Specialty Pharmacy Management Susan Cooper MPH RPh Sr. Director, Pharmacy Services HealthPartners October 24, 2012

Agenda Strategies HealthPartners is using to manage specialty drug trend Pharmacy benefit strategies Medical benefit strategies Integrated strategies Off label and safety

Specialty Pharmacy management goal Affordable access to specialty medications that improve health and reduce total cost of care Triple aim approach Strengthen provider/patient relationships and member experience Integrate with existing programs (DM, CM, MTM)

Integrated Specialty Drug spend Costs 40% Rx 60% medical Integrated view protects against “balloon effect” Variations by class Benchmarking used to compare to other plans

Trend management strategies Appropriate use Unit cost contracting Channel management Site of care Claim edits and controls Benefit design Provider incentives Benchmarking

Appropriate use management Same process used for Pharmacy and Medical benefit New drug reviews/formulary management Utilization Management (UM) Prior Authorization (PA) Step edits, quantity limits, diagnosis edits Pathways and guidelines Off label use management Drug interactions and safety Adherence monitoring

Appropriate use example 1 Clinical review recommended lowest cost option Total cost is $700 less a month per member Model for biosimilars $$$

Appropriate use example 2 Prior authorization used to drive preferred therapies within medical benefit Lowest cost but similar clinical results Savings >$20,000 per year per utilizing member PA announcement $$$ $

Appropriate use example 3 High returns from generally low denial rates Drug Criteria Denial Rate ROI Enbrel Specialist must prescribe Failure of standard therapies for rheumatoid arthritis and psoriasis Dose/administration limitations 5% 25:1 Botox FDA-approved indications Quantity limits 14% 15:1 Incivek & Victrelis Documented genotype I hepatitis virus infection Prescribed in combination with interferon and ribavirin 3% 39:1

Appropriate use example 4 Waste Management: Trial Drug Program for oral cancer drugs $4000 savings per impacted member Pro-rated cost share for member

Unit cost strategies Exclusive vendor contract for self administered drugs (Rx Benefit) Best discounts and most control Drug specific pricing Channel management (Rx Benefit) >96% use of specialty vendor for self administered drugs Aggressive provider contracting for professionally administered drugs (Medical Benefit) Cost advantages Pharma contracting (Rx and medical) Rebates- access and outcomes Net cost must be reviewed at drug specific level

Medical management: market myth Myth: There is a high mark-up resulting in significant profit margins on provider administered specialty medications Fact: Providers can often buy drugs at a lower cost than pharmacies Fact: Since CMS instituted ASP based reimbursement in 2005, profit margins have decreased Fact: Some plans are reversing requirements to use a specialty pharmacy

Site of care Self administered medications are usually lowest cost option Medical claim edits prevent self-administered drugs from being administered in clinics Professionally administered drugs Monitor site of care use and costs Management strategies Education, benefit design and/or site of care restrictions.

Claim controls: market myth Myth: There’s no controls for medical claims Fact: Medical claim controls in place Unclassified J-Codes require NDC detail Prior auth, quantity limits and maximum dose edits Diagnosis edits Fact: Integrated claim monitoring exists Specialty dashboard by therapeutic class Drug Utilization Reviews (DURs) High cost claim reviews and FWA checks Benchmarking

Medical claim control example Unclassified drug controls Ensures claims do not have assigned J-Codes Allows contracted payment rates Estimated $1000 savings per impacted claim Billed Proc Cd NDC Code Label Name Primary Diagnosis Code Diagnosis Code Description Date of Service Status J3590 61755000502 EYLEA 2 MG/0.05 ML VIAL 362.52 EXUDATIVE SENILE MACULAR DEGENERATION OF RETINA 01/13/2012 PAID 55513071001 PROLIA 60 MG/ML SYRINGE 733 OSTEOPOROSIS, UNSPECIFIED 01/03/2012 DENIED Touch on what J-Codes are

Specialty drug benefit parity Member cost share often varies between site of administration and/or benefit Copays vs. co-insurance, deductibles Professionally administered drugs vs. home care Recommend benefit parity for specialty drug classes to prevent adverse utilization Give example of benefit parity Rx Benefit Medical Benefit Member Cost Medical Copay Plan Drugs: 20% / $200 max No cost for drugs Use Enbrel = $200 Use Remicade = $25 office copay Benefit Parity Drugs: 20% / $200 max Use Remicade = $200

Provider incentives Specialty vendor performance guarantees: Service levels Accuracy Medication adherence rates Provider Total Cost of Care (TCOC) arrangements support specialty initiatives: lowest cost and best outcomes 80% of HealthPartners claims come from provider groups who have total cost of care incentives

Key messages Focus on integrated trends and detail by drug class Align incentives- total cost of care contracting, benefit parity Partnership between medical and pharmacy to control trend Coordinate programs with disease management, case management, and medication therapy management

Contact info Susan Cooper MPH, RPh Sr. Director, Pharmacy Services HealthPartners, Inc. susan.x.cooper@healthpartners.com phone: 952-967-5818