With prescription therapies at the center of more Americans health care, these medications have become invaluable. costs. Despite the 1.6% 1.2% 0.

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1 Rx spending up, but challenges remain By Richard Monks No products play a greater role in setting drug stores and community pharmacies apart from other retailers than prescription drugs. One % prescription growth of the most important factors in securing pharmacies increasingly important role in the country s healthcare system, prescription medications define what these stores are all about. With prescription therapies at the center of more Americans health care, these medications have become invaluable to the battle to control the nation s healthcare costs. Despite the NOMINAL AND PER CAPITA DISPENSED PRESCRIPTION GROWTH % 1.3% 3.2% 2.3% 4.5% 3.5% 1.7% 2.7% 1.1% 2.1% TRx TRx per capita 1.1% 0.7% 1.2% 1.6% 0.9% added significance prescription drugs are having in patients lives, they continue to account for only a small percentage of overall healthcare spending in the United States. According to the Pharmaceutical and Research Manufacturers Association, prescription drugs account for less than 10% of total healthcare spending. In its report Medicine use and shifting costs of health care: A review of Continued on page 58 IT IS PENNY-WISE AND POUND-FOOLISH TO FOCUS SOLELY ON THE PRICE OF A NEW MEDICINE WHILE COMPLETELY IGNORING THE VALUE IT PROVIDES TO PATIENTS AND THE HEALTHCARE SYSTEM BROADLY. John Castellani, president and CEO, Pharmaceutical Research and Manufacturers of America COMPONENTS OF CHANGE IN TOTAL SPENDING* 0.2% 1.2% 0.3% -0.1% 0.5% Generics New brands Protected brands price Protected brands value Loss of exclusivity Source: IMS Health, NPA, January 2014; U.S. Census Bureau NOMINAL AND REAL PER CAPITA SPENDING GROWTH % 9.3% Nominal medicines spending growth Real per capita medicines spending growth % spending growth U.S. 5.1% 5.6% 1.2% 4.9% 3.8% 1.9% -0.2% 5.3% 5.2% 3.1% 3.4% 1.1% 4.0% -1.0% 3.2% 1.0% % -3.5% Source: IMS Health, National Sales Perspectives, January 2014; U.S. Census Bureau July 2013; Economist Intelligence Unit, November * In billions Source: IMS Health, National Sales Perspectives, January AUGUST 26, 2014 DRUGSTORENEWS.COM

2 AFTER MANY YEARS OF SLOWING GROWTH, LARGELY DUE TO PATENT EXPIRIES, A RETURN TO GROWTH FOR MEDICINES IS LOOKED AT WITH CAUTION BY PAYERS AND POLICY MAKERS ALIKE. Murray Aitken, executive director, IMS Institute for Healthcare Informatics Continued from page 56 the use of medicines in the United States in 2013, the IMS Institute for Healthcare Informatics found that spending on prescription medications hit $329.2 billion last year, up 3.2% nominally and up from the 1% decrease in The report noted that the uptick in drug spending represents a 1% hike on a real, per-capital basis, and that per capita drug usage increased 0.9%. The authors of the IMS report noted that most industry observers remain cautious that last year s spending increase is a sign of things to come. Rather, they have suggested that the rise in drug spending in 2013 may be a one-time thing. After many years of slowing growth, largely due to patent expiries, a return to growth for medicines is looked at with caution by payers and policy-makers alike, IMS executive director Murray Aitken said in his introduction to the report released in April. Despite this view, little has changed in the dynamics of medicines spending, and in fact, the key elements of long-term savings and restraint in healthcare spending are clear. IMS said that while more people getting prescription insurance under the Affordable Care Act played a role in driving up drug spending last year after 2012 saw the largest spending decline ever, a number Continued on page 60 DISPENSED PRESCRIPTIONS BY DISPENSING LOCATION* CHANNEL RETAIL 3, , , , ,637.0 Chain stores 2, , , , ,132.0 Independent Food stores Mail service INSTITUTIONAL Long-term care TOTAL U.S. MARKET 4, , , , ,953.0 * In millions Source: IMS Health, National Sales Perspectives, National Prescription Audit, January 2014 NON-DISCOUNTED SPENDING* BY DISPENSING LOCATIONS CHANNEL RETAIL $236.2 $228.9 $236.0 $226.8 $214.9 Chain stores Mail service Independent Food stores INSTITUTIONAL $93.1 $90.2 $92.4 $88.9 $85.3 Clinics Non-federal hospitals Long-term care HMO Home health care Federal facilities Miscellaneous TOTAL U.S. MARKET $329.2 $319.1 $328.5 $315.7 $300.1 * In billions Source: IMS Health, National Sales Perspectives, National Prescription Audit, January 2014 NEW MOLECULAR ENTITIES LAUNCHED IN THE UNITED STATES, New mechanism Orphan Existing mechanism Source: IMS Institute for Healthcare Informatics, February AUGUST 26, 2014 DRUGSTORENEWS.COM

