The current pharmacy landscape Rebecca Mitchem Senior Director Aetna Specialty Pharmacy July 2017

Today’s Conversation Overall prescription drug spend High cost drugs that are driving the spend Strategies for managing or controlling the spend

Total US Healthcare Spending $3.2 Trillion $325 Billion Drug Spend 2015

Healthcare Spend 20% of healthcare dollars are spent on medication. Specialty medications are the largest driver of pharmacy trends. New specialty medications are treating more common conditions like cardiovascular disease and rheumatoid arthritis. This could dramatically increase cost for treatment of these more common conditions

2016 Top Traditional Drug Classes diclofenac lidocaine clobetasol VICTOZA GLUMETZA INVOKANA VYVANSE amphetamine/dextroamphetamine ER methylphenidate ER LEVEMIR HUMALOG LANTUS ANDROGEL FORTEO PREMARIN 5

2016 Top Specialty Drug Classes HUMIRA ENBREL STELARA TRUVADA ATRIPLA STRIBILD COPAXONE TECFIDERA GILENYA IBRABCE SPRYCEL GLEEVEC REVLIMID XOLAIR 6

What is a specialty drug? While there is no formal industry definition, these drugs are usually protein based and bio-engineered or genetically engineered. Average cost $4,500/month Mostly self-injected or infused drugs More side effects. Require “cold pack” shipping

Specialty drugs treat many disease states Hemophilia Immune Deficiencies Hepatitis C Infertility Growth Hormone Enzyme Deficiencies Multiple Sclerosis Anemia Cancer Psoriasis Osteoarthritis Asthma Psoriatic Arthritis Osteoporosis Rheumatoid Arthritis Crohn’s Disease Post-transplant Alcohol Dependency Macular Degeneration Deep Vein Thrombosis HIV Respiratory Syncytial Virus Parkinson’s Pulmonary Arterial Hypertension

Drug Trends 3,500 Drugs 350 drugs 99% of prescriptions Growing 2% - 3% a year Growing at 10% - 20% a year 1% of Rx’s = 10% of TOTAL Health Care Spend

Trends that impact the bottom line Make this two slides Trends that impact the bottom line 68% of plan sponsors said specialty drug management is their biggest concern over the next five years.1 Specialty drugs are estimated to reach 50% of total costs by 2018.2 Foot notes where is #2? This slide was split between this page and the next… how does that effect footnotes? 1 2016 Trends in Specialty Drug Benefits, PBMI. 2 National Business Group on Health, Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals. January 2017. Accessed at https://www.businessgrouphealth.org/pub/C317670B-782B-CB6E-2763-670A3E8568A0

AVERAGE SPECIALTY SPEND BY BENEFIT TYPE 1 Coverage of specialty drugs AVERAGE SPECIALTY SPEND BY BENEFIT TYPE 1 Pharmacy benefit – drugs mostly taken at home by the patient without medical supervision. Medical benefit – drugs given by a health care professional in a hospital, doctor’s office or at home. Drugs covered on the medical benefit, are given where the prescriber directs. Pharmacy 70% Medical 30% 1 Aetna Commercial All Funding Jan-Dec 2016.

Distribution by channel Commercial, Fully Insured plans for May,, 2017

Top therapies Commercial, Fully Insured plans for May,, 2017

Pharmacy has a “1% problem” Type Cost per Rx % Mix Generic $30 80% Brand $250 19% Specialty $4,500 1%

PBM approach to specialty management Create a benefit design that balances member out-of-pocket cost with access Select the right formulary strategy for your population Cover high cost medications when medically necessary Redirect patients, when appropriate, to lower cost sites of care Provide superior clinical support Manage holistically across both medical and pharmacy benefits *Aetna Specialty Pharmacy and the Specialty Pharmacy Network may not be available to California HMO members. Doctors may have agreed to dispense and administer these drugs to members themselves. Or they may write a prescription so that members can fill them at any participating retail or mail-order pharmacy.

40 60% 500 Ensuring appropriate use with precertification 12% Across 40 drug classes 60% of specialty drugs managed through precertification Maximum thresholds for more than 500 drugs 12% reduction in specialty drug spend in 20151 1 Aetna National Precertification List Savings Data Analysis, 2015.

