

Many self-insured plans have not implemented medical policies for specialty drugs covered under medical. Key opportunities include:

– TNF Inhibitors – IVIG – Visco Supplements – Oncology drugs Coordination of medical policies across pharmacy and medical is important for certain specialty drug classes.

©2014 Artemetrx Specialty Drug Solutions

Optimize Your Medical Vendor Contract

Specialty drug pricing – Price guarantees Specialty drug administration fees Specialty drug rebates – Inflation protection – Pass thru Reporting Ability to carve out

©2014 Artemetrx Specialty Drug Solutions

Coordinate the Pharmacy and Medical Benefit

Coordinating the benefits takes time Key elements include: – Cost-sharing • Across benefits • Within benefits – Medical policies – Pricing and network strategy – Clinical care

©2014 Artemetrx Specialty Drug Solutions

Summary

Absent more active management, plan sponsors will see specialty drugs outpace traditional drugs in the near future. Specialty drugs under medical are ripe with opportunities for more active management: – Savings opportunities range from 10% (Medicaid) to > 40% (commercial groups) specialty medical spend – Site of care and clinical management are often the largest opportunities Integrated tracking and management of specialty drugs is foundational to successful specialty drug management.

©2014 Artemetrx Specialty Drug Solutions

Questions

Contact Information: Brenda Motheral

President, Artemetrx [email protected]

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Spend and Management

IDENTIFYING AND MANAGING DRUG SPEND ON THE MEDICAL BENEFIT 45

Specialty Drug Overview HIGH COST + HIGH COMPLEXITY + HIGH TOUCH

Traditional Therapy

Specialty Therapy

• Chemically produced

• Intensive clinical support

• Easy to reproduce

• Very few generics

• Generics available

• Biosimilars not yet available

Average monthly cost1

Average monthly cost1

$62

$2,000

Top specialty conditions: inflammatory conditions, multiple sclerosis, HIV/AIDS, oncology, Hepatitis C, growth hormone, neutropenia, immune globulin, rheumatoid arthritis, hemophilia, transplant. 1. Ingredient costs range from $1,400-2,000. UnitedHealthcare legacy fully-insured membership, 2012.

Determining Pharmacy or Medical Benefit Coverage DETERMINING MOST APPROPRIATE BENEFIT ACROSS MEDICAL AND PHARMACY

How is the drug administered? Which benefit supports better patient care and lowest cost? Pharmacy Benefit

Medical Benefit

 Oral, injected or other drugs that are self-administered by member at home

 Administration / handling by physician or nurse

 Distributed by retail, mail or specialty pharmacy

 Careful physician oversight and support needed  Faster access and less disruptive to members/physicians

We are at risk for 8 million lives for both pharmacy and medical, which motivates better care and cost management.

1. Specialty program outcomes based on UHC commercial membership 2007 to 2010. Network contract savings based on 2011 commercial FI membership. Utilization management savings based on a sample of 2011 commercial ASO membership. Individual plan results may vary.

47

Audience Survey What percent of total health care spend is for medications?

A) 10% B) 25%

C) 18% D) 33%

Where’s the Drug Spend?

25%

Total Spend

Total Drug

Drug Type

Drug spend out of total healthcare spend

Pharmacy Benefit

Medical Benefit

67%

33%

of total drug spend

of total drug spend

67%

33%

44%

56%

non-specialty

specialty

non-specialty

specialty

43% - Hospital Outpatient

drug spend by site of service

42% - Physician 15% - Specialty/infusion

FY 2012 Pre-Rebate Net Paid Legacy UHCP Managed Business, does not include inpatient drug spend

Top Spend Classes under Medical Benefit $1.2 million average lifetime treatment cost By 2022, 18 million Americans will be living with

cancer

multiple sclerosis

74% of total medical drug spend represented by

5 classes neutropenia

More than 46 million people in the U.S. have

rheumatic diseases

cost increases of 10% year over year

immune globulin Being studied in 55+ trials for new and expanded uses

Cancer: The American Association for Cancer Research (AACR) / RD: National Institute of Arthritis and Musculoskeletal and Skin Diseases/ Neutropenia: reimbursementcodes.com / Immune Globulin: clinicaltrials.gov 2013 / Multiple Sclerosis: Scope, Stanford Medicine

50

UHC BOB Reimbursement Rates The top 10 classes make up approximately 85% of specialty drug spend on the medical benefit Reimbursement Rate AWP ± x%

Therapeutic Class Doctor Office

Outpatient Hospital

Specialty/ Home Infusion

-9%

+68%

-14%

Inflammatory Conditions

-25%

+49%

-15%

Neutropenia

-25%

+47%

-16%

Immune Globulin

-34%

+25%

-33%

Multiple Sclerosis

-17%

+28%

-14%

Ophthalmic

-13%

+50%

-16%

Osteoarthritis

-44%

+57%

-15%

Endocrine

-27%

+44%

-14%

Hematologic

-11%

+88%

-11%

Enzyme Deficiency*

+7%

+57%

-9%

Oncology – injectable

*Vast majority of drug spend for enzyme deficiency is through the specialty home infusion providers, very little through physician office. Average Reimbursement by Channel, Pre-rebate (UHC Legacy FI - Oct '12 to Sep '13 DOS)

Management Strategies Delivering Value Contracting Innovation Episode payments, drug fee schedules, preferred products, price protection

Clinical and Utilization Management

Medical Benefit Specialty Drug Trend

5.2%

Similar clinical programs to pharmacy ensuring clinically appropriate coverage UnitedHealthcare

Drive to Lowest Cost Site of Service Coverage based on cost and clinical needs

Comprehensive Care and Management Best and appropriate care at the lowest cost

Reporting Custom, client-specific trends and insights

Medical Benefit Provider Reimbursement Strategies

EMD Serono Specialty Digest, 10th Edition: Managed Care Strategies for Specialty Pharmaceuticals

53

UHC Provider Reimbursement Strategies Infusion Providers • Limited network of national providers for specialty medications • NDC drug pricing • Rates, services, initiative collaboration, reporting Physician Network • Contracted to ASP based drug reimbursement • Oncology variable fee schedule - higher reimbursement for lower cost drugs Episodes of care • Oncology episode payment pilot Hospital Outpatient • 340B renegotiation on a targeted basis with drug specific reimbursement, & reference based price Future Opportunities • ACOs – but need to account for high patient cost variability • Physician NDC Contracting • Preferred providers, COE 54