3 Continued from page 58 of other factors were equally important in the turnaround. For instance, fewer patent expirations and the development of innovative new medicines led many patients to rely on higher-priced drugs. Patent expirations last year resulted in $19 billion less in medicine spending, compared with a $29 billion reduction in 2012, IMS said. At the same time, 36 new molecular entities targeting such diseases as cancer, hepatitis C and HIV launched in 2013, the largest number in a decade. And, while healthcare reform has led more patients to utilize a wider range of wellness and preventive services and driven more people into the prescription market, the dynamics of the healthcare system during the lead up to the ACA s full implementation actu- Continued on page 62 DRIVERS OF LOSS OF EXCLUSIVITY NEGATIVE BRAND GROWTH IN U.S. BILLIONS 2012 $-2.6 $ $-3.1 $-2.0 $-12.7 PERCENT SHARE OF PRESCRIPTIONS Unbranded generics Branded generics 84% 86% 72% 74% 78% 80% 67% 57% 60% 63% 46% 50% 54% 58% 63% 66% 70% 73% 77% 80% 11% 10% 9% 9% 9% 8% 8% 7% 7% 6% Source: IMS Health, Naitonal Prescription Audit, January 2014 Spending in leading therapy areas THERAPY AREA SALES* % GROWTH Oncology $ % Antidiabetes Mental health Respiratory Pain Autoimmune $-15.6 $-1.5 Lipid regulators Antihypertensives HIV Antivirals Multiple sclerosis Products with >$1 billion in pre-expiry spending in each expiry cohort 2013 Expiries Cymbalta 2012 Expiries Plavix, Singulair, Seroquel, Lexapro, Actos, Diovan HCT* Anti-ulcerants ADHD Dermatologicals Antibacterials Nervous system disorders Anticoagulates Expiries Lipitor Zyprexa 2010 Expiries Tricor Eloxatin Vaccines Sex hormones Opthalmology Hormonal contraceptives * Diovan lost patent protection in 2012 but has failed to face generic competition, while the fixed-dose combination with hydrochlorothiazide has faced generic competition Source: IMS Health, Naitonal Sales Perspectives, December 2013 Specialty *In billions Source: IMS Health, National Sales Perspectives, January 2014 Traditional 60 AUGUST 26, 2014 DRUGSTORENEWS.COM

4 THERAPY AREAS ASSOCIATED WITH DECLINING COSTS, SUCH AS HYPERTENSION AND MENTAL HEALTH, SAW INCREASING VOLUME, PERHAPS RELATED TO REDUCTIONS IN PATIENT OUT-OF-POCKET COSTS. Murray Aitken, executive director, IMS Institute for Healthcare Informatics SELECTED THERAPY AREAS WITH LARGEST POSITIVE AND NEGATIVE CONTRIBUTIONS TO TRx GROWTH 2013 TRx in millions Continued from page 60 ally contributed to the increased spending, as patients with insurance paid higher out-of-pocket expenses in the form of deductibles and co-insurance last year. IMS noted, however, that since the start of 2014, prescription co-payments have come down to less than growth % TRx 1.1% 1.7% 5.9% 4.6% -1.0% -1.4% -1.0% $5 for more than half of all prescriptions filled. IMS pointed out that growing pressure to keep costs down could lead to even less growth Nervous Anti- Mental Lipid going forward. Pain Antibacterials system Hormonal hypertensives health regulators disorders contraceptives Researchers found that price increases for branded products added $4 billion more in spending growth Source: IMS Health, Naitonal Prescription Audit, January 2014 Continued on page 64 TOP 20 DRUGS BY TRx DRUG MAT APRIL* 2014 MAT APRIL* 2013 HYCD/APAP Lisinopril Levothyroxine SOD Simvastatin Amlodipine Besy Omeprazole (Rx) Atorvastatin Ca Metformin Hcl Amoxicillin Hydrochlorothiazid Alprazolam Azithromycin Gabapentin Furosemide Metoprolol Tart Sertraline Hcl Tramadol Hcl Fluticasone Prop Citalopram HBR Metoprolol Succin * In billions Source: IMS Health, IMS National Prescription Audit Plus, TM, April 2014 TOP 20 THERAPIES BY 2013 SALES THERAPIES 2013 SALES 2012 SALES 2013 % SHARE % GROWTH Oncology $27.9 $ % 9.2% Antidiabetes Mental health Respiratory Pain Autoimmune Lipid regulators Antihypertensives HIV antivirals Multiple sclerosis Anti-ulcerants ADHD Dermatologicals Antibacterials Nervous system disorders Anticoagulants Vaccines excl. flu Sex hormones Ophthalmology Hormonal contraceptives All other therapies * In billions Source: IMS Health, IMS National Sales Perspectives (retail and non-retail),tm, March AUGUST 26, 2014 DRUGSTORENEWS.COM

