Pharmacy Trends and Management Opportunities. Kerry Bendel, R.Ph. Director of Pharmacy Medica

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1 Pharmacy Trends and Management Opportunities Kerry Bendel, R.Ph. Director of Pharmacy Medica September 14, 20 1

2 Agenda Pharmacy Trend Experience Trend Drivers and Management Opportunities Call to Action 2

3 Pharmacy Trend Experience 3

4 Rx Drugs Source: Medicare-approved Drug Discount Cards and Prescription Drug Prices, Chisholm et al, Am J Health-Syst Pharm Vol 62, July 15,

5 MCHA Pharmacy Utilization PMPM $ $ $ $ Amt Paid PMPM $ $ Rx's PMPM $ $ $ $0.00 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- 0 Amount Paid PMPM # Rx's PMPM 5

6 20 YTD MCHA Top Drug Report Cost Rank Medica BOB Cost Rank Brand Name Therapeutic Use # of Rx's Amount Paid by Plan % of Total Amt Paid Avg. Amt Paid/Rx Utilizing Members 1 1 LIPITOR High Cholesterol 10,539 $675, % $ ENBREL Rheumatoid Arthritis, Psoriasis 479 $593, % $1, EFFEXOR XR Depression 3,256 $381, % $ COPAXONE Multiple Sclerosis 257 $327, % $1, REYATAZ HIV/AIDS 496 $322, % $ PROTONIX GERD 3,027 $320, % $ ATRIPLA HIV/AIDS 292 $300, % $1, TRUVADA HIV/AIDS 463 $300, % $ PREVACID GERD 2,2 $281, % $ ADVAIR DISKUS COPD 2,036 $272, % $ LANTUS Diabetes 3,013 $270, % $ SEROQUEL Antipsychotic 1,483 $269, % $ HUMALOG Diabetes 2,294 $262, % $ LAMICTAL Anticonvulsant 1,254 $260, % $ EPZICOM HIV/AIDS 425 $257, % $ CELLCEPT Transplant Rejection 585 $248, % $ ACTOS Diabetes 1,863 $242, % $ CYMBALTA Depression 1,821 $221, % $ TOPAMAX Anticonvulsant 997 $215, % $ ONE TOUCH ULTRA TEST STRIPS Diabetes 2,493 $2, % $ KALETRA HIV/AIDS 366 $2, % $ LEXAPRO Depression 3,200 $197, % $ REBIF Multiple Sclerosis 129 $178, % $1, AVANDIA Diabetes 1,467 $168, % $ HUMIRA Rheumatoid Arthritis, Crohns 124 $165, % $1, Top 25 Drug Total 44,565 $7,146, Total Drug YTD 346,621 $19,529, Top 25 as a % of Total 12.86% 36.59% 6

7 $ Plan Paid Per Prescription $ $ $75.00 $50.00 $25.00 $0.00 Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Brand Generic 7

8 MCHA Generic Utilization 60.00% 59.00% 58.00% 57.00% 56.00% 55.00% 54.00% 53.00% Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- De c- Jan- Feb- Mar- Apr- May- Jun- 8

9 Drug Trend 15.00% 10.00% 13.41% 9.00% % 7.90% 7.20% 5.00% 5.40% 4.87% 0.00% 2.80%2.90% 1.00% ESI* Medco+ Medica MCHA -5.00% -7.31% -5.00% % (Projected) Source: *ESI 2005, 20 Drug Trend Reports + Medco 2005, 20, 20 Drug Trend Reports 9

10 Trend Drivers and Management Opportunities 10

11 Introduction to Drug Trend Drivers Pharmacy Trend Drivers Member Contribution Price Utilization Mix What factors are within our control? Benefit Coverage Demographics 11

12 Introduction to Drug Trend Drivers Pharmacy Trend Drivers Member Contribution Price Utilization Mix Benefit Coverage Strategies used to address controllable influences Formulary management Clinical and trend management Plan design Demographics 12

13 Cost and Quality Asking tough questions Can we have it all and expect someone else to pay for it? Will medicine save us despite our unhealthy lifestyles? Should we pay for care that s not recommended by experts nor based on evidence? What defines medically necessary? 13

14 Cost and Quality Making Tough Decisions Formulary Management Preferred products Prior authorization medical necessity Generic incentives Clinical / Trend Management Step therapy: Use of a generic or low cost brand prior to a higher cost brand when medically appropriate. Quantity level limits: Supports benefit design, member cost share and prevents waste Disease and care management: Chronic condition coaching Plan Design Cost Share Network Restrictions Coverage exclusions or restrictions by category 14

15 Intervention Targets Members Physicians Pharmacists Generic incentives Formulary notifications Online self-service Disease education and management Specialty pharmacy services Wellness and lifestyle programs Formulary Interventions Pay for performance Generic samples Retrospective DUR Brand & generic substitution Therapeutic substitution On-line point-of-service edits 15

16 Impact of Managing the Formulary MCHA Statin Utilization Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- LIPITOR SIM VASTATIN VYTORIN CRESTOR LOV AST AT IN PRAVASTATIN SODIUM PRAVACHOL LESCOL LESCOL X L M EVACOR ZOCOR 16

17 A Call to Action 17

18 The Impact of Decision Making The True Cost of a Prescription Decision Nexium: $185 Prilosec OTC: $20 $165 per month NPV* = $17,172 The new math equation is: Prilosec OTC + = Nexium $17,172 * Net Present Value 18

19 The Obesity Burden 64%: Increase in diabetes patients, ,000%: Increase in obesity-related costs, $1,244: Annual health care spending difference, normal weight v. obese adults. Source: Health Affairs, June 2005 % of U.S. Health Spending On Obesity-linked Conditions 19

20 Specialty Pharmacy Cost 1 IMS Health, Company Reports and JP Morgan estimates 2 Ernst & Young, Competitive Growth, Growing Competition, Beyond Borders

21 MEDICA 21

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