Episode-of-care for oncology First-of-its-kind, 3-year study evaluates quality of care by basing reimbursement on overall treatment of the patient. Removes adverse incentives to use of high cost drugs and procedures , reimburses for quality care, and measures financial and patient outcomes

Episode

Traditional Visit/evaluation fee for service

Drug – fee for service

19% vs. Flat Fee + Drug Cost

total care cost reduction

no negative effect on health outcomes

Diagnostics – fee for service

Costs for cancer therapy were estimated at $124.6 billion in 2010 and are Newcomer L., et. al. Changing Physician Incentives for to Affordable, Cancer Care: Results of an Episode Payment Model. Journal of projected to rise $207 Quality billion to 2020. Oncology Practice. July 2014, 10 (4)

55

Utilization Management Strategies Reported Magellan Rx Management Medical Pharmacy Trend Report 2013 Fourth Edition

4%

3%

0%

0%

0%

67%

37%

24%

15%

31%

3%

41%

1%

8%

5%

66%

18%

33%

10%

16%

3%

15%

3%

0%

0%

65%

17%

24%

9%

30%

3%

31%

3%

1%

0%

59%

19%

38%

13%

10%

3%

28%

8%

3%

10%

83%

21%

39%

50%

6%

9%

3%

2%

2%

5%

58%

30%

17%

0%

4%

11%

3%

9%

7%

0%

n = 39; 62 million lives (2013) 56

Generic First

5%

Differential Reimbursement

10%

None

18%

NCCN Guidelines

20%

Disease Management

Step Edit

Intravenous Immune Globulin (IVIG) Chemotherapy EsAs csfs CINV Biologics Hemophilia

Clinical Pathway

Formulary

85%

Prior Authorization

Case Management

Figure 42: Utilization Management Tools by Class

UHC Clinical and Utilization Management

Today • 26 policies applied to over 200+ drugs • Based on FDA indications and clinical evidence • Prior authorization with medical necessity • Clinical claim edits • Diagnosis and max dosing • Genetic testing/lab value requirements

• Administrative guide protocols • Required specialty pharmacy sourcing • Steerage to preferred product

57

2014 and beyond • Implementation of new drug polices with prior authorization and medical necessity • Expansion of genetic testing and lab value requirements • Preferred products across benefits • Steerage to lower-cost sites of services • Expansion of utilization management programs

Expansion of medical necessity NOTIFICATION / PRIOR AUTHORIZATION

MEDICAL NECESSITY

Coverage is based on approved or proven uses of the medication

Coverage is approved if treatment is deemed medically necessary

Drug





Diagnosis





Dose





Duration





Genetic Testing





Dose Titration



Evaluation of Response



Treatment Guidelines



Preferred Product



Site of Service



Expanded clinical and cost effectiveness review with medical necessity 58

Medical Necessity Strategies Guiding access to clinically appropriate services and products while managing escalating costs.

Medical Necessity Strategies

H.P Acthar

Others: Inflammatory Conditions, Hereditary Angioedema, Pulmonary Hypertension etc.

Immune Globulins (IVIG)

Soliris

Enzyme Replacement Therapy for Gaucher's Disease

Planned

No

Yes

Yes

Evaluating

Future Potential

No

Yes

No

No

Yes

Yes

Limited Opportunity

No Opportunity

Evaluating

Utilization Management Enhanced review criteria to include dosage titration, response to therapy, duration, treatment guidelines and use of the most cost effective regimen.

Preferred Product Drive use of preferred product within the therapeutic class

Site of Service Leverage the most cost effective and clinically appropriate place for members to receive infused medication therapy.

59

Audience Survey What medical specialty category represents the highest spend for

specialty pharmacy/home infusion? A) Immune Globulin B) Hemophilia 60

C) Enzyme Deficiency D) Inflammatory Conditions

Medical Benefit Specialty Drug Spend Top Categories by Site of Service

42% Physician

15% Home Infusion / Specialty Pharmacy

43% Outpatient Hospital

• Offers almost all types of injectable medications, to most any patient type • Medium acuity

• Primarily services select categories • Convenient option for home for ambulatory infusion candidates, with physician agreement • Lowest acuity

• Offers all types of injectable and infusions, to all patient types • Highest acuity

1. Oncology

1. Immune Globulin

1. Oncology

2. Inflammatory Conditions

2. Hemophilia

2. Inflammatory Conditions

3. Neutropenia

3. Enzyme Deficiency

3. Neutropenia

4. Immune Globulin

4. Allergic Asthma

4. Immune Globulin

5. Vaccines

5. Inflammatory Conditions

5. Multiple Sclerosis

FY 2012 Net Paid Legacy UHCP Managed Business, does not include inpatient drug spend 61

Typical cost per dose

Reimbursement Differences Gammagard Remicade Neulasta

$8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0

Physician

Hospital Facility

Home Infusion

What drives cost differences? • Outpatient facility is generally a higher cost place service • • • • 62

Drug is a small part of total medical services offered No historical focus on drug unit cost management Provide a higher acuity of care Serve niche geographic areas

Billing Codes ACCURATE DRUG REIMBURSEMENT AT EVERY SITE OF SERVICE

J-codes • Doctor’s Office

•

A J-code billing unit is specific to the generic ingredient, and a set quantity. Commonly used for infused/injectable medications billed to the medical benefit through the doctor office.

National Drug Codes (NDCs) • • Home Infusion / Specialty Pharmacies

NDC is specific to the drug (brand) manufacturer, dose and package. Used in the U.S. to identify all medications, PBMs routinely capture the NDC. We capture this within the Specialty Pharmacy and home infusion providers.

Revenue Codes • Outpatient Hospital

Used by hospitals, a 3-digit code that denotes where and what types of services are being performed. Revenue codes do not identify drug level information.

