Health Care Reform: Legislative Overview & Impact on Market Access BIOCOM - April 12, 2011

1. Health Care Reform: Legislative Overview & Impact on Market AccessBIOCOM - April 12, 2011 Jennie Best Director Health Economics and Outcomes Research, Amylin

2. Agenda • Health Care Reform -- Patient Protection and Affordable Care Act (PPACA) – Impact on Biopharmaceutical Companies and Other Health Care Segments • HCR Opportunities/Challenges • Discussion

3. 2010 Health Reform Implementation Timeline 2018 Snapshot of Major Health Care ReformProvisions • Insurance Reforms • 2010 protections, including high-risk pool • 2014 expanded reforms • Individual mandate • State-based exchanges & tax subsidies • National long-term care program • Tax Reforms • Increase MC tax for high-income earners • Limit FSAs • Tax high-cost plans • Employer and individual penalties • Industry excise taxes • Employers • Small business tax credit • Eliminate Part D employer deduction • Penalties for employers with more than 50 FTEs not offering adequate coverage • Auto-enrollment & wait period limits • Prescription Drugs • Medicaid rebates • Improved Medicare Rx coverage, incl. branded discounts • Follow-on biologics • Industry excise tax • Comparative Effectiveness Research (CER) • Medicaid • Expand eligibility to 133% FPL • Increase primary care reimbursement • Enhance federal matching funds • Streamlined enrollment • Quality Improvement • National QI strategy • CMS Innovation Center • Pilots on bundled payments, medical home, ACOs • Expand Physician Quality Reporting Initiative (PQRI) • Workforce • Advisory Committee to develop national strategy • Loans & scholarships to increase supply and training • Redistribute GME slots • Medicare • $523b payment reductions • Improve Part D & prevention coverage • Increase Part B & D premiums • Independent Payment Commission (IPAB)

4. Impact on Payers • Financial Challenges • Medicare Advantage payment cuts (-$206 billion) • New fees (-$60 billion) • Medical loss ratio minimums • New Operating World • Rating and coverage • Reporting and transparency • Market Opportunities? • Individual and employer mandates • Medicaid expansions • State exchanges • Government Help • Comparative effectiveness research • Prevention/wellness

5. Combined Impact of PPACA Taxes and Reimbursement Cuts by Health Care Sector Source: MVC Analysis of March 20, 2010 CBO and Joint Committee on Tax Data; Note Rx data based on net CBO/JCT score and does not account for industry impact of donut hole discount.

6. When Does the Bill Take Effect? $250 Rebate for Part D Donut Hole Extend Dependent Coverage Medical Loss Ratio Employer & Individual Mandates Prohibition of Lifetime Limits Center for Payment Innovation Creation of High-Risk Pool Health Insurance Market Reforms Sunshine Reporting Begins Tax On High-Cost Health Plans (2018) Establish CER Entity MA Payments Frozen Exchanges Begin Operation, Premiums & Cost-Sharing Subsidies Medicaid Rebate for MCOs Brand Drug Annual Fee Sunshine Provisions Begin FSA Caps Begin Independent Payment Advisory Board Recommendations Effective (2015) Medicaid Drug Rebate Increase Part D Coverage Gap Discount MA Payment Changes Begin New Income Taxes Medicaid Expansion 2010 2011 2012 2013 2014 2015 & After

7. Medicare and Medicaid • Annual Medicare wellness visits and no coinsurance for most preventive care • Improved Medicare Part D Medication Therapy Management program • Medicare demonstrations on medical home, accountable care orgs, bundled payment • Medicare/Medicaid Center for Innovation • Improved access to Medicaid preventive services • Medicaid medical home to improve chronic conditions • Medicaid behavioral health chronic disease grant program, including diabetes, heart disease and overweight • Medicaid childhood obesity demonstration program • Medicaid adult core quality measures

8. Quality Improvement • HHS national strategy on quality improvement and interagency workgroup on quality • Medicare/Medicaid Innovation Center • Medicare demonstrations on ACOs, medical homes, bundled payment • Medicaid medical homes and incentives to improve treatment and prevention of chronic disease

9. Diabetes • HHS, Centers for Disease Control and Prevention biennial state diabetes report card • CDC national diabetes prevention program for high-risk adults • IOM study on impact of diabetes on U.S. medical practice and recommendations for medical education, licensure and certification • Medication Therapy Management grant program targeted to certain individuals, including those taking four or more Rx drugs or with two or more chronic conditions • Appropriate use  improved outcomes

10. Workplace Wellness • CDC worksite wellness survey • 30-50% cost savings for employees participating in wellness programs • Individual insurance market 10-state demonstration project to offer rewards, incentives • Community health center demonstration to examine impact of individualized wellness plans • Small business workplace wellness grant program

11. So, What’s Actually in the Legislation?

12. Thanks to Bill Franco for sharing his slides