5 Continued from page 62 last year than in However, other market forces off-invoice discounts and rebates resulted in net price growth being essentially flat from 2012 to While spending on biologics and specialty drugs is outpacing the broader prescription market, especially in retail and mail-order pharmacies, the vast majority of spending on medicines continues to come from traditional small-molecule pills dispensed through retail pharmacies. IMS data showed that retail pharmacies accounted for 71.7% of prescription sales nationwide last year with pharmacies in drug stores, discount stores and supermarkets, as well as mail-order operations, dispensing more than 91% of the nearly 4.2 billion prescriptions filled last year. A growing number of those prescriptions are being filled with generics another factor that many say is contributing to the slowdown in drug spending. IMS reported that 86% of the prescriptions dispensed in 2013 were filled with a generic. A decade ago, only slightly more than half of all prescriptions were filled with generics. The continued increase in generic utilization has been good news for both retailers and patients. While carrying pricepoints well below their brandname equivalents, generic drugs provide pharmacies with higher margins. For patients and insurers, these medications are more affordable, leading many to suggest that wider use of generics is making it easier for patients to afford their medicines and driving up adherence rates. IMS reported that patients filled an average of more than 12 prescriptions at retail last year, up nearly 2% over However, people older than 65 years filled an average of 28 prescriptions annually at retail, down slightly from The disease states treated by those prescriptions had a positive impact on prescription growth last year, the report said, with two of the largest therapeutic classses antihypertensives and medicines to treat mental health issues contributing to the spike in the number of prescriptions dispensed and helping to curb runaway healthcare spending. Therapy areas associated with declining costs, such as hypertension and mental health, saw increasing volume, perhaps related to reductions in patient out-of-pocket costs, Aitken and his colleagues said. The report noted that that an ongoing shift in the types of medicines being prescribed is helping sales move forward. Spending on biologics and specialty drugs, for instance, grew by 11% to $73 billion in 2013, IMS said, while significant innovation in diabetes and a handful of other therapies helped those ar- Continued on page 66 TOP 20 CORPORATIONS BY Rx VOLUME CORPORATION MAT APRIL* 2014 MAT APRIL* 2013 Teva Mylan Actavis Novartis Endo International Lupin Laboratories Amneal Pharm Pfizer Zydus Cadila Aurobindo Dr. Reddy s Lab Boehringer Ingelheim Apotex Mallinckrodt Hetero Drugs Daiichi Sankyo AstraZeneca Sun Pharma GlaxoSmithKline Abbott * In billions Source: IMS Health, IMS National Prescription Audit Plus, TM, April 2014 TOP THERAPEUTIC CLASSES BY DISPENSED PRESCRIPTIONS THERAPIES Antihypertensives Mental health Pain Antibacterials Lipid regulators Antidiabetics Nervous system disorders Anti-ulcerants Respiratory Antithyroid Dermalotogicals Hormonal contraception ADHD Anticoagulants Vitamins and minerals Corticosteroids GI products Nasal preps, topical Other cardiovasculars Sex hormones TOTAL U.S. MARKET 4, , , , ,953.0 * In millions Source: IMS Health, National Prescription Audit, January AUGUST 26, 2014 DRUGSTORENEWS.COM