Unclassified Codes Used when there is not drug specific coding available or when a drug is new to market e.g. J3490, J3590 Figure 66: Unclassified Codes – Medical Benefit 2012

UNCLASSIFIED CLASSIFIED

Strategies for Unclassified Code Management:

Allowed per 1M lives $4,498,437

$430,288,664

claims per 1M lives

19,661

2,323,768

% of total spend

1.0%

99.0%

• Mandatory claim review

Allowed per 1M lives $6,605,245

$255,496,357

• Requiring specific information – NDC

Claims per 1M lives 17,821

693,881

% of total spend

97.5%

2011

2.5%

Magellan Rx Management Medical Pharmacy Trend Report 2013 Fourth Edition

• Repricing to list price and contract rate

Medical Drug Reporting Checklist

 Top Categories / Spend / Users  Top Drugs / Spend / Users  Drivers of Change  PMPM & Trend  Site of Service • Physician • Hospital Outpatient • Specialty Pharmacy/Infusion Provider

 How you compare to book or similar clients  How you compare YOY  Biannual update 65

Top 20 Specialty Conditions Medical Benefit Reporting Client Name: ABC Company Top 20 Specialty Disease Condition - (2 Top Medical Drugs) in ($'000)

January - January - January - January December December December December 2013 2012 2013 2012 User Count

Change

Class/Condition

Drug Common Name

ONCOLOGY - INJECTABLE

(AVASTIN, HERCEPTIN)

1,350

1,392

11,589.8

11,070.6

4.5%

43%

41%

INFLAMMATORY CONDITIONS

(REMICADE, ORENCIA)

201

216

2,610.2

2,715.9

-4.0%

10%

10%

NEUTROPENIA

(NEULASTA, NEUPOGEN)

238

290

2,529.6

2,594.5

-2.6%

9%

10%

IMMUNE GLOBULIN

(GAMUNEX/GAMUNEX-C/GAMMAKED, GAMMAGARD LIQUID)

172

169

1,923.7

1,863.3

3.1%

7%

7%

MULTIPLE SCLEROSIS

(TYSABRI, )

39

48

1,303.7

1,336.4

-2.5%

5%

5%

VACCINES

(GARDASIL, ZOSTAVAX)

4,754

3,796

1,056.6

809.0

23.4%

4%

3%

OPHTHALMIC

(LUCENTIS, EYLEA)

323

262

849.7

607.5

28.5%

3%

2%

ENZYME DEFICIENCY

(FABRAZYME, ARALAST/ZEMAIRA/PROLASTIN)

7

8

839.9

537.1

36.1%

3%

2%

ANTIEMETIC

(ALOXI, EMEND)

4,770

4,784

786.3

787.2

-0.1%

3%

3%

ENDOCRINE

(SANDOSTATIN LAR, ZEMPLAR)

269

267

736.0

689.3

6.3%

3%

3%

GAUCHERS DISEASE

(CEREZYME, )

2

2

526.2

447.5

14.9%

2%

2%

ANEMIA

(EPOGEN/PROCRIT, ARANESP)

291

316

474.9

719.2

-51.4%

2%

3%

BLOOD MODIFYING AGENT

(SOLIRIS, )

2

1

340.5

63.0

81.5%

1%

0%

CERVICAL DYSTONIA

(BOTOX/BOTOX COSMETIC, MYOBLOC)

178

177

231.8

265.5

-14.6%

1%

1%

UNCLASSIFIED DRUGS

(UNCLASSIFIED DRUG, UNCLASSIFIED DRUGS)

1,466

1,430

209.3

531.5

-153.9%

1%

2%

ASTHMA

(XOLAIR, )

20

18

199.3

91.5

54.1%

1%

0%

HEMATOLOGIC

(NPLATE, KALBITOR)

55

48

160.0

308.6

-92.8%

1%

1%

RSV PREVENTION

(SYNAGIS, )

29

31

135.5

158.9

-17.3%

0%

1%

OSTEOARTHRITIS

(SYNVISC/SYNVISC ONE, EUFLEXXA)

453

516

120.1

161.1

-34.1%

0%

1%

PAIN MANAGEMENT

(FENTANYL/SUBLIMAZE, PRIALT)

4,498

4,412

103.0

94.7

8.0%

0%

0%

Other

Misc

875

913

510.3

1,377.2

-169.9%

2%

5%

19,992

19,096

$ 27,236.4

$ 27,229.6

0.0%

Grand Total

14,614 PMPM Membership

66

$

11.98 189,458

Paid Amount ($'000)

January - January December December 2013 2012

13,914 Unique User Count $

11.93 190,275

% Total

Top 20 Specialty Conditions by Channel Medical Benefit Reporting

Client Name: ABC Company

January December 2013

Top 20 Specialty Disease Condition - (Channel) in ($'000) Class/Condition

January December 2012

January December 2013

PHYSICIAN OFFICE

January December 2012

OUTPATIENT FACILITY

January December 2013

January December 2012

HOME INF. / SPEC RX / OTHER

ONCOLOGY - INJECTABLE

$

5,534.3

6,259.7

$

5,928.4

4,804.1

$

127.1

6.8

INFLAMMATORY CONDITIONS

$

1,253.7

1,218.0

$

1,172.8

1,230.0

$

183.7

267.9

NEUTROPENIA

$

1,307.2

1,510.7

$

1,193.8

1,079.8

$

28.5

3.9

IMMUNE GLOBULIN

$

355.7

238.7

$

1,348.3

1,317.3

$

219.7

307.3

MULTIPLE SCLEROSIS

$

602.1

570.9

$

537.8

658.7

$

163.9

106.9

VACCINES

$

1,035.5

785.1

$

6.4

5.1

$

14.7

18.8

OPHTHALMIC

$

805.0

580.5

$

39.3

27.0

$

5.4

ENZYME DEFICIENCY

$

187.6

110.7

$

508.9

137.4

$

143.4

ANTIEMETIC

$

328.0

345.6

$

482.9

437.0

$

(24.6)

4.6

ENDOCRINE

$

204.2

297.0

$

490.3

338.6

$

41.6

53.8

GAUCHERS DISEASE

$

$

230.7

163.6

$

295.5

284.0

ANEMIA

$

210.7

$

77.2

95.8

$

187.0

448.2

BLOOD MODIFYING AGENT

$

108.6

-

$

231.9

63.0

$

-

CERVICAL DYSTONIA

$

69.2

68.3

$

71.3

80.7

$

91.3

116.5

UNCLASSIFIED DRUGS

$

118.8

184.0

$

86.4

338.2

$

4.1

9.3

ASTHMA

$

16.7

12.0

$

89.5

17.3

$

93.0

62.2

HEMATOLOGIC

$

63.5

71.3

$

64.7

235.3

$

31.8

1.9

RSV PREVENTION

$

-

2.2

$

26.7

18.1

$

108.8

138.7

OSTEOARTHRITIS

$

90.4

122.2

$

5.0

4.2

$

24.7

34.7

PAIN MANAGEMENT

$

1.6

2.6

$

100.8

91.4

$

0.6

0.7

All Other

$

146.5

194.5

$

193.7

290.7

$

170.1

892.0

Grand Total

$

12,439.4

12,749.2

$

12,886.8

11,433.4

$

1,910.2

% of Total Channel

67

-

45.7%

175.2

$

46.8%

47.3%

$

42.0%

7.0%

288.9

-

$

3,047.1 11.2%

Top 20 Specialty Drugs Medical Benefit Reporting

Client Name: ABC Company 2013

Top 20 Common Drugs - Current Period (January - December 2013)

