1. State of the pharmacy market
Vrinda Rio, PharmD
Principal, Mercer
March 15, 2019

2. Mercer today MAKING A DIFFERENCE for 70+ years
HEALTH —
CAREER —
MERCER
WEALTH —
28,000 CLIENTS
+21,000colleagues
140 countries
110 million lives touched

3. Top DRUG spenders per capita ($US), 2016
Source: Organisation for Economic Co-operation and Development

4. US HealthCare Expenses by state, 2014

5. Macro trends SHAPING pharmacy TODAY
Market consolidation and expensive new drugs and treatments are driving cost
As plan designs shift cost to employees, some struggle to afford the healthcare they need
New solutions are flooding onto the market – but employee engagement remains elusive
The line between medical and pharmacy is blurring, making it imperative to manage care holistically across both benefits
Greater focus on the current rebate structure could lead to a change and may shift contract dynamics
Today’s on demand consumer may shift health trends towards connected care technology

6. STATE OF THE MARKET key MARKET trend: capitalizing on change
Understand the carrier landscape, prepare to capitalize and take action accordingly
TODAY’S REALITY
TOMORROW’S POSSIBILITIES
How will those with more market leverage pass savings onto Plan Sponsors?
How will the vertical integration promise result in better care delivery and outcomes?
How will new entrants and solutions focused on technology lead to a better member experience?
What will be the next deal?

7. STATE OF THE MARKET key MARKET trend: focusing on PHARMACY
Actively manage today’s programs, and understand the near and long-term impacts of the evolving market
TODAY’S REALITY
TOMORROW’S POSSIBILITIES
What if rebates cease to exist – how will this impact Plan Sponsors and the pharmacy financial equation?
Specialty drugs impact less than 2% of people, but are expected to be half of all pharmacy spend by 2020 – how can these costs be managed?
Life-saving/changing drugs – are there limits to how much a Plan Sponsor should be obligated to pay for a cure?
Traditional rebate model is being challenged by the government and new delivery models
Specialty medications accounted
for 70% of pharmacy cost growth in the US over the past five years
Specialty pipeline continues to grow – with new specialty medications expected to be approved each year

8. KEY EMPLOYER CHALLENGES EMERGING TRENDS & ACTION OPPORTUNITIES
The prescription drug landscape managing drug costs in a dynamic marketplace
KEY EMPLOYER CHALLENGES
PBM Market Consolidation
Rising Drug Costs
Specialty Pharmacy/ High Cost Claims
Rebates
Behavioral Health
EMERGING TRENDS & ACTION OPPORTUNITIES
Pharmacy Governance
Formulary, Utilization Management, Network
Site of Care
Evolving Payment Models
Condition Management