1 Coverage and Payment for Biotechnology and Medical Devices Academy Health June 4, 2007 Thomas Weisman, MD, MBA Ohio Medical Director Anthem Blue Cross and Blue Shield

2 Agenda P & T Process Cost of Care Committees Value Chain Transparency Examples Herceptin Specialty Pharmacy

3 P & T Process Clinical Review Committee (CRC) Majority external representation Assessment of efficacy only Superior Equivalent Inferior

4 P & T Process Value Added Committee (VAC) Internal representatives Cannot disadvantage superior medication Within restrictions, business needs rule

5 Cost of Care Committees Provider Relations Medical Directors Actuaries Support areas PBM Behavioral Health Operations

6 Cost of Care Committees State level (OH) Central Zone (OH, IN, KY, MO, WI) Enterprise

7 Value Chain Deconstruct and examine each step/activity Is this an activity a customer would pay extra for? Internal activities Device/Pharmaceutical

8 Transparency Cost and (limited) quality information 38 elective services Cost Event or shoebox methodology Results presented in bands Can see impact on member responsibility Quality Volume of cases Access to Subimo information

9 Transparency Consumer Directed Health Plans (CDHP) Increasing consumer cost sharing Increasing consumer engagement Increasing market forces Increasing consumer focus on value chain

10 Herceptin Monoclonal antibody Useful in HER2 positive breast cancer Useless in HER2 negative breast cancer Cardiotoxic Expensive Weekly infusions, either alone or in combination chemo regimens

11 Herceptin J9355 Summary by Financial Arrangement (OH, IN, KY, MO, WI) Total 23,618,980 After rem Medicare claims 18,668,905 After rem NASCO ASO 8,024,165 Tot allowed amt for Fully Ins (after rem other ASO) 5,609,691

12 Herceptin United Health Care Pilot (anecdotal information) demonstrated that % of women receiving Herceptin did not have documentation of positive HER2 gene test

13 Herceptin Proposal Activate CG-DRUG-02 as of 7/30/2007no grandfathering Require documentation of positive HER2 and attestation of normal cardiac function Letter to all oncologists Separate letter to oncologists with members on Herceptin Rapid update

14 Herceptin Proposal Create Provider Tool and Desktop Training for MDs and for RNs in Pre-D, Med Review and Precert Provider Relations, Med Review, Pre-D and Specialty Rx sign-on Track PMPM (absolute and trend) compared to states not managing Herceptin Track denial rates

15 Specialty Pharmacy Pilot in California, Colorado and Nevada 84 (soon 87) medications require guideline- based authorization for payment Some medications (by volume, 5% of above) will require purchase from PrecisionRx Specialty Services including: Hemophilia factors TNF inhibitors ( but not Remicade) Synagis Somatotropins and Gonadotropins Hyaluronic acid derivatives Interferons Enzyme replacement products

16 Conclusion Health plan decision-making will be driven by concerns for: Affordability Patient safety Value Transparency and Consumer engagement will reinforce above trends Initial efforts focused on newer agents and low hanging fruit

17 Trademark Information Anthem Blue Cross and Blue Shield is the trade name of: In Colorado: Rocky Mountain Hospital and Medical Service, Inc. In Connecticut: Anthem Health Plans, Inc. In Indiana: Anthem Insurance Companies, Inc. In Kentucky: Anthem Health Plans of Kentucky, Inc. In Maine: Anthem Health Plans of Maine, Inc. In most of Missouri: RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC), and HMO Missouri, Inc. RIT and certain affiliates administer non-HMO benefits underwritten by HALIC and HMO benefits underwritten by HMO Missouri, Inc. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. In Nevada: Rocky Mountain Hospital and Medical Service, Inc. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. In Ohio: Community Insurance Company. In most of Virginia: Anthem Health Plans of Virginia, Inc. In Wisconsin: Blue Cross Blue Shield of Wisconsin ("BCBSWi") underwrites or administers the PPO and indemnity policies; Compcare Health Services Insurance Corporation ("Compcare") underwrites or administers the HMO policies; and Compcare and BCBSWi collectively underwrite or administer the POS policies. Independent licensees of the Blue Cross Blue Shield Association. ® ANTHEM is a registered trademark. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association