68

Total

Unique Members

Rank

Common Drug

% Total

1

NEULASTA

$

2,169.5

194

8%

2

REMICADE

$

2,154.0

147

8%

3

AVASTIN

$

1,861.2

263

7%

4

HERCEPTIN

$

1,460.3

49

5%

5

TYSABRI

$

1,303.7

39

5%

6

RITUXAN

$

1,217.9

100

4%

7

PROLEUKIN

$

1,002.1

1

4%

8

GARDASIL

$

900.2

3,968

3%

9

ELOXATIN/OXALIPLATIN

$

762.8

52

3%

10

ERBITUX

$

703.4

15

3%

11

SANDOSTATIN LAR

$

677.9

18

2%

12

FABRAZYME

$

566.8

2

2%

13

CEREZYME

$

526.2

2

2%

14

GAMUNEX/GAMUNEX-C/GAMMAKED

$

516.0

20

2%

15

PROLIA/XGEVA

$

511.4

323

2%

16

LUCENTIS

$

502.7

205

2%

17

GAMMAGARD LIQUID

$

494.4

23

2%

18

ALIMTA

$

464.2

32

2%

19

ALOXI

$

420.3

287

2%

20

VELCADE

$

398.7

33

1%

Other

$

8,622.9

Grand Total

$

27,236.4

32%

Top Members by Spend Medical Benefit Reporting

Client Name: ABC Company Top Members by Spend - Current Period (% of Total Spend) in ($'000)

Total Individual Pd Amt ($000's)

% Total Group Spend

Rank

Class/Condition

1

ONCOLOGY - INJECTABLE

$

1,002.1

$

ANTIEMETIC

$

26.4

$

-

THROMBOLYTIC AGENTS

$

0.9

$

-

PAIN MANAGEMENT

$

0.2

$

ONCOLOGY - INJECTABLE

$

414.3

$

ANTIEMETIC

$

28.1

$

-

UNCLASSIFIED DRUGS

$

0.4

$

-

PAIN MANAGEMENT

$

0.0

$

3

ENZYME DEFICIENCY

$

413.3

$

413.3

2%

4

GAUCHERS DISEASE

$

295.5

$

295.5

1%

5

ONCOLOGY - INJECTABLE

$

224.2

$

294.5

1%

NEUTROPENIA

$

51.6

$

-

ANTIEMETIC

$

18.1

$

-

PAIN MANAGEMENT

$

0.7

$

BLOOD MODIFYING AGENT

$

231.9

$

ONCOLOGY - INJECTABLE

$

33.5

$

HEMATOLOGIC

$

26.2

$

ONCOLOGY - INJECTABLE

$

267.4

$

ANTIEMETIC

$

10.7

$

PAIN MANAGEMENT

$

0.0

$

NEUTROPENIA

$

132.9

$

ONCOLOGY - INJECTABLE

$

82.3

$

-

ANTIEMETIC

$

19.2

$

-

THROMBOLYTIC AGENTS

$

1.6

$

-

ANTICOAGULATION

$

0.9

$

-

PAIN MANAGEMENT

$

0.0

$

9

GAUCHERS DISEASE

$

230.7

$

230.7

1%

10

ONCOLOGY - INJECTABLE

$

144.5

$

215.4

1%

NEUTROPENIA

$

34.6

$

-

ANTIEMETIC

$

28.5

$

-

ANEMIA

$

6.5

$

-

PAIN MANAGEMENT

$

1.3

$

-

2

6

7

8

69

January - December 2013 Total by Class ($000's)

1,029.6

4%

442.9

2%

-

291.7

1%

278.1

1%

236.9

1%

-

Top 20 Providers Medical Benefit Reporting

Client Name: ABC Company

January December 2013

Top 20 Providers and Provider Types - (PAR Status) in ($'000)

January December 2012

January December 2013

PAR Status January December 2013

Provider Name

Provider Type

WESTERN REGIONAL MEDICAL CENTER INC

GENERAL HOSPITAL

$

1,205.5

$

789.4

4%

3%

PAR

UNIVERSITY OF COLORADO HOSPITAL

GENERAL HOSPITAL

$

486.6

$

243.6

2%

1%

PAR

FOX CHASE CANCER CENTER

GENERAL HOSPITAL

$

454.7

$

212.1

2%

1%

PAR

YAMPA VALLEY MEDICAL CENTER

GENERAL HOSPITAL

$

443.2

$

-

2%

0%

PAR

JOHNS HOPKINS HOSPITAL

GENERAL HOSPITAL

$

436.1

$

-

2%

0%

PAR

UMHC/SYLVESTER COMPREHENSIVE CANCER CTR

GENERAL HOSPITAL

$

373.8

$

424.3

1%

2%

PAR

HOSPITAL OF UNIVERSITY OF PA

GENERAL HOSPITAL

$

369.3

$

228.9

1%

1%

PAR

OPTUMRX INC

PHARMACY

$

361.8

$

401.5

1%

1%

PAR

H LEE MOFFITT CANCER CTR & RESEARCH INST

GENERAL HOSPITAL

$

346.0

$

1%

0%

PAR

ACCREDO HEALTH GROUP INC

HOME HEALTH

$

345.3

$

1%

2%

PAR

IOWA LUTHERAN HOSPITAL

GENERAL HOSPITAL

$

299.4

$

1%

0%

PAR

MIDWESTERN REGIONAL MEDICAL CT

GENERAL HOSPITAL

$

295.2

$

460.4

1%

2%

NONPAR

WUSM IM ONCOLOGY

HEMATOLOGY AND ONCOLOGY

$

271.6

$

201.8

1%

1%

PAR

MD ANDERSON CANCER CTR

GENERAL HOSPITAL

$

271.6

$

324.5

1%

1%

PAR

OREGON HEALTH SCIENCE UNIVERSITY INC

GENERAL HOSPITAL

$

263.6

$

266.1

1%

1%

PAR

SAINT MARYS REGIONAL MEDICAL CENTER

GENERAL HOSPITAL

$

250.9

$

-

1%

0%

PAR

WALGREENS INFUSION SERVICES

HOME HEALTH

$

240.1

$

-

1%

0%

PAR

WALGREENS INFUSION SERVICES

HOME HEALTH

$

240.1

$

-

1%

0%

PAR

WALGREENS INFUSION SERVICES

HOME HEALTH

$

240.1

$

-

1%

0%

PAR

ST PETERS UNIVERSITY HOSPITAL

GENERAL HOSPITAL

$

230.7

$

-

1%

0%

PAR

ALL Other Providers

$

19,810.97

$

23,050.98

73%

85%

Grand Total

$

27,236.4

$

27,229.6

70

Paid Amount ($000's)

