Prescription Drug Utilization & Opioid Abuse July 16, 2013

1. Prescription Drug Utilization & Opioid AbuseJuly 16, 2013 Mona Chitre, PharmD, CGP Vice President, Pharmacy Management Excellus BlueCross BlueShield

2. Pharmacy Management: Market Landscape • Impact of Prescription Benefits • Specialty Medications • Price Increases • Trend Management Opportunities • Opioids

3. Why are Prescriptions important: • #1 Benefit:Most commonly used benefit • 67-70% use the drug benefit each year • 12-15 prescription fills per person per year • #1 Cost:Drugs are the top cost driver

4. How does Rx affect benefit plans? Medical Benefit Pharmacy Benefit Retail Pharmacy Mail Pharmacy Specialty Pharmacy Drug Cost : 20-25% of total health care cost ($75-$85 pmpm) • Hospital • Physician Office • Outpatient Facility • Clinics • Infusion centers • Home Infusion • DME • Drug Costs: 5-8% of total medical cost ($20-$25 pmpm)

5. Prescription Benefit Medical Benefit Cancer Rheumatology Psoriasis Contraceptives Multiple Sclerosis Osteoarthritis Asthma Pulmonary Arterial Hypertension Diabetes Antidepressants Hypertension Hyperlipidemia PPIs Glaucoma Hemophilia Vaccines Immunoglobulins Enzyme Replacement

6. Today’s pharmaceutical benefit reality $20 – generic Rx $200 – brand Rx $2,200 – specialty Rx

7. SPECIALTY PHARMACEUTICALS

8. New Technology: Specialty Drugs General Description: • High Cost • Biologics • Pharmacy or Medical Benefit (Oral, Injectable, Infusion) • Monitoring Required • Targeted • Chronic or genetic conditions with still an unmet need

9. Top Ten Drug Projections

10. Specialty Drug: Employer Impact Employer: 200 employees (450 total with coverage) • 5300 Prescriptions/ year • Average employer cost/Rx: $60 • Total Annual Rx cost for employer: $320,000 Specialty Drug Impact: Tykerb • Oral drug used in combination for breast cancer. • Incremental Added Cost: $55,000/ year 15% increase in Rx expense that year

11. Specialty Drug: Employer Impact Large multiple employer coalition: • 41,000 covered lives • Medical Drug PMPM: $14.47 (07-08) • Medical Drug Trend: 50% over 2 years • Specialty Drug Impact: • 2 of the covered members treated with Fabrazyme • Annual cost of > $518,000 This drug accounted for 8% of the medical expense

12. “Cancer Trends Demand Call To Action” The Tipping Point Cost Trends “At Memorial Sloan-Kettering Cancer Center, we recently made a decision that should have been a no-brainer: we are not going to give a phenomenally expensive new cancer drug to our patients” • Zaltrapv. Avastin • Same Efficacy • $11,000 difference

13. 2012/2013 Sample Specialty Rx Approvals

14. Pricing and Price Increases

15. Case Study: Multiple Sclerosis • New Technology: • 2010: 2 New agents - 1stCombination drug and 1stOral Agent • Significant Price Increases: • 2006 Price - $ 15,000 • 2010 Price - $37,000

16. Drug Cost Trends: Upstate New York

17. Trend Management: GENERICS “Ask your doctor if a generic is right for you”

18. Employer Impact: Case Study • Employer: 200 employees (450 total with coverage) • Avg 12 Rx/person/yr: approx. 5,300 Rx • Avg employer cost/Rx: $60 • Generic Fill Rate: 65% (3,445 of the Rx are for generic) • Total Annual Rx cost for employer: $318,000 • Generic Opportunity: Increase GFR to 70% • 265 brand drug Rx changed to a generic option. • Cost saving per Rx: $100 • Savings to employer: $26,500 (8% of spend) • Savings to employee: 200-$400+/year Each 1 point increase in GFR can reduce Rx spend by 2-3%

19. Trend Management: Use Management Data based on claims incurred January – April 2013 • Rx management programs: Generic Trial Program, Prior Authorization and Step Therapy encourage equally effective lower cost options to help manage trend and lower member out of pocket cost. • Groups with unmanaged Rx are incurring significantly higher Per Member Per Month (PMPM) costs than groups with managed Rx benefits

20. Opioid Impact

21. Balancing the need for opioids “Overdoses involving prescription painkillers are at epidemic levels and now kill more Americans than heroin and cocaine combined. States, health insurers, health care providers and individuals have critical roles to play in the national effort to stop this epidemic of overdoses while we protect patients who need prescriptions to control pain.” CDC Director Thomas Friedan M.D., M.P.H. Although evidence is limited, chronic opioid therapy (COT) can be an effective therapy for carefully selected and monitored patients with chronic non-cancer pain (CNCP). The American Pain Society and the American Academy of Pain Medicine expert panel

22. Statistics • Overdose deaths involving opioid pain relievers (OPR) have increased and now exceed deaths involving heroin and cocaine combined. OPR involved in 14,800 deaths in 2008 • More ED visits related to misuse or abuse of pharmaceuticals compared to use of illicit drugs • By 2010, enough OPR were sold to medicate every American adult with a typical dose of 5 mg of hydrocodone every 4 hours for 1 month • 17 percent of teens say they have used a prescription medicine at least once in their lifetime to get high or change their mood. * Significantly lower than 2009 levels

23. Impact to Stakeholders in Healthcare Wasted healthcare dollars 40 people die every day from overdoses involving opioids such as hydrocodone, oxycodone and oxymorphone The average annual cost per capita for opioid abusers has been calculated at $16,000 compared to $1,800 for non-abusers Nonmedical use of OPR costs insurance companies up to $72.5 billion annually in health-care costs

24. Excellus BlueCross Blue Shield Team

26. Prescribing Summary - Cover Letter

27. Example Report

28. Results of Opioid Mailing

29. Provider survey Based on 330 respondents

30. Step Three - Promoting Outpatient Detoxification • Suboxone® - Under the Drug Addiction Treatment Act (DATA), limited to physicians who meet certain qualifying requirements (authorized training, addiction medicine specialty) • Physician Engagement: • Upstate New York has a shortage of physicians who can prescribe Suboxone® for opioid dependence • Advantages of therapy: • Withdrawal symptoms can be managed safely and effectively in their home environment that incorporates support from the family. • Significant MEDICAL cost savings. Medical costs associated with inpatient detox can cost upwards of $1,200/day. Outpatient detox costs the health plan less than $300/day (excluding drug costs). • Disadvantages of therapy: • High cost • Inappropriate use

31. Results

32. Last Thoughts Insurers — the bad guys in so many policy debates — can do a lot of good, keeping better track of the number and types of controlled substances policyholders are receiving. The New Drug Crisis: Addiction by Prescription Time Magazine Monday, Sept. 13, 2010