1. The New Face of Preferred Pharmacy Networks: What you need to know Chris von Heymann Senior Vice President September 8, 2011

2. INTRODUCTION 3 PRIMARY STEPS TO CONSIDER: 1)SELECTING THE RIGHT PHARMACY PARTNER(S): WHAT EXACTLY IS PREFERRED IN “PPN”? 2)ENSURING UPTAKE AMONG PLAN MEMBERS 3)ENSURING THE ONGOING SUCCESS OF THE NETWORK

3.  Which basic type of pharmacy is preferred to your organization: retail pharmacy, mail order/central dispensing pharmacy, or both?  Retail pharmacy incentives (e.g. discount cards for front shop)  Lower dispensing fees  90-day fills for maintenance medications – what about weekly Dispills/Dosettes?  Key consideration: will your plan realize cost savings only when specific milestones are reached, or right out of the starting gate at 1 st dollar? WHAT EXACTLY IS PREFERRED IN “PPN”?

4.  PRICING & INGREDIENT COSTS 1)Ensure everyone is speaking the same language: proposed cost structures based on MLP vs. AAC vs. AWP 2)What is being offered, and what does it mean to you? Do your due diligence, know your numbers CASE EXAMPLE #1: National group, $500K+ annual spend DRUG TYPEREGIONNON-PREFPREFERRED BRANDRegion AMLP + 17.6%MLP + 13.6% Region BMLP + 9.4%MLP + 22.2% GENERICRegion AMLP + 13.4%MLP + 8.9% Region BMLP + 6.3%MLP + 24.4%

5. WHAT EXACTLY IS PREFERRED IN “PPN”?  PRICING & INGREDIENT COSTS …cont’d… 3)Determine how agreed upon cost structure will be implemented and adhered to – at the pharmacy provider level, adjudicator level, or both? CASE EXAMPLE #2: ASO plan, 1 province, $4M+ annual spend PHARMACYDRUG TYPESUBMITTED PREFERRED ABrandMLP + 10.0% GenericMLP + 8.0% PREFERRED BBrandMLP + 17.1% GenericMLP + 10.0%

6. WHAT EXACTLY IS PREFERRED IN “PPN”?  ENHANCED PHARMACY SERVICES Programs to facilitate adherence with therapy among plan members Screening programs/clinics in the workplace Disease statement management programs Health & wellness, and education programs NOTE: Key for pharmacy here is that these services can be directly funded by the savings realized by other preferred provisions, facilitating the business case and determination of ROI of these enhanced services for employers.

7. ENSURING UPTAKE AMONG MEMBERS  PLAN DESIGN IS CRITICAL – YOU CAN’T HAVE ONE WITHOUT THE OTHER If the financial incentive for members isn’t there, and if that incentive isn’t significant enough, then desired movement of prescriptions over to PPN will not occur PDD card vs. manual reimbursement incentive – once again, due diligence is required  COMMUNICATION & PROMOTION TO EMPLOYEES

8. ENSURING ITS ONGOING SUCCESS  ROUTINE MONITORING IS KEY For compliance with preferred arrangements among all pharmacies within network For desired change in plan member Rx filling behaviour; if goal not being met, further adjustments in plan design & coverage may be required CASE EXAMPLE #3: National group, $2.5M annual spend Two-tiered design, per Rx deductible PPN structure (retail + mail) After first 6 months: only 7% of claimants using preferred retail and 1.2% of claimants using mail order option Management re-evaluating incentives

9. QUESTIONS Chris von Heymann, RPh, B.Sc.Phm. Senior Vice President Cubic Health Inc. cvonheymann@cubichealth.ca 416.203.1446