Finding the best place for infusion care Before the first infusion: We may recommend alternate lower-cost sites to the prescribing physician. Reviewing infusion claims: A team of specialty pharmacy experts review claims to help members find convenient, more cost-effective sites of care like home infusion. $17.7 million saved in 2015, without member disruption* *Aetna program analysis.

Capture the value of biosimilars There is no standard policy that works for all specialty medicines. They are all unique. Aetna reviews every drug launch independently using all of the information available to create a context for our coverage policies. In some cases, biosimilars may not be the best option for a member. We will always explore ways to decrease the unit cost of specialty drugs and help patients and payers to make informed choices. Biosimilars could lead to a $44.2 billion reduction in spending on specialty drugs from 2014 to 2024. The Cost Savings Potential of Biosimilar Drugs in the United States, Andrew W. Mulcahy, Zachary Predmore, and Soeren Mattkehttp://www.rand.org/content/dam/rand/pubs/perspectives/PE100/PE127/RAND_PE127.pdf

In the quest to manage pharmacy spend, we can’t lose sight of the patient Improving outcomes and eliminating efficiencies Engaging members in the right care for them Managing through the lens of total cost of care Appropriate use: ensuring rigorous review of medical evidence and drug pipeline to ensure patients have access to effective therapies. This includes establishment of clinical criteria for initial authorization, reauthorization protocols, provider engagement and innovation with respect to authorization streamlining/HIT maximization Patient Engagement and Management: supporting patients and their caregivers with resources to make daily living easier, managing their controllable lifestyle factors, and coordinating necessary care across pharmacy, medical and other ancillary services (home infusion, community resources, financial support services, etc.). This also means educating patients on their therapies including side effects, when to ask for help, and specialized resources by disease state to help our patients stay on therapy (as proven by our industry leading adherence rates for patients using ASRx) Negotiating Price: establishing and effectively using tools to manage unit price including formularies across medical and pharmacy products, fee schedules for medically benefitted drugs, effective site of care programs, and preferred channel use We work across all benefits for a holistic approach that improves outcomes and eliminates waste. We meet members where they are in their health journey and deliver care in ways that work for them. Drug cost only tells one part of the story and the allure of unit cost discounts could end up increasing your overall cost. 19

Identifying High Risk Specialty Members Reports identify members who are: Newly diagnosed with a disease that requires treatment with a specialty drug New to specialty therapy or switching drugs Non-compliant Members needing additional support referred to for Care Management from: Case and Disease Management New to diagnosis/ therapy Non-compliant Referrals

Compliance and Persistency Education Medication Disease Importance of medication compliance Communication Clinical support 24 hours a day, 7 days a week Proactive refill reminders Provider collaboration Identify barriers to adherence: Side effect management Copay assistance coordination Medication reminder tips Care Management Programs Optional Additional support Available for all patients

Specialty Health Care Management Team Disease & Drug education, tools, resources, with expedited referrals Member managed by one clinician for personalized care and single point of contact Collaboration with Case and Disease Management, Behavioral Health and other Aetna programs Integrated computer system to share clinical information with Aetna Clinicians Coordination with internal Registered Dieticians Side effect monitoring and management Copay assistance coordination Adherence monitoring and intervention to support medication compliance

Case study: Shirley’s journey with Multiple Sclerosis When her doctor changed her medication, she partnered with us to get the support she needed to manage her condition. Introduced Shirley to support program Connected her to her Aetna nurse Educated her on her new medication Checked for gaps in her care Discovered Shirley’s struggle with depression Referred her to specialists for support Worked with her providers to ensure success Encouraged her to continue persevering Actual Member Experience

Proven Results: Personalized Care drives better MS outcomes 13 Adherence Rate Annual Relapse Rate % 25 % For patients engaged with the Aetna Specialty Health Care Management team Preliminary results from Aetna study to evaluate the value of Aetna Specialty Pharmacy services in Multiple Sclerosis patients, August 2015

Thank you