January December 2012

% Total

626.1 -

Looking Forward

• INNOVATION

Innovation

Overview

Medical Necessity

Expand utilization management of assisted administration medications through prior authorization – dose optimization, continuation based upon response to therapy

Sites of Service Steerage

Require infusion of drug in the home or ambulatory infusion suite setting when clinically appropriate rather than the costly and potentially inconvenient outpatient facility setting

Preferred Products

Negotiate preferred products across both pharmacy and medical benefits to leverage lower cost alternatives and rebates

Physician Engagement

Physician specialist engagement programs to promote higher value products

Center of Excellence & Pay for Performance

Steerage of members to centers of excellence prior to diagnosis or initiation of drug for relevant disease states

Site of care optimization Walgreens, Regence BCBS

Site of care optimization Walgreens, Independence Blue Cross & J&J

SITE OF SERVICE

75

Site of Service Management

EMD Serono Specialty Digest, 10th Edition: Managed Care Strategies for Specialty Pharmaceuticals

76

Typical cost per dose

Reimbursement Differences $8,000

Gammagard Remicade

$6,000

Neulasta

$4,000 $2,000 $0 Physician

Hospital Facility

Home Infusion

• 40-50% savings from implementing a site of service strategy across the board may not be a realistic expectation • Some patients will need high acuity clinical oversight in a hospital outpatient • Many facilities already have competitive rates

77

Site of Service Effective Strategy Considerations  Drug Choice • •

Are targeted medications safe candidates for alternative sites of care ROI: Financial savings vs operational costs

 Site of Service Patient Criteria •

Clinical criteria for patient screening – who should stay in the hospital outpatient?

 Infusion Partners • •

Keep prescriber connected to patient Reporting on successes and infusion outcomes

 Benefit/Incentive • •

Benefit coverage directs the site of care through PA/medical necessity Financial incentives for movement, out-of-pocket max may be reached quickly

 Disruption • •

78

Smooth transition of member to new services Socializing policies with network providers

Billing Codes ACCURATE DRUG REIMBURSEMENT AT EVERY SITE OF SERVICE

J-codes • Doctor’s Office

•

A J-code billing unit is specific to the generic ingredient, and a set quantity. Commonly used for infused/injectable medications billed to the medical benefit through the doctor office.

National Drug Codes (NDCs) • • Home Infusion / Specialty Pharmacies

NDC is specific to the drug (brand) manufacturer, dose and package. Used in the U.S. to identify all medications, PBMs routinely capture the NDC. We capture this within the Specialty Pharmacy and home infusion providers.

Revenue Codes • Outpatient Hospital

Used by hospitals, a 3-digit code that denotes where and what types of services are being performed. Revenue codes do not identify drug level information.

Carving-Out Medical Drugs J-Code Blocks

Blocking J-Codes only impacts professional claims that pay based on HCPCs or procedure codes.

Block Remicade: J1745

80

Doctor’s Office

Home Infusion / Specialty Pharmacies

Outpatient Hospital

Remicade HCPC Code: J1745

Remicade HCPC Code: J1745

Remicade Revenue Code: 636

does not pay

does not pay

pays per contract

Outpatient Facility Management – Carve Out

PBMs don’t own the hospital relationship and aren’t impacted by repercussions PBM requests that health plan carves drugs out from medical benefit

Carving out drugs using

1

Because of inconvenience, doctors may refuse service

2

Member goes to the hospital at an increased cost.

3

PBM’s clinical programs don’t apply in outpatient facilities which further decreases management opportunities.

J codes is not feasible. While doctor offices use J codes, hospitals contractually use revenue codes for reimbursement. 81

Site of Care Management for Specialty Drugs

PREPARED BY Brenda Motheral, MBA, PhD President Artemetrx Specialty Drug Solutions

©2014 Artemetrx Specialty Drug Solutions

Medical Specialty Drug Spend

The administration of specialty drugs is shifting from the physician office to higher cost outpatient facilities and is driving up overall costs.

Source: Express Scripts 2011 Drug Trend Report

83

©2014 Artemetrx Specialty Drug Solutions

Artemetrx Study of Price Differences for Specialty Drugs ASP % 300% 267%

Outpatient Hospital

250%

Physician Office

Drug Administration Cost, Physician Office

AVG Cost

AVG Cost

$605

$114

Neulasta

$120

$50

Remicade

$487

$220

Avastin

$714

$122

Herceptin

$632

$269

$1,075

$389

227%

200%

150%

Drug Administration Cost, Outpatient Hospital Drug

All 128%

Specific Drugs 107%

100%

50%

Rituxan

0% Generic Oncology

All Other Drugs

84

©2014 Artemetrx Specialty Drug Solutions

Allowed Amount per Claim Neulasta $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 4/1/2013

5/21/2013

7/10/2013

8/29/2013

10/18/2013

Physician Office / Home Health

85

12/7/2013

1/26/2014

3/17/2014

Outpatient Hospital

©2014 Artemetrx Specialty Drug Solutions

Site of Care: Overview

Site of Care Management focuses on redirecting specialty patients to the lowest cost and most clinically appropriate location for their infusions. These programs are typically voluntary for the patient and/or physicians. For most plan sponsors, site of care represents the single biggest savings opportunity across specialty drug management.

86

©2014 Artemetrx Specialty Drug Solutions

Site of Care: Savings Opportunity Average annual savings per patient is $20,000- $25,000. Savings represents 12-25% of total medical specialty drug spend, depending on whether oncology drugs are included. Savings total $25-$50 PMPY across all the entire membership.

