MEDICARE PART B DRUG PAYMENT PROPOSAL Proposed CMS Rule Cuts Reimbursement For Physician- Administered Drugs Costing More Than $480/Day Projected Effect of Proposed Medicare Part B Payment Rule: Analysis Under the proposal, about half of physicians who administer Part B drugs would be reimbursed according to the traditional model, or 106% of the drug’s average sales price (ASP), while the other half would be paid 102.5% of the ASP plus an additional flat fee of $16.80 per day According to analysis by Avalere Health, $480 is the tipping point for reimbursement under the new rule – drugs that cost providers more than $480 per day would result in lower reimbursement, whereas drugs costing less would receive higher payments Accordingly, because Medicare beneficiaries are responsible for 20% of these payments, patients’ out of pocket (OOP) costs would increase for drugs below $480 and increase for drugs above $480 April 11, 2016 | Alexander Perry Sources: Fauzea Hussain and Adam Borden, “Proposed Medicare Part B Rule Would Reduce Payments to Hospitals and Some Specialists, While Increasing Payments to Primary Care Providers,” Avalere Health, April 7, 2016; Gregory Twachtman, “Medicare Part B Drug Payment Proposal Could Cost Some Doctors,” Family Practice News, April 9, ASP Below $480ASP Above $480 ASP Equal s $480 Provider Total Payment Increase Provider Total Payment Decrease Patient OOP Higher Patient OOP Lower No Change On March 8, the Centers for Medicare and Medicaid Services (CMS) proposed a new pricing model aimed at lowering physician-administered drug costs and reducing financial incentives for providers to prescribe more expensive drugs under Medicare Part B

Medicare Payment Proposal Would Redistribute Spending Across Provider Types; Impact Varies by Specialty April 11, 2016 | Alexander Perry Sources: Fauzea Hussain and Adam Borden, “Proposed Medicare Part B Rule Would Reduce Payments to Hospitals and Some Specialists, While Increasing Payments to Primary Care Providers,” Avalere Health, April 7, MEDICARE PART B DRUG PAYMENT PROPOSAL Share of Increase/Decrease in Medicare Payment Under Proposed Part B Rule, by Provider Specialty *These figures reflect initial aggregate impact of the Part B drug payment changes, if the changes were implemented in all regions nationwide

Payment Reductions Under Medicare Proposal Concentrated on Subset of Part B Drugs, Cancer Drugs Among Most Impacted April 11, 2016 | Alexander Perry Sources: Fauzea Hussain and Adam Borden, “Proposed Medicare Part B Rule Would Reduce Payments to Hospitals and Some Specialists, While Increasing Payments to Primary Care Providers,” Avalere Health, April 7, 2016; Mary Ellen McIntire, “Cancer Drugs Among Those Most Affected by Medicare Drug Payment Proposal,” Morning Consult, April 7, MEDICARE PART B DRUG PAYMENT PROPOSAL Total Medicare Part B Payment Reductions Under Proposed Rule, by Therapeutic Area Analysis More than 50% of payment reductions come from 10 drugs, which will save Medicare $252 million in the first year if the changes are implemented nationwide Seven of the 10 most impacted drugs are used to treat cancer, two treat ophthalmologic conditions and one treats immunologic conditions According to Avelere, in many cases related to the drugs most impacted by these changes, physicians do not have the option to prescribe a less expensive alternative