UPM - University Prescription Management Sponsored by: Creighton University School of Pharmacy and Health Professions

UPM – Mission Statement “A fair, balanced, and understandable approach to pharmacy benefit management that aligns with and represents the interests of plan sponsors” UPM - University Prescription Management

Problem worth solving Traditional models of PBM have proven to be expensive, confusing and rarely aligned to a plans' needs. The needs for plans are many and their PBM choices are few. We introduce the ethical, practical and viable solution to this area of healthcare! UPM - University Prescription Management

Our solution VUCA describes the PBM industry, Volatility, Uncertainty, Confusion and Ambiguity. We will transform this with Vision, Understanding, Clarity and Agility using transparency and world class analytics. We desire to be the change maker of the market. UPM - University Prescription Management

Typical PBM Services Retail pharmacy network Mail service pharmacy  Employer owned pharmacy as preferred vendor Plan design Customer service help de sk (7x24x365) UPM - University Prescription Management

PBM Services (continued) Clinical Management (DUR/DUE/DSM/MTM) Specialty pharmacy integration Formularies Manufacturer rebates/discounts Data Analytics UPM - University Prescription Management

Specialty Drugs * In 2014, spending on Rx drugs grew 13.1%, largest increase since 2001 Specialty drugs are complex molecules derived from living biological sources. These include vaccines, gene therapies, recombinant protein products, antibodies and hormones In 2014, Specialty Drugs represented 1% of all prescriptions written In 2014, Specialty Drugs accounted for 32% of all prescription drug spending! UPM - University Prescription Management * AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015

Specialty Drugs * UPM - University Prescription Management MedicationIndication for useMonthly cost for indication Provenge ® Metastatic prostrate cancer$105,800 Sovaldi ® Hepatitis C$29,900 Olysio ® Hepatitis C$23,600 Rituxan ® Non-Hodgkin’s lymphoma$21,900 Gleevec ® Chronic myeloid leukemia$11,900 Avastin ® Metastatic colorectal cancer$11,600 Revlimid ® Multiple myeloma$9,300 * AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015

Health Plan Efforts to Manage Specialty Drugs * Integration and Coordination of pharmacy and medical benefits Policies to maximize treatment adherence Growing role of specialty pharmacies Utilization and pharmacy management Clinical pathway and bundled payment arrangements UPM - University Prescription Management * AHIP Issue Brief, Specialty Drugs: Issues and Challenges, July 2015

Does your PBM provide value? UPM - University Prescription Management

Does your PBM make money? UPM - University Prescription Management

How do PBMs make Money?? Admin fees per claim Admin fees per employee (PEPM) Spread Pricing Ownership of mail service pharmacy Manufacturer Rebates Selling claims data UPM - University Prescription Management

How do PBMs make Money?? Admin fees per claim  Fee for service  $ $2.00 per claim paid Admin fees per employee (PEPM)  Capitation arrangement  $ $5.00 PEPM UPM - University Prescription Management

How do PBMs make Money?? Spread Pricing  Brand name (AWP = $100) Employer: AWP – 15% (charge = $85) Pharmacy: AWP – 17% (paid = $83) $2 difference kept by PBM! UPM - University Prescription Management

How do PBMs make Money?? Spread Pricing  Generic (MAC based pricing) Example: alprazolam 0.25mg #90 Employer: charge = $17.00 Pharmacy: paid = $4.00 $13.00 difference kept by PBM! UPM - University Prescription Management

How do PBMs make Money?? Spread Pricing  Generic (MAC based pricing) Example: ranitidine 300mg #90 Employer: charged = $ Pharmacy: paid = $15.00 $ difference kept by PBM! UPM - University Prescription Management

How do PBMs make Money?? Spread Pricing  Brand name Example: Xarelto ® 20mg #30 Employer charged $706 Pharmacy paid $193 $513 difference kept by PBM! UPM - University Prescription Management

Spread Pricing Research 2004 – Creighton researchers *  Pilot project: 2 employers; 129 transactions  Average spread per transaction All : $12.29/transaction Brand only: $4.65/transaction Generic only: $23.45/ transaction UPM - University Prescription Management * Garis RI and Clark BE. “The spread: pilot study of an undocumented source of Pharmacy Benefit Manager Revenue,” J Am Pharm Assoc. 2004;44:15–21.

Spread Pricing Research 2008 – Creighton researchers *  Data source: 2 employers; 20,376 transactions  Average spread per transaction All : $1.82/transaction Brand only: $0.07/transaction Generic only: $4.20/ transaction UPM - University Prescription Management * Siracuse MV, Clark BE, Garis RI. “Undocumented source of Pharmacy Benefit Manger Revenue,” Am J Health-Syst Pharm 2008; 65:552-7.

