Meet Bob Kordella , RPh

1. Lessons Learned from Sovaldi - The Future is NOW in Specialty PharmacyAugust, 2014Presented by Bob Kordella, Chief Clinical Officer of Excelsior Solutions

2. Meet Bob Kordella, RPh Chief Clinical Officer Robert Kordella, Chief Clinical Officer, has more than 27 years of diverse experience in the pharmacy industry. Bob has practiced in retail pharmacy, in a large academic medical center setting, and, for the last sixteen-plus years, has been an effective, widely known, and well-respected leader in the PBM industry. Over the course of his tenure with LDI Integrated Pharmacy Services, National Medical Health Card Systems, CVS PharmaCare, Eckerd Health Services, and TDI Managed Care Services, Bob has led clinical and PBM operations teams that successfully managed over $4 billion in annual drug spend while limiting per member per year spending growth to levels that have simultaneously drawn industry acclaim and consistently high levels of member and payer satisfaction. Bob received his Bachelor of Science in Pharmacy from the University of Pittsburgh School of Pharmacy. He went on to receive his Masters in Business Administration from The University of Pittsburgh, Katz Graduate School of Business.

3. Past Performance is no Guarantee of Future Results • Never a good idea to drive down an interstate highway with your gaze fixed in the rear-view mirror • Sovaldi isn’t an exception, it represents the new rule • That “coming tsunami” in Specialty Pharmacy has arrived

4. What Was Different About Sovaldi? • Seeming Surprise • Higher Unit Costs • Higher Utilization • Higher Visibility • Clear Link to Medical Management • Ethical Concerns – Is It For Everyone? • Government Role, Clinical • Government Role, Economic

5. Will All New Specialty Pharmacy Drug Launches Have Impact Like Sovaldi’s? • That depends… • MAJOR: • Treats what was previously untreatable, OR • Treats what was previously treatable in such a superior way that old ways will no longer suffice • High incidence disease categories • Rationale for high cost • MODERATE: • Lower incidence disease categories, OR • Lower cost premium, OR • Less potential to unlock “pent-up demand”

6. Did Sovaldi’s Launch Surprise You? • Clinically • Financially • “Ergonomically” • Lesson Learned: Pay attention to the wealth of information at your disposal

7. Why Will Specialty Rx Unit Costs Be Higher? • Higher true costs to develop • What is a true cost? • Acthar HP example • Convenience premium • Lesson Learned: The market has shifted from costs being driven down by “small molecule” patent expirations to costs being driven up by “large molecule” innovation

8. Why Will Specialty Pharmacy Utilization Be Higher? • Unleashed pent up demand as “watchful waiting” transforms to action driven by new oral dosage forms • Lesson Learned: Oral dosage forms will drive utilization and product adoption of new Specialty Rx products higher, faster than has historically been the case – old actuarial and underwriting models are obsolete if these changes aren’t reflected I’m going to prescribe something that works like aspirin but costs a whole lot more. -A. Bacall

9. Why Will Visibility Be Greater? • Initiatives to support enhanced screenings will quietly support new Specialty Rx product launches • The early lessons of Pharma direct-to-consumer advertising will be migrated to Specialty Rx • It is in Pharma’s interests to make the pool of potential customers larger • Lesson Learned: Don’t lose control of screening initiatives

10. Why Are Pharmacy & Medical Management Linked More Closely? • The questions surrounding new Specialty Rx drugs are not as simple as, “Formulary or Non-Formulary” or “Which tier to place it on?” • It’s evaluating 84 days of Rx at $1,000 per day vs. probability and cost of a subsequent liver transplant based on current clinical condition of patient • Lesson Learned: Your predictive analytics capabilities will be as important to your future success as your clinical capabilities, and they must work more closely together than ever

11. Will Everyone Be Eligible to Receive the New Meds?...Who’s to Say? • This isn’t about rationing, per se, it’s about establishing reasonable and defensible unbiased patient characteristics that point to success from a $1,000 per day (or more), 84-day long (or longer) treatment • Lesson Learned: Ethical issues will also become more prominent as Specialty Rx costs rise

12. What Role Will Government Play Clinically? • Many State Medicaid agencies have stepped in to work with plans to develop and implement regional or state-wide utilization management criteria • Lesson Learned: Avail yourselves of this opportunity if available in your state, or seek to lead such an initiative if one doesn’t exist

13. What Role Will Government Play Financially? • Some State Medicaid agencies have stepped in to work with plans to develop and implement reinsurance initiatives to mitigate the financial ramifications of high-cost Specialty Rx products • Lesson Learned: Sustainability is a concern as more products launch

14. What’s a Plan to do… • Watch out for combination therapies in Hepatitis C • 2 separate pills/copays replaced with 1 pill/1 copay • Therapies will be significantly more expensive • $84K for Sovaldi versus $100K - $150K for combination product • Plans should not be covering all of these products for all patients. Suggestions: Evaluate formulary status, add appropriate utilization management controls and screenings • Be alert for first-in-class products that now offer drug therapy in addition to or replacing medical treatments • Anticipate increased costs due to drug regimen add-on. Not all new specialty therapies replace prior options. • Consider appropriate Utilization Management criteria • Not every drug has to be (or should be) available for all patients. Qualify patients prior to approving s:\filepath

15. Conclusion • Sovaldi has fundamentally transformed how payers must think about and deal with Specialty Pharmacy • Clinical, Economic, Ethical, Financial, and Regulatory minefields abound • The Specialty Rx pipeline is rich and more transformative products that share many of the characteristics of Sovaldi are queuing up to launch

16. Appendix The Specialty Drug Pipeline (as of August 2014) s:\filepath

17. Specialty Pipeline – Hepatitis C *Combination therapies (such as the above three) will compete with Sovaldi/Olysioand continue to increase costs

18. Specialty Pipeline – Cystic Fibrosis, Multiple Sclerosis & High Cholesterol Evolocumab has potential to redefine clinical management of high cholesterol with significant cost impacts against a mature (generic-heavy) statin category

19. Specialty Pipeline - Miscellaneous

20. Specialty Pipeline - Miscellaneous

21. Specialty Pipeline – Cancer Therapies

22. Contact For questions or more information: Martha Allen, VP Business Development Excelsior Solutions 7401 Metro Blvd, Suite 210 Edina MN 55439 mallen@excelsiorsolutions.com (o) (952) 562-5542 (m) (612) 325-7594 Please check out our team and client testimonials at: www.excelsiorsolutions.com