April 10, 2014 7401 Metro Blvd, Suite 210, Edina MN 55439 952-657-5457 | www.excelsiorsolutions.com

1. April 10, 20147401 Metro Blvd, Suite 210, Edina MN 55439952-657-5457 | www.excelsiorsolutions.com

2. What If Your PBM Told You... • That your generic dispensing rate exceeded the contractually guaranteed minimum rate of 72% by 3% at 75%? • That your actual effective generic discount vs. AWP exceeded the contractually guaranteed minimum generic effective discount of 73% by 2% at 75%? …How would you feel about that performance??

3. What If Your PBM Went On To Tell You… • That 2015 will produce the fewest number and lowest value of high-profile brand drug patent expirations in recent memory? • That the amount that you spent on specialty pharmacy medications doubled in 2013, even though you only added 10 new patients to your specialty pharmacy pool? …How would you feel about what 2015 will bring?

4. What If Your Boss Then Told You To Reduce Pharmacy Costs By 5% For Next Year’s Budget? …How well would you sleep tonight?

5. The Need for “Common Cents” • This initiative is about finding opportunities to achieve material absolutesavings in highly utilized therapeutic classes, even when less specific relative metrics such as generic dispensing rates and aggregate AWP discounts, on the surface, appear to be optimal. • The PBM industry does a very good job of keeping your focus on relative metrics and percentages

6. Why the Excitement? • High generic dispensing percentages and deep AWP generic discountshave combined to create the impression that generic performance is "as good as it gets.” • Lesson learned:  "You don't take percentages to the bank." • Not all generics, even those in the same therapeutic category, are priced similarly — there is wide variation in unit prices among them. • Variation in unit price is material (20x or more) among “clinically indifferent” generic alternatives • Are you receiving 20x or more clinical benefit for 20x or more cost??

7. “Common Cents” Analysis • Take advantage of the “maturing” generic drug market • What is “Clinical Indifference?” • Volume must be high enough, and delta must be wide enough to create economically material, clinically reasonable opportunities that justify effort • Focus in on categories where majority of claims are already deeply discounted generics

8. “Common Cents” Tactics • MD/Patient Communication • MAC pricing modification • Plan design and/or Utilization Management changes

9. A “Common Cents” Case Study

10. “Common Cents” Findings • Analyzed claims data from October 1, 2013 through December 31, 2013 (4Q2013) • Analysis based on “Net Plan Paid” amount, to include impact of existing “Patient Paid Amount” structure • Terms: • “PPU” = Plan Paid per Unit • “PPC” = Plan Paid per Claim

11. 4Q13 Descriptive High Level Utilization Statistics: ($ and % of Total Net Plan Paid Amountby Target Category) Total Net Plan Paid Amount: $ 1.6 million Target Categories: TOTAL $168 thousand (10.5%)

12. Combination Oral Contraceptives: • % of claims in class dispensed as generic: 84% • Effective generic discount: 29% • Max Brand PPU: $3.45 • Max Generic PPU: $2.26 • Min Generic PPU: $0.32 • Projected Annual Plan Paid Amt. in category: $104,000 • Recommendation: Communicate wide unit price disparity that exists across class to prescriber community with goal of compressing cost to existing mean PPU of $1.24 • Tactic: Share information with prescribers illustrating that general clinical indifference that exists among available alternatives across class is not matched by similar economic indifference • Total Potential Annualized Savings: $28,000 (26.9% )

13. ARBs: • % of claims in class dispensed as generic: 63% • Effective generic discount: 91% • Max Brand PPU: $4.07 • Max Generic PPU: $2.50 • Min Generic PPU: $0.00 • Projected Annual Plan Paid Amt. in category: $48,000 • Recommendation: Displace entrenched Brand ARB utilization with Generic ARBs, where clinically appropriate, by providing incentive to patient to ask physician to consider switch • Tactic: Apply reduced or zero co-pay to all generic ARBs • 50% Potential Annualized Savings: $21,000 (43.8% )

14. Statins: • % of claims in class dispensed as generic: 86% • Nationwide Market Share for Crestor (all strengths): 10% • Kenosha Market Share for Crestor (all strengths): 13% (HIGH) • PPU for Crestor (all strengths): $4.60 • PPC for all generic statins (all drugs & strengths): $0.16 • Projected Annual Plan Paid Amt. in category: $124,000 • Total Potential Annualized Savings by Eliminating Crestor Market Share Disparity: $21,000 (16.9% ) • Tactic: Create MD communication piece highlighting cost differential between Crestor and generics

15. Nasal Steroids: • % of claims in class dispensed as generic: 81% • Effective generic discount: 78% • Max Brand PPU: $10.52 • Max Generic PPU: $4.11 • Min Generic PPU: $0.16 • Projected Annual Plan Paid Amt. in category: $40,000 • Recommendation: Displace entrenched Brand Nasal Steroid utilization with Generic Nasal Steroids, where clinically appropriate, by providing incentive to patient to ask physician to consider switch • Tactic: Apply reduced or zero co-pay to all generic Nasal Steroids • 50% Potential Annualized Savings: $13,000 (32.5% )

16. PPIs: • % of claims in class dispensed as generic: 86% • Effective generic discount: 93% • Max Brand PPU: $9.14 • Max Generic PPU: $1.15 • Min Generic PPU: $0.14 • Projected Annual Plan Paid Amt. in category: $156,000 • Recommendation 1: Restrict coverage in class to generic omeprazole or pantoprazole only • Tactic: Make omeprazole and pantoprazole only PPIs on formulary, others excluded, except for unique dosage forms to be covered via PA process • Total Potential Annualized Savings: $128,000 (82.1% ) • Alternative Tactic:Re-evaluate continued coverage of any PPIs under Rx benefit since now widely available as OTC – be consistent with non-sedating antihistamine coverage strategy

17. Grand Total Potential Annualized Savings GRAND TOTAL $280 thousand (4.4%  Annual Plan Paid Amount)

18. The Power of Common Cents • A 4.4% reduction in total annual drug spend can be achieved by focusing on only nine highly utilized therapeutic categories where generics already constitute the majority of claims. • Similarly derived incremental savings are achievable across the entire pharmacy benefit by paying close attention to the data, by sharing information with physicians and benefit administrators, and by using Common Cents.

19. Specialty Pharmacy

20. Why the Focus on Specialty Pharmacy? • Goldman Sacs Report – Americas: Healthcare Services: Supply Chain, Sept 27, 2012. • http://www.ajmc.com/payer-perspectives/0213/The-Growing-Cost-of-Specialty-PharmacyIs-it-Sustainable#sthash. • Specialty Pharmacy Times Industry Guide Oct 2013 – Top 10 Trends in SP. • Cohen GM, Calla N, Moore TS. Evolution of a community pharmacist to a specialty pharmacist. Specialty Pharmacy Conference; 2013.

21. Best-in-class care The most expensive Rx is one shipped to a patient who doesn’t take it . . . • Case management coordination • Coordination of benefits • Physician education on guideline updates • Medical billing • Side effect and symptom management • Customized communication • Injection training support • Support group enrollment • Motivational Interviewing Techniques • Drug regimen assessment and collection of medication history • Adherence calls • Proactive PA & Rx renewal support

22. Discussion