87

©2014 Artemetrx Specialty Drug Solutions

Site of Care: Program Options

INTERVENTION OPTIONS  Voluntary Program  Incented Plan Design (including reference pricing)  Mandatory/Pre-certification

VENDORS

THERAPY CLASS OPTIONS

 Home Infusion

 All classes

 Customized

 Non-cancer only

88

©2014 Artemetrx Specialty Drug Solutions

Site of Care: The Patient Experience Greater convenience through shorter travel and wait time

$$$ Outpatient Hospital

Reduced risk for iatrogenic infections Increased cost savings through lower out-of-pocket spend $$ Specialty Pharmacy

89

$ Physician office

$ Home Infusion

$ Free-standing Infusion Center

©2014 Artemetrx Specialty Drug Solutions

Site of Care, Employer Example #1 • ~7,000 life employer in the Midwest • Identified one hemophiliac using a high cost site of care

•

Case Management – –

•

90

Dose double recommended for critically ill, hospitalized patients Provider not part of certified hemophilia treatment center

Drug acquired with no involvement of specialty pharmacy ©2014 Artemetrx Specialty Drug Solutions

Site of Care, Employer Example #1

• • • •

91

Patient agreed to see provider at certified center Dose Adjusted Specialty pharmacy discounts acquired Result: Annual savings of $374,461 and improved patient care

©2014 Artemetrx Specialty Drug Solutions

Site of Care, Employer Example #2 • • • •

~20,000 life employer with tight financial management of benefits Wanted to address the top opportunities in site of care Identified 4 patients with large opportunities 3 of the 4 patients switched to alternative site

Patient Diagnosis

Drug

Outpatient Cost per Visit

Office/Clinic Cost per Visit

Annualized Savings

Guillian Barre

IVIG q 6 wks

$17,900

$4,200

$123,200

Chronic Polyneurtis

IVIG q 8 wks

$35,300

$3,800

$189,200

Myasthenia Gravis IVIG q 6 wks

$14,200

$2,875

$102,100

92

©2014 Artemetrx Specialty Drug Solutions

Site of Care, Employer Example #3

• ~20,000 life labor group in the Northeast.

2013 Remicade Spend by Channel 3% Price, % of ASP

• Outpatient hospital pricing averaged 2x the physician office. • Site of care managed through prior authorization for Remicade.

Home Infusion MD Office

38% 59%

119% 105%

Outpatient 220% Hospital

• Outpatient hospital use of Remicade is minimal.

93

©2014 Artemetrx Specialty Drug Solutions

Site of Care, Total Opportunity in Outpatient Hospital Channel, Employer #4 DRUG CATEGORY

TOTAL

CHEMOTHERAPY TNF INHIBITORS COLONY STIMULATING FACTORS IVIG ENZYME REPLACEMENT THERAPY ANTIEMETIC ANTI-ASTHMA BIPHOSPOHONATE INJECTON HORMONE THERAPY CALCIUM REGULATORS SKELETAL MUSCLE RELAXANTS VISCO SUPPLEMENTATION OPTHALMIC AGENTS ESTERASE INHIBITORS ANTICOAGULANTS COAGULANTS NEUROTOXIN THYROID STIMULATING HORMONE

$3,391,500 $2,017,933 $1,271,507 $542,509 $378,130 $268,939 $193,719 $160,547 $113,723 $109,906 $83,397 $61,301 $52,277 $36,304 $32,201 $4,393 $2,899 $1,123

Grand Total

$8,722,306

*includes drug and administrative cost savings

©2014 Artemetrx Specialty Drug Solutions

Voluntary Site of Care Savings and ROI, Employer Example #4 Non-Oncology Savings Opportunity

$4,402,303

Member Incentive

$100

Number of Patients

183

Conversion Rate Savings Savings Net of Fees and Incentives ROI

25%

50%

75%

$1,100,576

$2,201,152

$3,301,727

$1,028,538

$2,081,077

$3,133,615

14.5

17.3

18.9

©2014 Artemetrx Specialty Drug Solutions

© 2013 Artemetrx. Proprietary and confidential.

Site of Care Program Outreach Services

Pre-Outreach Options Communications targeted to current specialty drug users

Use claims data to identify patients currently receiving treatment

Physician outreach for high volume prescribers

Identify alternative sites of care for each patient based on pt. char., location, pricing, and quality/volume

Website content

Targeted member outreach to encourage use of alternative site

Promote ShopSmartTM Specialty (optional)

Physician engagement in site of service selection

Financial incentive can be offered to patient (optional) Follow-up member satisfaction survey 96

©2014 Artemetrx Specialty Drug Solutions

What is ShopSmart™ Specialty? ShopSmart Specialty is an industry leading collaboration between Healthcare Bluebook and Artemetrx to help plan sponsors and their members save money on specialty drugs covered under the medical benefit.

The service exposes the highly variable pricing for specialty drugs paid under the medical benefit.

Members can find the best price on their specialty medications across providers, which can include physician offices, outpatient hospitals, home health providers, and more sources. 97

©2014 Artemetrx Specialty Drug Solutions

Partnership with Healthcare BlueBook Our Mission To help employers and employees save money by finding quality care at a Fair Price

Our Approach

Practical – Focus on what drives real savings Simple – Intuitive, at-a-glance, Red-Yellow-Green Integrated – Portals, Programs, and Providers

©2014 Artemetrx Specialty Drug Solutions

©2014 Artemetrx Specialty Drug Solutions

98

ShopSmartTM Specialty ShopSmartTM Specialty exposes price variations and enables employees to make informed decisions about the care they need.

99

©2014 Artemetrx Specialty Drug Solutions

ShopSmartTM Specialty – A Closer Look

100

©2014 Artemetrx Specialty Drug Solutions

Go Green to Get GreenTM Member incentive option Members can receive employerdetermined incentive (e.g., $100) for using an alternative site of care

Checks to members are issued quarterly from HealthCare BlueBook Plan sponsor provides funding at the beginning of the quarter based on estimated patient switches Incentives can be incorporated in HSAs and other points systems

Incentive programs can be built outside of the Healthcare Bluebook tool as well 101

©2014 Artemetrx Specialty Drug Solutions

Site of Care Process: Getting Started Request medical pharmacy data from vendor

Data

Analyze

Design

Identify members using higher cost sites of services and identify most costeffective and clinically appropriate site of care Develop program design, including drugs targeted, financial criteria, incentives, outreach, etc.

