HIRSP Strategic Planning Committee January 25, 2007

1. HIRSP Strategic Planning Committee January 25, 2007

2. Vacation Pre-Fill Policy Tiered Benefit Analysis Specialty Pharmacy Program Mail Order Pharmacy Program Overview

3. Current Policy Policyholders are able to receive an additional 30 days supply of medications when traveling outside the U.S., but not within the U.S. -Policyholders have access to Network Pharmacies throughout the U.S., but not abroad. Optional Policy For members of some Navitus clients, an additional supply of medication beyond their defined benefit may be obtained when traveling within the United States as well. -Overrides would not allow a member to receive medication beyond their coverage date. The member would be responsible for: -Any Quantity Limit, Prior Authorization, or other restriction criteria for each medication they are having filled. -A copay per 30-day supply, per unit, or per quantity limit dispensed as outlined in their benefit. Vacation Pre-Fill Policy

4. Formulary Covered-consists of Navitus Select Formulary Tier 1 and Tier 2 Drugs Tier 1 consists of mostly generic drugs, Tier 2 consists of preferred brand and some high cost generics Policyholder coinsurance = 20% up to $25 Not Covered-consists of Navitus Select Formulary Tier 3 Drugs Tier 3 consists of non-preferred drugs available through a Medical Exception Process Maximum Out of Pocket Varies by Plan Plan 1A = $750 per year with Reductions available based on income Plan 1B = $1,000 Plan 2 = $125 Current HIRSP Pharmacy Benefit

5. Current HIRSP Pharmacy Benefit • Average Paid by Tier in 2006 *Tier 3 costs are drugs covered as HIRSP Medical Exceptions.

6. Navitus analyzed the financial impact of 2 benefit designs: Option 1 - Tier 1=$5, Tier 2=$25, Tier 3=50% -This option splits the current ‘covered’ drugs into 2 tiers, and adds a benefit for the current ‘not covered’ drugs as Tier 3, Tier 3 drugs would not apply to Policyholder’s Maximum Out-of-Pocket (MOOP). -Tier 1 consists of mostly generic drugs, Tier 2 has preferred brand and some high cost generics, and Tier 3 consists of non-preferred drugs. -Rebate opportunities would be negatively affected by this plan design, since utilization of rebatable drugs could shift to non-rebatable drugs. Option 2 - Tier 1=$5, Tier 2=$25, Tier 3=NC -This option also splits the current ‘covered’ drugs into 2 tiers, but does not add coverage for the currently ‘not covered’ drugs. -Tier 1 consists of mostly generic drugs, Tier 2 has preferred brand and some high cost generics, and Tier 3 consists of non-preferred drugs. -Rebate opportunities would stay consistent with the current plan design. Tiered Benefit Analysis

7. Tiered Benefit Analysis • Navitus re-priced HIRSP CY 2006 claims using the 2 Options *Does not take into account potential Tier 3 Utilization **Includes 2006 rebates received, filed and 4 Qtr. estimate

8. Tiered Benefit Analysis Option 1 • Navitus re-priced HIRSP CY 2006 claims for Option 1 with Tier 3 utilization scenarios • -average Tier 3 cost for the Navitus book of business is $102.52 • -it is assumed that Tier 3 utilization would replace Tier 2 utilization, data has been adjusted for this • Option 1 would create the most risk, as future utilization of Tier 3 drugs is unknown • Rebate opportunities would be negatively affected by covering Tier 3 drugs • HIRSP would cover additional high cost, non preferred drugs on Tier 3 -Plan currently covers Tier 3 drugs through a Medical Exception process *Represents utilization with a $35 copay **Rebate Estimates are approximate

9. Option 2 creates the least risk to both the plan and policyholders HIRSP would not cover additional high cost, non-preferred drugs on Tier 3 Rebate opportunities would be unchanged from the current plan design, because Tier 3 drugs would continue to be ‘not covered’ Policyholders would have the largest incentive to reduce out of pocket costs by choosing Tier 1 drugs over Tier 2 alternatives This option is expected to reduce plan costs by over $600,000 annually Tiered Benefit Analysis Option 2