Spread Pricing 2013 Creighton experience *  Average spread per transaction All claims: $1.00/transaction UPM - University Prescription Management * Study done to compare a known competitor with their suggested contract values. Spread is in addition to a PEPM fee of $3.50. The goal is a $0.00 spread with a fully disclosed admin fee.

Spread Pricing 2014 – Wharton School U of Penn. * Brand Names: “…For example, the PBM may reimburse pharmacies for drugs at AWP minus 18% plus a $1 dispensing fee. These payment rates at which PBMs reimburse pharmacies are not generally known to plan sponsors. The PBM contracts for reimbursement from the sponsor at a somewhat smaller discount off AWP, say AWP minus 16% plus a $2 administration fee per script. The difference between the sponsor’s payment rate to the PBM and the PBM’s payment rate to the pharmacy is known as the ‘retail spread’ and is a significant source of PBMs’ net revenue.” Generics: “… each PBM sets its own MAC reimbursement prices for pharmacies. According to the PBMI Report, the majority of PBM contracts with plan sponsors (75%) bill for generics based on MAC pricing, and the remainder bill for generics based on a discount off AWP. PBMs can earn a spread on generics dispensed through retail pharmacies, as they do on brand drugs by billing a larger MAC to the sponsor and paying the pharmacy a smaller MAC.” UPM - University Prescription Management * Danzon PM. “2014 ERISA Advisory Council - PBM Compensation and Fee Disclosure,” Report to the United States Secretary of Labor, November 2014.

Ownership of mail service pharmacy 2009 Creighton researchers * Analysis of 484,987 claims from 5 employers  Copay incentive to use mail service Higher mail service utilization Higher cost to plan sponsor  No copay incentive to use mail service Lower mail service utilization Lower cost to plan sponsor UPM - University Prescription Management * Clark BE, Siracuse MV, Garis RI. “A comparison of mail-service and retail community pharmacy claims in 5 prescription benefit programs,” Research in Social and Administrative Pharmacy 5; 2009:

How do PBMs make Money?? Manufacturer Rebates  Flat rebates  Performance rebates  What proportion of rebate dollars are passed on to plan sponsors? UPM - University Prescription Management

How do PBMs make Money?? Selling claims data *  To data warehouse (broker)  Broker sells to pharmaceutical industry  Used by pharmaceutical industry to maximize sales and marketing UPM - University Prescription Management * Claims data are de-identified to comply with HIPAA; prescriber information stays with data

Other Current Issues “Turing Pharmaceuticals Retreats From Plan To Raise Price Of Daraprim” from September 24, 2015 from $13 to $750 per tablet! mp3/npr/atc/2015/09/ _atc_turing_pharmaceuticals_retreats_from_plan_to_raise_price_of_daraprim.mp3?dl=1 Glumetza ® 1000mg ER  June 1, 2015: AWP = $14.84 per tablet  July 1, 2015: AWP = $89.09 per tablet Compare to metformin 1000mg ER  AWP = $10.47 per tablet UPM - University Prescription Management

University Prescription Management (UPM) – PBM consultants J. Chris Bradberry, PharmD Professor and Dean Mark V. Siracuse, PharmD, PhD Associate Professor and Vice Chair Creighton University School of Pharmacy and Health Professions Center for Health Services Research and Patient Safety Omaha, NE Phone: UPM - University Prescription Management

University Prescription Management (UPM) – PBM consultants  information file should be in Excel or Access. Required fields: Date dispensed Prescription number NDC (National Drug Code) Drug name and strength Quantity dispensed Days supply NABP # or NCPDP # (Pharmacy Provider ID number) Generic Flag (Generic/Brand identifier) Ingredient Cost (Amount reimbursed to pharmacy for ingredient) Dispensing fee (Amount paid to pharmacy for dispensing) Co-payment Amount (Co-payment paid by member) Reversal Flag (Reversal/Credit of transactions = Return to stock) Specialty drug flag (if available)  Need 3 months of prescription claims data UPM - University Prescription Management

University Prescription Management (UPM) – PBM consultants J. Chris Bradberry, PharmD Professor and Dean Mark V. Siracuse, PharmD, PhD Associate Professor and Vice Chair Creighton University School of Pharmacy and Health Professions Center for Health Services Research and Patient Safety Omaha, NE Phone: UPM - University Prescription Management