Identify internal and external resources to support site of service tactics

Evaluate Notify members and providers about the site of service program

Engage

Monitor

Monitor program effectiveness (member satisfaction and outcomes) and continue to identify additional opportunities

102

©2014 Artemetrx Specialty Drug Solutions

Hepatitis C progression:

Most patients: Chronic progression

Compare US costs of Hepatitis C drug regimens

Payer faces cost challenge due to high number of untreated patients

In 2013, hepatitis C patient “warehousing”

Some MD specialists suggest reserving new therapy due to “low value”

(Abbreviation: HCV = Hepatitis C)

But: Payers will find new Hep C Rx use hard to control

Elan Rubinstein, Pharm.D., MPH EB Rubinstein Associates [email protected] www.ebrubinsteinassociates.com

PHARMACY BENEFIT STRATEGIES 111

Where’s the Specialty Rx Drug Spend?

25%

Total Spend

Total Drug

Drug Type

Drug spend out of total healthcare spend

Pharmacy Benefit

Medical Benefit

67%

33%

of total health care spend

of total health care spend

67% non-specialty Rx benefit

33% specialty Rx benefit

44%

56%

non-specialty med. benefit

specialty medical benefit

43% - hospital medical benefit specialty spend by site of service

42% - physician 15% - SP/ infusion

FY 2012 Pre-Rebate Net Paid Legacy UHCP Managed Business, does not include inpatient drug spend

Audience Survey What percent of total members use specialty medications on the Rx benefit?

A) < 0.5% B) 3 - 4%

C) 1 - 1.5% D) 5 - 6%

Pharmacy Benefit Specialty Management

Specialty Pharmacy Program

Specialty Pharmacy Study Outcomes

Utilization Management Strategies

Specialty Pharmacy Total Program Savings

Importance of Adherence

Looking Forward: Pharmacy Benefit

INNOVATION

Innovation

120

Overview

Grace Fill Elimination

• Require first fill from the specialty pharmacy while allowing acute access to therapy when needed • Provides opportunity to encourage lower-cost but clinically appropriate products and to get patients into clinical programs sooner

Price Protection Expansion

• Continue expansion of price protection clauses in contracts with specialty manufacturers to mitigate excessive price increases

Increased Physician Engagement

• Physician specialist engagement programs to influence selection of preferred (and lower cost) products for start of therapy

Lower Cost Alternatives

• Establishing programs/services that help OptumRx work with members to identify lower cost alternatives and work directly with providers to switch medications.

Medical Necessity

• Utilization management reviews beyond notification; assessing response to therapy for continuation, requirement of specialty provider, dose optimization, and driving to the lowest cost clinically appropriate therapy

120

Specialty Drug Clinical Management Opportunities

Corey Belken, Pharm.D., Vice President of Business Development

©2014 Artemetrx Specialty Drug Solutions

Key Challenges and Characteristics of Specialty Clinical Management Drugs covered across pharmacy and medical benefits Larger variety of dosage forms Lack of real-time adjudication under medical

Genetic testing New therapies and expanding indications Cost—every prescription, dose, and quantity matters

122

©2014 Artemetrx Specialty Drug Solutions

METRIC

Client A

RANGE*

Spend Profile

2012

Lo

High

PMPY Specialty Spend

$232

$205

$514

% of Specialty in Medical

55%

29%

59%

% Outpatient Hospital

32%

11%

32%

Specialty Medical Trend

45%

18%

47%

Physician Office / Home Health, % of ASP

130%

101%

167%

Outpatient Hospital, % of ASP

231%

95%

295%

n/a

5%

14%

Inappropriate Use, as % of Medical

10%+

3%

17%

Savings, as % of Medical

31%+

10%

>40%

Pricing Under Medical

Administrative Costs, As % of Medical

Savings Opportunity

*Range is based on Artemetrx BOB clients (commercial, Medicare, Managed Medicaid and employer)

123

©2014 Artemetrx Specialty Drug Solutions

Specialty Spend by Therapy Class and Channel $3,000,000 OTHERS COAGULANTS

$2,500,000

GENETIC SYNDROME AGENTS $2,000,000

UNCLASSIFIED IMMUNE MODULATOR

$1,500,000

COLONY STIMULATING FACTORS $1,000,000

IVIG INTERFERONS

$500,000 TNF INHIBITORS $0

CHEMOTHERAPY Rx

Physician Office / Outpatient Hospital Home Infusion

124

©2014 Artemetrx Specialty Drug Solutions

Cost per Prescription for Select Specialty Drugs $41,405

CINRYZE (Angioedema)

$40,124

ACTHAR GEL (Infantile spasms)

$35,145

ADVATE (Hemophilia)

$17,047

INCIVEK 375 MG (Hepatitis C) REBIF 44 MCG/0.5 ML (MS) HUMIRA (Inflammatory Cond.)

Rx

$8,428 $4,827

FABRAZYME (Fabry's Disease)

$25,051

YERVOY (Melanoma)

$24,823 $18,376

ZELBORAF (Oncology)

$11,895

RITUXAN (Oncology) AVASTIN (Oncology)

$9,560

STELARA(Psoriasis)

$9,397

REMICADE (Inflammatory Cond.)

Medical

$7,280

125

©2014 Artemetrx Specialty Drug Solutions

Net Spend (PMPY) for Specialty Patients by Diagnosis CHRONIC INFLAMMATORY POLYNEURITIS

$479K

KIDNEY OR END-STAGE RENAL DISEASE

$407K

CANCER

COAGULATION DEFECTS MULTIPLE SCLEROSIS ASTHMA RHEUMATOID ARTHRITIS PSORIASIS CROHNS DISEASE OR ULCERATIVE COLITIS OSTEOARTHRITIS

$0

Specialty

$50,000

Medical (Other)

$100,000

$150,000

$200,000

Rx (Other)

Note: Includes patients with a specialty Rx and relevant diagnosis in 4/1/2013 – 3/31/2014.

126

©2014 Artemetrx Specialty Drug Solutions

Prevalence of Treatment with a Specialty Drug 100% 90%

Significant cost exposure exists for treatment growth within existing members.