10. Specialty Pharmacy

11. Specialty Drug Spending In the year 2009, Specialty Drug Spending predicted to be $90 billion¹ from 2005 spend of $40 billion Navitus SpecialtyRx Navitus utilizes a partnership with SpecialtyScripts Pharmacy, a pharmacy experienced in handling specialty drugs, to coordinate personalized support for members impacted by chronic illnesses and complex diseases, such as rheumatoid arthritis, HIV/AIDS, multiple sclerosis and cancer. Specialty drugs are an important part of the treatment for many chronic and complex health conditions. These high-cost, and often self-injectable, medications require personalized coordination between the policyholder, provider and pharmacy. Our goal is to improve the quality of life for policyholders by providing personalized support and compassion. We help policyholders navigate the complex medication challenges they encounter everyday. Benefits Personalized Patient-Centric Commitment to ensure appropriate use of specialty medications Automatic Refill Reminder to support adherence to medications Free Delivery for patient convenience ¹ESI 2005 Drug Trend Reports, Reprinted in Drug Benefit News, July 21, 2006 In Navitus SpecialtyRx Overview

12. Specialty Utilization Analysis January – December 2006

13. HIRSP saves $14.54 per script Total Plan savings increase as utilization moves from retail to Navitus SpecialtyRx Policyholders benefit from high touch patient care coordination, with expertise specific to specialty medications and the disease states treated Current Specialty Savings Use of Navitus SpecialtyRx Pharmacy is voluntary -Navitus targets specialty medication users through educational mailings

14. Currently, Specialty Rx participation is low at 3.35% of specialty claims. Current utilization is estimated to have saved HIRSP approximately $15,738 in 2006 Options for increasing Specialty Rx Utilization include: Offering incentives such as co-pay waivers Modeling has demonstrated this option is not cost effective Increasing knowledge of clinical benefits of Specialty Rx. Face to Face meetings between Navitus and Frequently Prescribing Docs Targeted and tailored mailings to policyholders with "top 5“ diagnoses Mandating participation Consider this option in 6 months after evaluating enhanced outreach efforts Current Specialty Savings

15. Mail Order Pharmacy Prescription Solutions

16. Prescription Solutions Valued Navitus partner since 1996 Five million members utilize Prescription Solutions for their pharmacy needs Contracted pricing with Navitus Health Solutions* Brand = AWP – 22% + $0.00 dispensing fee Generic = MAC or AWP – 55% + $0.00 dispensing fee Prescription Solutions is willing to Priority Mail all scripts for HIRSP policyholders. Shipping and handling costs are not charged back to the plan or policyholder Policyholders can obtain both prescription products covered under their pharmacy benefit as well as non-covered over-the-counter (OTC) medications through the mail order service The use of mail order service is generally recommended only for maintenance medications, rather than medications that will only be needed on a short-term basis (e.g. antibiotics for an acute illness). Policyholders can receive the following quantities of medication through the mail order service: Up to a 90 day supply for most maintenance medications (quantity limits may apply to certain medications) Up to a 90 day supply for controlled substances Prescription Solutions Mail Order Pharmacy Overview *Retail pricing: Generic = MAC or AWP – 25% + $2.50 dispensing fee; Brand = AWP – 15% + $2.00 dispensing fee

17. Most Navitus clients offer mail order as a voluntary program What is a maintenance medication? Maintenance drugs are medications prescribed for chronic, long-term conditions and are taken on a regular, recurring basis. Examples of chronic conditions that may require maintenance drugs are: high blood pressure, high cholesterol, epilepsy and diabetes. Navitus re-priced 6 months of HIRSP Claims using Jan-June 2006 data Re-priced to 2007 Retail reimbursement rates Savings projection based on mail order pricing Policyholder is 20% up to $50 max This is 2 times the retail coinsurance for 90 days supply Current retail is 20% up to $25 Prescription Solutions Mail Order Analysis Overview

18. Mail Order Cost Analysis Savings can be achieved by offering a mail order option for maintenance medications Analysis assumes 2 times the retail coinsurance of 20% up to $50 *Navitus Book of business averages 2-4% mail order utilization with a voluntary program. **Number of prescriptions is 1/3 that of retail due to maximum days supply at mail of 90, versus maximum days supply at retail of 30.

19. Prescription Solutions is not WI Medicaid Certified Currently, all HIRSP Providers must be WI Medicaid Certified Legislation has been proposed that would permit non-WI Medicaid certified pharmacies to participate in the HIRSP Network Timeline for Implementation 60 days advance for system set-up, testing and auditing Prescription Solutions would cover the costs for brochures and policyholder mailings Mail Order Considerations

20. 2006 HIRSP Retail AWP-13% + $4.38 disp fee 2007 HIRSP Retail Brand = AWP-15% +$2.00 disp fee Generic = AWP-25% + $2.50 disp fee 2006 Mail Order Brand = AWP-20% + $0.50 disp fee Generic = AWP-50% + $0.50 disp fee 2007 Mail Order Brand = AWP-22% + $0 disp fee Generic = AWP-55% + $0 disp fee Pricing Schedules