September 17th 2017 Board Discussion

Why consider a tender ? Is it even possible?

What is Tendering? Tendering is a process in which an entity, negotiates the lowest price for a pharmaceutical drug. In exchange for this low price, the supplier of the drug gets their product listed on the drug plan. Often, the lowest bidder becomes the sole tender meaning their drug is the only one available in an entire class of drugs to patients.

Do we need a tender to achieve better pricing? Market leader pricing? Chapter Name

Do we need a tender to achieve better pricing? Market leader pricing? Chapter Name

Market Losers RFVIII Price CSL Novo Pfizer Bayer Q4 15 .66 .79 .73 .75 .60 Q4 17 .65 .63

Top 10 Questions around a Tender 10. How do we guarantee the sale? 9. How do we keep government out of process? (sort of ) 8. Will Clinicians be able to agree on formulary? 7. Can we do it outside of the 340B program? 6. Will new technologies render the process obsolete before we get started?

Top 10 Questions around a Tender 5. Do we need a tender to accomplish the same goal? 4. How do you manage distribution? (Wholesalers, Specialty Pharmacy etal.) 3. How do we get buy-in from patient organizations/patients? 2. How do we fund the community in a tender world? 1. If we do not act will others?

BSI (Blood Systems Inc.) & HCWP (Hemophilia Center of Western Pennsylvania) Background In March 2017 Blood Systems Inc. (BSI) acquired The Institute for Transfusion Medicine (ITxM) the parent company of the Hemophilia Center of Western Pennsylvania (HCWP).  BSI is also the parent company of BioCARE and CanyonCARE Rx.   We have been working since March to integrate operations and support services for all entities.  We have identified redundancies and areas for optimization particularly between BioCARE, CanyonCARE and HCWP.  Currently, BioCARE holds inventory at ITxM and supplies factor on consignment to all of the UPMC hospitals as well as most of the other hospitals in the Pittsburgh area.

BSI (Blood Systems Inc.) & HCWP (Hemophilia Center of Western Pennsylvania) Background - Continued All of the thirteen (13) physicians at the ITxM center, including Dr Ragni, are actually UPMC employees leased to ITxM. The ITxM center currently provides many diagnostic and clinical services to the Pittsburgh area and we believe we can enhance patient care and satisfaction by adding a clinical pharmacist to our staff and expanding the services we provide.

Moving Forward There are a number of synergies between the new entities of BSI and we have been developing a plan to consolidate our services.  Specific to the HCWP, we have decided that BioCARE will provide purchasing, billing and dispensing services for the covered entity.   We would prefer to do this through the Alliance.  We believe we can do this in a very transparent way that would not interfere in any way with the strong established relationships you have with the HCWP and manufacturers.

The Plan BioCARE will hold WAC inventory at the ITxM center for both the hospitals and the HCWP.   When the HCWP needs product, BioCARE will sell it to them at the current 340B price or the Alliance sub-ceiling price. The clinical pharmacist at CanyonCARE, also located at the ITxM center, will then dispense the product to the patient.   This will allow for a true just in time inventory. The clinical staff will partner with ITxM diagnostic and testing staff to provide additional services to the HCWP, UPMC hospitals and local community.

The Plan - continued If allowed by the Alliance, BioCARE would purchase all product through the Alliance contract and provide all the necessary reporting to the manufacturers.   All volumes would still be included in the Alliance purchasing  tiers and BioCARE and the HCWP would continue to participate with the Alliance in any strategic late quarter purchases to meet volume commitments or improve pricing.