6 Continued from page 64 eas grow by 11% to $37 billion. The largest amount of spending, $128 billion, was in therapy areas with limited innovation or patent expirations. Spending in those areas, IMS said, grew by 7%. Meanwhile, price increases on protected brands contributed $20 billion to growth in 2013, up from $15.6 billion a year earlier. The rising cost of prescription drugs has rankled some critics of the pharmaceutical sector who question why the cost of medications is increasing at a rate nearly twice that of inflation. The growing use of biologics and specialty drugs has only added fuel to that fire and caused many Americans to fear having to shell out more in pharmacy co-pays in coming years. According to a study released last month, 57% of the 2,010 people polled reported that they are very concerned they will not be able to afford specialty medicines in the future, and another 35% were somewhat concerned about their ability to afford specialty drugs. The same poll, however, found that current prescription pricing sits well with consumers, as 38% of respondents said they were very satisfied with prescription drug prices and another 40% were somewhat satisfied. John Rother, chief executive of the National Coalition on Health Care, which sponsored the study, said that while the findings indicate that people feel the system has been working, and prescription insurance has helped them absorb the cost of their medications, they are fearful about where drug pricing is headed. One drug in particular has been at the heart of the growing concern about runaway drug pricing. Many of the patients and groups who have voiced concern over the direction that prices are headed point to Sovaldi, Gilead Sciences hepatitis C treatment that costs $84,000 for a 12-week treatment, or $1,000 a day. The drug maker and some health economists contend that the cost is justified because the drug has an extremely high cure rate and alternative Continued on page 68 PERCENT CHANGE IN HOSPITAL ADMISSIONS AND OFFICE VISITS Office visits Inpatient via ER Scheduled inpatient ER Outpatient -14.6% -4.2% -0.8% -3.2% -0.5% -0.6% 2.7% 3.5% 2.4% 1.8% 0.1% 3.2% % 6.2% 10.5% Source: IMS Health, National Disease and Therapeutic Index, IMS Hospital CDM, December 2013 TOP MEDICINES BY DISPENSED PRESCRIPTIONS DRUG 2013* 2012* 2011* 2010* 2009* Acetaminophen/hydrocodone Levothyroxine Lisinopril Metoprolol Simvastatin Amlodipine Metformin Omeprazole Atorvastatin Albuterol Amoxicillin Hydrochlorothiazide Alprazolam Azithromycin Fluticasone Furosemide Gabapentin Sertraline Zolpidem Tramadol Citalopram Prednisone Acetaminophen/oxycodone Ibuprofen Pravastatin TOTAL U.S. MARKET 4, , , , ,953.0 * In millions Source: IMS Health, National Prescription Audit, December AUGUST 26, 2014 DRUGSTORENEWS.COM

7 Continued from page 66 treatments, notably liver transplants, can be more expensive. Sovaldi, they said, could be a sign of what may lie ahead for all prescription medicines as more specialty drugs make their way onto the market. The National Coalition on Health Care poll found that while only 1% of those surveyed said they had taken a specialty drug during the previous year, 29% said they had not taken a medicine due to cost and 51% believed the cost of prescription drugs greatly affects insurance premiums. Meanwhile, 85% of those polled said while it was critical that drug makers continue research into finding treatments for cancer and the other diseases treated by biologics and specialty medicines, pharmaceutical companies need to become more efficient to keep prices down. Only 15% believe society should be prepared to pay whatever these medicines cost. Advocates for the country s drug companies say the high cost of cuttingedge medicines is warranted in light of the greater savings these drugs can bring to the healthcare system. It is penny-wise and pound-foolish to focus solely on the price of a new medicine while completely ignoring the value it provides to patients and the healthcare system broadly, PhRMA president and CEO John Castellani said last month. The increased attention on the cost of new medicines is being fueled by the fact that we have an outdated insurance model that is forcing patients to pay an ever-growing share of their prescription drug costs. Insurers are increasingly imposing unprecedented costsharing on patients that deters them from utilizing the medicines they need to manage or even cure their disease while covering the vast majority of costs of more expensive hospitalizations and services these medicines could prevent SPENDING (IN U.S. BILLIONS) BY THERAPY SEGMENT AND % GROWTH OVER 2012 $ % $ % $ % $ % $ % Primary care with limited innovation and limited LOE Primary care with significant LOE Specialty with recent innovation Primary care wiht significant innovation Other largely specialty with limited innovation Source: IMS Health, Naitonal Sales Perspectives, January 2014 TOP MEDICINES BY NON-DISCOUNTED SPENDING DRUG 2013* 2012* 2011* 2010* 2009* Abilify $6.5 $5.7 $5.3 $4.6 $4.0 Nexium Humira Crestor Cymbalta Advair Diskus Enbrel Remicade Copaxone Neulasta Rituxan Lantus SoloSTAR Spiriva Handihaler Atripla Januvia Avastin Lantus OxyContin Lyrica Epogen Celebrex Truvada Diovan Herceptin Gleevec TOTAL U.S. MARKET $329.2 $319.1 $328.5 $315.7 $300.1 * In billions Source: IMS Health, National Sales Perspectives, January AUGUST 26, 2014 DRUGSTORENEWS.COM

