Drug Management Updates September 27, 2017 MA Medical Directors Meeting

Drug Management Initiatives Goal: Harvard Pilgrim is committed to using our customers’ claims dollars wisely while making sure our members have access to safe and effective medications  New specialty drug vendor: CVS Specialty (7/1/17) Medical drug management program: CVS Health Novologix (July – August 2017) MedImpact Direct Mail (10/1/17) 2018 Premium formulary (1/1/18) Innovative outcomes-based contracts with pharmaceutical companies

New Specialty Pharmacy Vendor CVS Specialty  5000 members Successfully implemented on 07/01/2017 Allows us to consolidate from multiple vendors (Accredo, Magellan and Walgreens Specialty) to one and helps us achieve significant cost savings What ? Who ? When ? Why ?

MedImpact Direct Mail – Mail Order Program  30,000 members 10/01/2017 - Improved Customer Service - Cost Savings Opportunity What ? Who ? When ? Why ?

MedImpact Direct Mail – Mail Order Program MedImpact has been our PBM since 2000 Confident that MedImpact Direct Mail will be an excellent mail service partner as they understand our membership and the level of service we expect MedImpact Direct Mail will be the member’s single source for all mail order needs NoviXus Pharmacy Services for dispensing Orders can be placed by phone, mail or e-prescribing Active prescriptions at Walgreens Mail will be transferred Communication Timeline: Employer and broker communications sent - week of July 17th MedImpact sent member notifications - July 19th to July 28th Providers were updated via Network Matters – August

Premium Formulary 2018 Redesigned Premium formulary All members that currently have Premium formulary January 1, 2018, regardless of anniversary date To offer a more cost-competitive formulary What ? Who ? When ? Why ?

Premium Formulary Redesign What's included All FDA approved drugs within most classes Generics Most single source brands (i.e. no generic equivalent) What's excluded Non-FDA approved drugs Drugs for cosmetic use only Multi-source brands High cost/Low value Select drugs with OTC equivalents Drugs used for cosmetic use only New-to- Market Drugs Included automatically Excluded pending P&T Review Plan Options 3-Tier 4-Tier

2018 Premium Key Differences Different from current Premium formulary Excluding 895 drugs 828 are multisource brands = generic alternative available 67 additional drugs Select Strategic Exclusions High dollar/Low value Support preferred drugs Select drugs with OTC alternatives Exclude new-to-market (NTM) drugs until reviewed for coverage Different from Value formulary Tier structure Not sold on Exchange = not required to meet EHB benchmark plan compliance Excluded drugs may differ

2018 Premium Communication and Transition Plan April Brokers, employers, and providers notified October Early – subscribers Late – Impacted members 1/1/18- 3/31/18 Transition August Mailing of ANOCs – starting week of 9/11, continue through week of 10/18 Impacted member letters tentatively scheduled to start week of 10/23 Formulary Changes Finalized 30-day supply Disruption Report process available

Innovative Outcomes-Based Contracts Mission Pay for value Align payment for drugs with clinical benefit Assess the effectiveness of drugs in the real world setting and account for any variances with financial incentives/disincentives Effective and appropriate use of health care services while challenging manufacturers to demonstrate value Goal Process Result

Recent Outcomes-Based Contracts Manufacturer Drug Use Details Amgen Inc. Enbrel Autoimmune disease drug for rheumatoid arthritis Focuses on positive clinical results when compliant with the drug Repatha PCSK9 inhibitor class to treat high cholesterol Pay less if drug is less effective than shown in clinical trials Full reimbursement for plan when a patient has a cardiovascular event when on therapy Astra Zeneca Bydureon Improves blood glucose levels in type 2 diabetes Focuses on getting patients to HbA1c goal Brilinta Anti-platelet drug to treat acute coronary syndrome Protection from repeat hospitalizations in patients on drug compared to standard of care options

Recent Outcomes-Based Contracts Manufacturer Drug Use Details Biogen Avonex Tecfidera Tysabri Multiple Sclerosis Reduced cost for inferior annual relapse rate for Biogen products when compared to clinical trial rates Eli Lilly and Company Trulicity Improves blood glucose levels in type 2 diabetes Payment tied to success of lowering HbA1c compared to other agents Forteo For treatment of osteoporosis Improved pricing with increased adherence rates Novartis Entresto For the treatment of congestive heart failure Guarantees a decrease in the rate of hospitalizations