1. Promoting high quality, cost effective drug therapy throughout the Military Health System Industry Teleforum August 2010 P&T By Dr. Jeremy Briggs PharmD, MBA, Lean Six Sigma Black Belt PEC Industry Liaison

2. DoD Pharmacoeconomic Center www.pec.ha.osd.mil DoD Condition Set Provisions 1. All generic agents may be on the Uniform Formulary. 2. All generic agents are eligible to be used before the step therapy and are not included in condition set scenarios bids. 3. Generic agents may be on the BCF and are not included in condition set scenarios bids. 4. Generic agents will be used in cost analysis at the lowest available price. 5. Brand name agents with generic equivalents are only available if medically necessary. The pharmacy benefits program mandates substitution of generic drugs listed with an "A" rating in the current Approved Drug Agents with Therapeutic Equivalence Evaluations (Orange Book) published by the FDA unless sufficient clinical justification from the prescriber is submitted. 6. If a generic formulation of a branded product becomes available, TRICARE Management Activity reserves the right to use the generic formulation of the branded product as the step-preferred agent. 7. Basic Core Formulary agents are approved by generic name, dose and form. 8. TRICARE Management Activity reserves the right to evaluate a combination agent’s merit either as a single entity or relative to the component agents. 9. Step-preferred agent(s) are agents available prior to the step therapy criteria process. 10. Step therapy, a prior authorization process, would require all new patients to complete an adequate trial of the step-preferred agent(s) before a non-step-preferred agent is provided to a new user through an MTF pharmacy, the Mail Order, or a Retail network pharmacy. Patients must have tried an agent in the class in the previous 180 days in order to be excluded from the prior authorization process. 2

3. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Matrix Bidding New concept to give manufacturers the ability to bid on more discrete variables instead of being tied to a story condition set. 3

4. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Bidding Differences Old Story: Antilipidemics 1 Use: One to two branded agent(s) on the UF with Zero to one of the branded agent(s) of the same line on the BCF. Step therapy applies, one branded agent will be designated as a step- preferred agent and available prior to step therapy. (1-2 branded UF, one step-preferred branded agent will be available prior to Step Therapy, 0-1 branded BCF ) Matrix Discrete Variables: MTF: –BCF no step/before step –ECF no step/before step –UF not BCF Mail: –T1 no step/T2 no step –T1 before/T2 after step –T2 before/T2 after step Retail: –T1 no step/T2 no step –T1 before/T2 after step –T2 before/T2 after step 4

5. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Condition Set Families Condition Set # Category One of (X) Number of brand agents Mail Order Price NDC 10421AA1 Tier 1 No Step Therapy1 10421BA1 Tier 2 No Step Therapy1 10421BA2 2 10421BA3 3 or more 5 10431AA1Tier 1 & Before Step Therapy1 10431BA1Tier 2 After Step with Tier 1 preferred agent(s) before step1 10431BA2 2 10431BA3 3 or more 10441AA0Tier 2 & Before Step Therapy0 10441AA1 1 10441AA22 10441BA1Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more Condition Set #Category One of (X) Number of brand agents Military Treatment Facility Price per NDC 10411AA1Basic Core Formulary No Step Therapy1 10411AA2 2 10411BA1Basic Core Formulary Before Step Therapy1 10411BA2 2 10411DA1Uniform Formulary but not BCF or ECF(Local MTF P&T decision whether to put on formulary)1 10411DA2 2 10411DA3 3 or more

6. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Zero 6 10441AA0 Tier 2 & Before Step Therapy0 10441AA1 1 10441AA2 2 10441BA1 Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more

7. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Step Therapy Definition: Step therapy, a prior authorization process, would require all new patients to complete an adequate trial of the step-preferred agent(s) before a non-step-preferred agent is provided to a new user through an MTF pharmacy, the Mail Order, or a Retail network pharmacy. Patients must have tried an agent in the class in the previous 180 days in order to be excluded from the prior authorization process. Before Step: Preferred agent(s) After Step: Non-step-preferred agent(s) Step Therapy Addendum: ACE Inhibitor(s) are preferred agents that must be tried before step Step Therapy Addendum: ARB (Brand or Generic) will be before step 7

8. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Military Treatment Facility Blanket Purchase Agreement 8 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set # Category One of (X) Number of brand agents Military Treatment Facility Price per NDC 10411AA1 Basic Core Formulary No Step Therapy1 10411AA2 2 10411BA1 Basic Core Formulary Before Step Therapy1 10411BA2 2 10411EA1 Extended Core Formulary No Step Therapy1 10411EA1 Extended Core Formulary Before Step Therapy1 10411DA1 Uniform Formulary but not BCF or ECF(Local MTF P&T decision whether to put on formulary)1 10411DA2 2 10411DA3 3 or more

9. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Mail Order Blanket Purchase Agreement Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set # Category One of (X) Number of brand agents Mail Order Price NDC 10421AA1 Tier 1 No Step Therapy1 10421BA1 Tier 2 No Step Therapy1 10421BA2 2 10421BA3 3 or more 10431AA1 Tier 1 & Before Step Therapy1 10431BA1 Tier 2 After Step with Tier 1 preferred agent(s) before step1 10431BA2 2 10431BA3 3 or more 10441AA0 Tier 2 & Before Step Therapy0 10441AA1 1 10441AA2 2 10441BA1 Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more 9

10. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Retail Voluntary Agreements for TRICARE Retail Pharmacy Refunds (VARR) 10 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set #Category One of (X) Number of brand agents Mandatory Agreement Retail Refund (MARR) per NDC Package Voluntary Agreements for TRICARE Retail Network Rebates (VARR) per NDC Package (In Addition to MARR) Total Offered Retail Refund per NDC Package (MARR + VARR) 10421AA1 Tier 1 No Step Therapy1 10421BA1 Tier 2 No Step Therapy1 10421BA2 2 10421BA3 3 or more 10431AA1 Tier 1 & Before Step Therapy1 10431BA1 Tier 2 After Step with Tier 1 preferred agent(s) before step1 10431BA2 2 10431BA3 3 or more 10441AA0 Tier 2 & Before Step Therapy0 10441AA1 1 10441AA2 2 10441BA1 Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more

11. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Tier 1 New variable to bid on: –Historically large market share with near generic pricing 11

12. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Military Treatment Facility 12 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ACE Inhibitor(s) are preferred agents that must be tried before step Condition Set # CategoryOne of (X) Number of brand agentsMilitary Treatment Facility Price per NDC 10411DB1 Uniform Formulary but not BCF or ECF(Local MTF P&T decision whether to put on formulary)1 10411DB2 2 10411DB3 3 or more NDCDrug NameStrengthDosage FormPackage Size Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set # Category One of (X) Number of brand agents Military Treatment Facility Price per NDC 10411AA1 Basic Core Formulary No Step Therapy1 10411AA2 2 10411BA1 Basic Core Formulary Before Step Therapy1 10411BA2 2 10411DA1 Uniform Formulary but not BCF or ECF(Local MTF P&T decision whether to put on formulary)1 10411DA2 2 10411DA3 3 or more

13. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Mail Order 13 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ACE Inhibitor(s) are preferred agents that must tried before step Condition Set # Category One of (X) Number of brand agentsMail Order Price NDC 10431BB1 Tier 2 After Step with preferred agent(s) before step1 10431BB2 2 10431BB3 3 or more Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set # Category One of (X) Number of brand agentsMail Order Price NDC 10421AA1 Tier 1 No Step Therapy1 10421BA1Tier 2 No Step Therapy1 10421BA2 2 10421BA3 3 or more 10431AA1Tier 1 & Before Step Therapy1 10431BA1 Tier 2 After Step with Tier 1 preferred agent(s) before step1 10431BA2 2 10431BA3 3 or more 10441AA0Tier 2 & Before Step Therapy0 10441AA1 1 10441AA22 10441BA1 Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more

14. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Retail 14 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ACE Inhibitor(s) are preferred agents that must tried before step Condition Set #Category One of (X) Number of brand agents Mandatory Agreement Retail Refund (MARR) per NDC Package Voluntary Agreements for TRICARE Retail Network Rebates (VARR) per NDC Package (In Addition to MARR) Total Offered Retail Refund per NDC Package (MARR + VARR) 10431BB1 Tier 2 After Step with preferred agent(s) before step1 10431BB2 2 10431BB3 3 or more

15. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Retail 15 Renin-Angiotensin Antihypertensives (RAAS) Step Therapy Addendum: ARB (Brand or Generic) will be before step Condition Set #Category One of (X) Number of brand agents Mandatory Agreement Retail Refund (MARR) per NDC Package Voluntary Agreements for TRICARE Retail Network Rebates (VARR) per NDC Package (In Addition to MARR) Total Offered Retail Refund per NDC Package (MARR + VARR) 10421AA1 Tier 1 No Step Therapy1 10421BA1 Tier 2 No Step Therapy1 10421BA2 2 10421BA3 3 or more 10431AA1 Tier 1 & Before Step Therapy1 10431BA1 Tier 2 After Step with Tier 1 preferred agent(s) before step1 10431BA2 2 10431BA3 3 or more 10441AA0 Tier 2 & Before Step Therapy0 10441AA1 1 10441AA2 2 10441BA1 Tier 2 After Step with Tier 2 preferred agent(s) before step1 10441BA2 2 10441BA3 3 or more

16. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Military Treatment Facility 16 Ophthalmics 1Subclass: Mast Cell Stabilizer Step Therapy Addendum: None Condition Set # Category One of (X) Number of brand agents Military Treatment Facility Price per NDC 10414AB0 Basic Core Formulary No Step Therapy0 10414AB1 1 10414DB1 Uniform Formulary but not BCF or ECF(Local MTF P&T decision whether to put on formulary)1 10414DB2 2 10414DB3 3 or more

17. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Mail Order 17 Ophthalmics 1: Mast Cell Stabilizer Step Therapy Addendum: None Condition Set # Category One of (X) Number of brand agentsMail Order Price NDC 10424AA1 Tier 1 No Step Therapy1 10424BA1 Tier 2 No Step Therapy1 10424BA2 2 10424BA3 3 or more

18. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Retail 18 Ophthalmics 1 Subclass: Mast Cell Stabilizers Step Therapy Addendum: None Condition Set #Category One of (X) Number of brand agents Mandatory Agreement Retail Refund (MARR) per NDC Package Voluntary Agreements for TRICARE Retail Network Rebates (VARR) per NDC Package (In Addition to MARR) Total Offered Retail Refund per NDC Package (MARR + VARR) 10424AA1 Tier 1 No Step Therapy1 10424BA1 Tier 2 No Step Therapy1 10424BA2 2 10424BA3 3 or more

19. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Recent Lessons Learned Wrong price No bid placed 19

20. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Questions Face-to-face meeting after clinical presentation Teleconference Other designated times 20

21. DoD Pharmacoeconomic Center www.pec.ha.osd.mil Future Electronic bidding –Company selection Username Password Pin –Coming in November 21