8 NEW MOLECULAR ENTITIES LAUNCHED IN 2013 Source: IMS Institute for Healthcare Informatics, Medicine Use and Shifting Costs of Healthcare 70 AUGUST 26, 2014 DRUGSTORENEWS.COM

9 OTHER NEW MEDICINE LAUNCHES IN 2013 Source: IMS Institute for Healthcare Informatics, Medicine Use and Shifting Costs of Healthcare 72 AUGUST 26, 2014 DRUGSTORENEWS.COM

10 NEW BRAND SPENDING* TOP 10 Rx COMPANIES TOP 10 Rx PRODUCTS Traditional Other specialty Oncology Multiple sclerosis $6.2 $0.5 $0.9 $4.8 $7.3 $0.1 $0.5 $0.9 $6.0 $10.4 $0.6 $1.7 $2.6 $1.9 $6.3 $11.1 $10.9 $0.9 $3.4 $4.1 $1.8 $2.1 $3.6 $ * In billions Source: IMS Health, NPA Market Dynamics, January 2014 PAYMENT TYPE Commercial third-party PERCENT DISPENSED Rx BY PAYMENT 57.0% 58.6% 61.3% 61.6% 62.9% Medicare Part D 26.0% 23.7% 20.6% 19.8% 19.9% Medicaid 9.0% 9.4% 9.5% 9.6% 8.3% Cash 8.0% 8.3% 8.6% 9.0% 8.9% TOTAL U.S. MARKET 4,208 4,139 4,022 3,995 3,953 Source: IMS Health, National Prescription Audit, XPonet, PlanTrak, January 2014 COMPANY SALES MAT APRIL 2014* % GROWTH Novartis $ % Astrazeneca Pfizer Roche Merck & Co Teva Amgen Johnson & Johnson Lilly GlaxoSmithKline TOTAL TOP 10 $ % * In billions, prescription drugs only Source: IMS Health, IMS National Sales Perspectives (retail and non-retail), TM, April 2014 TREATED PATIENTS IN SELECTED THERAPIES* Hypertension Cholesterol Antidepressants Anti-ulcerants Narcotics Antidiabetes Thyroid Anti-epileptics Contraceptives Respiratory Anticoagulants ADHD Insomnia Benign prostate hyperplasia Antipsychotics Osteoporosis Overactive bladder Parkinson s Migraine Alzheimer s DRUG SALES MAT APRIL 2014* % GROWTH Abilify $ % Nexium Humira Crestor Advair Diskus Enbrel Remicade Cymbalta Copaxone Neulasta TOTAL TOP 10 $ % * In billions Source: IMS Health, IMS National Sales Perspectives (retail and non-retail), TM, April * In millions Source: IMS Health, NPA Market Dynamics, January MEDICINES SPENDING AND GROWTH SEGMENTATION COMPARISON Brands: 71% / 1.9% Traditional retail and mail: 56% / 0.9% Total Market: $329B / 3.2% Traditional non-retail: 14% / 1.0% Branded generics: 12% / 3.1% Specialty retail and mail: 15% / 12.6% Generics: 17% / 9% Small molecules: 72% / 0.1% Biologics: 28% / 9.6% Specialty non-retail: 14% / 5.4% Orals: 52% / -1.3% Injectables: 29% / 7.3% Other: 19% / 10.2% Retail: 53% / 3.2% Mail: 19% / 3.2% Non-retail: 28% / 3.2% Source: IMS Health, National Sales Perspectives, January AUGUST 26, 2014 DRUGSTORENEWS.COM