75%

80% 70% 60% 50%

44%

41%

40% 30%

23%

22%

19%

17%

20%

10%

10% 0% Multiple Sclerosis

Rheumatoid Arthritis

Psoriasis

Client A

Crohn's Disease / Ulcerative Colitis

Hepatitis C

Benchmark Source: Gunderson, Slavik, Starner, Phillips, and Gleason. Prime Therapeutics, 2011. Available at http://www.primetherapeutics.com/pdf/amcpposterrxclass.pdf

127

©2014 Artemetrx Specialty Drug Solutions

Clinical Treatment of Treatment with a Specialty Drug

Clinically Appropriate Use • Off-label (right diagnosis) • Companion testing (right patient) • Dose optimization (right dose) Cost-Effective Therapy • Step through first-line drugs • Injectables prior to infused • Generics or biosimilars

Prior Authorization

Step Therapy

Lowest Net Cost • Preferred therapies • Quantity limits: dosing/frequency 128

Formulary & Rebate

©2014 Artemetrx Specialty Drug Solutions

Stelara® (ustekinumab) Dosing Indications – Moderate to severe plaque psoriasis – Active psoriatic arthritis Dose – < 100kg (220lbs.) 45mg initially & in 4 weeks, then every 12 weeks – > 100kg (220lbs.) 90mg initially & in 4 weeks, then every 12 weeks AWP Cost – 45mg $8,848.31 (AWP) 90mg $17,696.57 (AWP)

129

©2014 Artemetrx Specialty Drug Solutions

Remicade Quantities, Artemetrx Book of Business

$12,000 100 KG MALE

Allowed Amount

$10,000

ASP

$8,000

$6,000

$4,000

$2,000

$0 0

20

40

60

80

100

120

140

160

Billed Units 130

©2014 Artemetrx Specialty Drug Solutions

Spend on Potentially Clinically Inappropriate Use by Class $70,000 $60,000

Methods For 20K life labor & trust organization. Examined offlabel use and trial of 1st line therapies where feasible in claims data.

$3,895 $11,168 $3,194

$50,000

Key Findings

$40,000 $30,000

New users of TNF inhibitors (for autoimmune dx) have no trial of 1st line agents (for self-injectables) or selfinjectable (for infused products).

$61,289 $53,113

$51,488

$20,000

Xolair use without an inhaled corticosteroid.

$10,000

$11,419

$1,361

CANCER

OSTEOPOROSIS

$0 TNF

RESPIRATORY OSTEOARTHRITIS

Inappropriate Medical

Inappropriate Rx

131

Visco-supplement users without first-line use of other medications or medical services.

$1,051

©2014 Artemetrx Specialty Drug Solutions

Hepatitis C New Drug Utilization, Client Example 8 Members on New Hepatitis C Therapy (Sovaldi or Olysio) – 88% (7 members) had a diagnosis of chronic hepatitis C

– 38% (3 members) using it off label (taking Sovaldi & Olysio together) – 50% (4 members) appear to be non-compliant

– 25% (2 members) had history of previous use of Hep. C therapies – 25% (2 members) had history of drug abuse & are on Suboxone –25% (2 members) had history of cirrhosis –12.5% (1 member) had liver transplant

132

©2014 Artemetrx Specialty Drug Solutions

Specialty Pipeline: Staying Ahead of the Curve Plan sponsors were generally unprepared for Solvaldi. – Gilead estimates full-year product sales of $21 billion to $23 billion, compared to initial outlook of $11.3 billion to $11.5 billion. – Unexpected Off-label use (Sovaldi + Olysio) and indications (Genotypes 2-4 & interferon-free use).

– Coverage policies implemented reactively and relied heavily on PBM recommendations. –Policies range from coverage with no limitation to no coverage.

New Hep C alternatives will reach the market in late 2014/2015. –All oral “interferon free” regimens (multiple) & near 100% cure rate.

Plan sponsors should understand current use of Solvadi and begin planning now for coverage policies for the new therapies. 133

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Pipeline – Drugs to Watch Drug

Manuf.

Route

Use

Date

Notes

Sofosbuvir + Ledipasvir

Gilead

Oral

Hepatitis C

Oct. 2014

• •

Interferon-free Close to 100% cure

ABT-267 + ABT450r + ABT 333

AbbVie

Oral

Hepatitis C

Q4 2014 Q1 2015

• •

Interferon-free Close to 100% cure

Lumacaftor VX809

Vertex

Oral

Cystic Fibrosis

Q4 2014 Q1 2015

•

Effective for 50% CF population

Opdivo (Nivolumab)

BMS

IV infusion

Melanoma & other cancers

Q1 2015

•

New mechanism of action

Esbriet (perfenidone)

Intermune

Oral

Idiopathic pulmonary fibrosis (IPF)

Q4 2014

•

First available treatment for IPF

Nintedanib

BI

Oral

IPF

Q2 2015

•

Also being studied for cancer

Evolocumab Alirocumab

Amgen Sanofi

SC inj. SC inj.

LDL-lowering

Q4 2015

• •

PCSK9-inhibitors Significant LDL lowering

134

©2014 Artemetrx Specialty Drug Solutions

Biosimilars “A biotherapeutic product which is similar in terms of quality, safety and efficacy to an

already licensed reference biotherapeutic product” (WHO) Biosimilars are expected to have no clinically meaningful differences from the brand name biologic and are similar to generics for small molecules except: – Biosimilars are not exactly identical to the brand product (may not be interchangeable). – Estimated cost to develop a biosimilar is $75 - $250 million compared to $2-3 million to develop a small molecule generic. Biosimilars are expected to cost 10-30% less than the brand name product. Prior to 2012, a pathway to develop and manufacture biosimilars did not exist in the U.S. July 24, 2014, the FDA accepted its first application for biosimilar development under the new U.S. biosimilar pathway from Sandoz for filgrastim.

135

©2014 Artemetrx Specialty Drug Solutions

Biosimilars in the Pipeline

Drug

Manufacturer

Brand Product

Estimated Date of Approval

Glatiramer acetate Mylan/Natco Pharma. Copaxone Sandoz/Momenta

Uncertain ~ 2014-15

Insulin glargine

Eli Lilly, BI, Merck & Samsung

Lantus

~ Q2 2016

Adalimumab

Sandoz , Teva

Humira

~ 2015–2016

Rituximab

Sandoz, BI

Rituxan

~ 2015 –2016

Infliximab

Hospira

Remicade

~ 2016

Erythropoetin

Hospira

Epogen

~ 2016

Filgrastim

Sandoz

Neupogen

~ 2016

136

©2014 Artemetrx Specialty Drug Solutions

Specialty Drug Clinical Management Recommendations Key Steps 1. Understand clinical management opportunities across the channels for specialty drugs based on your own data: – Pharmacy, Physician Office, Outpatient Hospital, Infusion Centers 2. Coordinate a clinical strategy across pharmacy and medical benefit by therapy classes. 3. Monitor the effectiveness of clinical programs on an ongoing basis given the rapidly changing specialty drug marketplace.

137

©2014 Artemetrx Specialty Drug Solutions

Corey Belken, Pharm.D. Vice President Business Development 952-994-9459 [email protected]

138

©2014 Artemetrx Specialty Drug Solutions