11 PERCENT OF RETAIL PRESCRIPTIONS BY OUT-OF-POCKET COSTS, U.S. $, % 0.1% 0.1% 0.7% 2.3% 2.8% 2.1% 3.2% 5.5% 4.2% 7.2% 2.4% 4.0% 5.2% 5.6% 9.6% 13.3% 14.4% 34.8% ONCOLOGY NEW MOLECULAR ENTITIES LAUNCHED IN THE U.S., Cometriq, Gazyva, Gilotrif, Iclusig, Imbruvica, Kadcyla, Mekinist, Pomalyst, Tafinlar, Xofigo 10 Bosulif, Erivedge, Inlyta, Kyprolis, Perjeta, Stivarga, Synribo, Voraxaze, Xtandi 9 Adcetris, Caprelsa, Erwinaze, Jakafi, Xalkori, Yervoy, Zelboraf, Zytiga 8 Folotyn, Halaven, Istodax, Jevtana, Provenge 5 Arzerra, Firmagon, Votrient 3 Treanda 1 Ixempra, Tsaigna, Torisel, Tykerb 4 Arranon, Dacogen, Revlimid, Sprycel, Sutent, Vectibix, Zolinza 7 Clolar, Nexavar % 2004 Alimta, Avastin, Erbitux, Plenaxis, Tarceva, Vidaza 6 Source: IMS Institute for Healthcare Informatics, February 2014 RETAIL PRESCRIPTIONS BY AGE 25.9% Share of population Share of Rx Change in Rx per capita Prescriptions per capita Age 51.6% % 3.7% 8.9% % 61.0% % 10.0% 22.4% % % 19.5% 30.7% 19.2 National Average % 16.4% 20.1% % 4.2% 1.0% 10.0% 25.4% 31.9% % Total retail % of total 100% Commercial 60.7% Medicare Part D 26.2% Medicaid 13.1% No co-pay $0.01-$5.00 $5.01-$10.00 $10.01-$20.00 $20.01-$30.00 $30.01-$70.00 $ Source: IMS Health, Xponent PlanTrak co-pay, December % 24.9% 8.5% 4.2 Source: IMS Health, Xponent National, January 2014; U.S. Census Bureau 76 AUGUST 26, 2014 DRUGSTORENEWS.COM

12 PERCENTAGE OF WORKERS BY EMPLOYER-BASED INSURANCE TYPE, EMPLOYER-BASED INSURANCE WITH DEDUCTIBLES, % 45% 57% $1,600 $1,400 72% 78% 90% 80% 70% $1,200 $1,135 60% % % 20% PPO HMO and other types HDHP/SO Source: Kaiser Family Foundation, Kaiser Employer Health Benefits 2013 Annual Survey, January 2014 $1,000 $800 $600 $400 52% $584 10% 38% Average deductible % of workers with deductible % of workers with deductible of $, % 40% 30% 20% 10% 0% Source: Kaiser Family Foundation, January 2014 PERCENT OF RETAIL PRESCRIPTIONS ABANDONED AND REJECTED 15% 10% 5% Patient abandonment Payer rejection DISTRIBUTION OF PAYER REJECTION REASONS IN SELECTED CLASSES 5.3% 19.9% 30.8% 0% Acne Anticoagulant Antidepressant Atypical antipsychotic Cholesterol Diabetes Gout HIV Obesity Proton-pump inhibitors Rheumatoid arthiritis Sedative Average 11.7% 12.0% 20.4% Quantity limits PA required All other Not covered Step edits Refill too soon Source: IMS Health, Formulary Impact Analyzer; December 2013 Source: IMS Health, Formulary Impact Analyzer; December AUGUST 26, 2014 DRUGSTORENEWS.COM

13 PRIMARY CARE WITH LIMITED INNOVATION AND LIMITED LOSS OF EXCLUSIVITY 2013 therapy segment spending and growth SELECTED NEWER GENERATION DIABETES BRANDS New to brand and continuing prescriptions 10.4% New to brand Rx by type of payment Average out-of-pocket cost $73.26 $64.97 $53.47 $128 Bn / 6.5% 89.6% 85.7% 14.3% $25.00 $13.33 $5.00 Drivers of segment spending and growth Protected brands - Volume -1.3% New to brand Rx Continuing TRx Without coupon With coupon With coupon Without coupon High Average Low Source: IMS National Prescription Audit, IMS Consulting Group, company/product websites PERCENT OF RETAIL-DISPENSED PRESCRIPTIONS BY OUT-OF-POCKET COSTS, U.S. $ 31.7% 33.8% Protected brands - Pricing 4.3% 23.2% 21.7% 23.3% 21.6% LOE impact -1.9% New brands 0.2% 10.0% 9.6% Generics 5.1% 4.6% 4.0% 6.2% 5.5% 2.4% 2.3% % Source: IMS Health, National Sales Perspectives, January 2014 No co-pay $0.01- $5.00 $5.01- $10.00 $ $20.00 $ $30.00 Prescription out-of-pockets costs (U.S.$) $ $70.00 $ Source: IMS Health, Xponent PlanTrak Co-Pay, December AUGUST 26, 2014 DRUGSTORENEWS.COM

14 PRIMARY CARE WITH SIGNIFICANT LOSS OF EXCLUSIVITY 2013 therapy segment spending and growth $79.6 Bn / -10.2% RETAIL DISPENSED PRESCRIPTIONS BY OUT-OF-POCKET COSTS, U.S. $ 2.3% 5.5% 4.0% 9.6% 29.9% 21.6% 22.1% Drivers of segment spending and growth Protected brands - Volume Protected brands - Pricing -1.1% 6.6% 33.8% 9.4% 12.9% LOE impact -15.6% New brands 1.4% Generics -1.5% % Source: IMS Health, National Sales Perspectives, January % Share of TRx 0.0% 16.7% 9.1% Share of total out-of-pocket costs No co-pay $0.01-$5.00 $5.01-$10.00 $10.01-$20.00 $20.01-$30.00 $30.01-$70.00 $ Source: IMS Health, Xponent PlanTrak co-pay, December 2013 SAVINGS ON PRESCRIPTIONS WITH NO CO-PAY FOR COMMERCIALLY INSURED IN 2013 Increase in number of prescriptions with no co-pay (in millions) Incremental 2013 savings in patient out-of-pocket costs (U.S. $ millions) $24.8 $21.6 $483.3 $27.7 $19.5 $211.6 Contraceptives Antihypertensives Mental health Cholesterol Respiratory Total others Source: IMS Health, Xponent PlanTrak Co-Pay, December AUGUST 26, 2014 DRUGSTORENEWS.COM

15 SPECIALTY WITH RECENT INNOVATION 2013 therapy segment spending and growth PRIMARY CARE WITH SIGNIFICANT INNOVATION 2013 therapy segment spending and growth $73.3 Bn / 11.4% $36.5 Bn / 11.1% Drivers of segment spending and growth Drivers of segment spending and growth Protected brands - Volume 0.3% Protected brands - Volume 0.2% Protected brands - Pricing 7.0% Protected brands - Pricing 7.0% 11.9% LOE impact -2.1% LOE impact -5.5% New brands 5.5% New brands 3.0% Generics 0.7% Generics 1.5% % % Source: IMS Health, National Sales Perspectives, January 2014 Source: IMS Health, National Sales Perspectives, January AUGUST 26, 2014 DRUGSTORENEWS.COM

16 TRENDS IN HOSPITAL ADMISSIONS BY PAY TYPE* ER Oupatient Inpatient Scheduled inpatient Inpatient via ER ER commercial ER Medicaid ER Medicare Outpatient commercial Outpatient Medicaid Outpatient Medicare *In millions Source: IMS Health Hospital CDM, December 2013 PERCENT CHANGE IN OFFICE VISITS BY PHYSICIAN TYPE AND PATIENT AGE IN 2013 Total -0.7% 2.7% 4.9% Seniors (65+) 2.6% 6.7% 9.5% Adults (26-64) -2.1% 2.2% 5.9% Young adults (19-25) -2.7% 1.0% 3.4% Children (0-18) -1.1% 0.0% 0.2% Total Specialist Primary care Source: IMS Health, National Disease and Therapeutic Index, December AUGUST 26, 2014 DRUGSTORENEWS.COM