Elect Rx: True Lowest Net Cost PBM Strategies

1. and Health Solutions LLC

2. Who is Elect Rx? Elect Rx is an organization of strategicpartnerships with a singularpurpose: To Reduce the overall cost of prescription drug products for you the Benefit Plan Sponsor. Elect Rx provides the only “fully integrated” PBM service for Benefit Plan Sponsors in the United States with a Personal Importation component. Elect Rx is a Pharmacy Benefit Strategist composed of independent and synergistic organizations with full PBM oversight and governance. Elect Rx provides prescription drug fulfillment services through the following divisions: • US Retail • US Mail Order  • International Mail Order/ Personal Importation (PI) • Specialty

3. What does Elect Rx do? Elect Rx provides prescription drugs at “True Lowest Net Cost” to your Benefit Plan Members. Overall savings average 13% to 30% annually.

4. Why do you need Elect Rx ? • PBM standard business practices result in higher net cost of prescription drug products to your Plan. • A traditional PBM contract works much better for their Shareholders, not for you, the Sponsor.

5. How does your PBM keep more of your organization’s money for their Shareholders? • By utilizing “Spread Pricing”. The PBM charges you more money than they pay the dispensing Pharmacy. The bigger the “spread”, the more of your money they keep. • A Generic Drug pricing benchmark such as MAC (Maximum Allowable Cost) pricing alone does not fully protect you, the Sponsor, from excessive “spread” pricing practices used by most traditional PBM business models. Widening the “spread” is a critical mechanism of revenue generation by PBM’s. Another favorite PBM practice is “Formulary Manipulation” to further excessively increase the revenue potential of “spread” pricing. Specific contractual language allows PBM’s to engage in such practices at the expense of you, the Sponsor. • By engaging in excessive pricing practices for 90 day Mail Order supply by charging up to 3 times more than equivalent pricing at retail pharmacies particularly with generic maintenance medications. • By retaining Rebates from Drug Manufacturers and developing formularies that maximize rebate revenue vs. pursuing “lowest net cost” strategies in the best interest of the client.

6. How does your PBM keep more of your money for their Shareholders? (contd.) • By utilizing contract terms and language that favor the PBM with restricted auditing rights. • By monopoly through in house and non-independent Mail Order, Specialty, and Retail Divisions. • By charging fees and expenses other than Transaction Fees Per Net Paid Claim or Per Employee Per Month (PEPM) • By selling data or accepting rebate management fees or other Pharma based funding. • By confusing you with terms like Generic Utilization Index (GUI). This is NOT the same as a Generic Utilization Rate (GUR). Data will always confirm that when a PBM suggests a Generic Utilization Index in the97% range, the actual GUR is usually in the 70% range which approximates the national average GUR of around 70 %. PBM’s use terms like GUI to give you a false sense of security as to their performance. Beware of this false sense of security!

7. How does Elect Rx provide “True Lowest Net Cost”? • Our Generic MAC (Maximum Allowable Cost) lists are the most inclusive and aggressively priced in the industry. Significantly more generic drugs are on our MAC list versus our PBM competitors and always at “true lowest net cost”. Additionally, the Sponsor is contractually protected from harmful business practices such as spread pricing, formulary manipulation, steering and other practices that drive your Benefit Plan costs up, not down. Elect Rx is always governed by transparency, accountability and integrity in all our dealings with you, the Sponsor. That’s why you will always benefit the most from our “true lowest net cost” model. Also, be wary of benchmarks like AWP (Average Wholesale Price). They do NOT reflect the deep discounts available to large purchasers like your PBM. AWP more accurately reflects “ain’t what you pay”! • Our Generic Drugs are subsequently up to 50% cheaper than competitors like Express Script, Medco, and CVS Caremark.

8. How does Elect Rx provide “True Lowest Net Cost”?(cont’d) • By dramatically increasing the Generic Utilization Rate (GUR) of your plan members. Our benchmark GUR is 80%. The national GUR average is around 70%. GUR is your most powerful cost containment tool. Each 1 % upward movement in GUR can decrease drug spend by up to 2%. • By providing 90 day fills (3 months) of “maintenance” generic medications from one of our 60,000 participating retail pharmacies. • By providing an “Over the Counter” (OTC) program for Antihistamines such as Allegra, Claritin and Zyrtec and Acid Suppressants such as Prevacid and Prilosec. These former brand drug “stars” were the main competition for current brand drugs such as Nexium. These OTC drugs are proven to be equally clinically effective at a fraction of the cost.

9. How does Elect Rx provide “True Lowest Net Cost”?(cont’d) • By passing along all manufacturers’ rebates to you if applicable by PBM practice.Brand drug manufacturers pay rebates to PBM’s which can promote sales of higher cost Brands. This is both a major revenue stream and a conflict of interest for most PBM’s. Expensive Brand drugs are promoted through practices like “formulary steering” when many less costly options for both Sponsors and Members are available. PBM Shareholders are benefiting, not you. Our “ true lowest net cost” approach means we don’t “chase” rebates at your expense. • By providing an International Mail Order/Personal Importation (PI) Program for certain Brand drugs with no Generic equivalent. The average cost of brand drugs through PI is up to 60% less than US priced brands. The average savings per Brand drug claim per year using PI is $440. • By customizing our approach to meet your goals. Education and the provision of voluntary options for your Plan Members can and will change their drug buying behavior. Huge savings will result for both the Plan and the Member through zero or reduced co-payments.

10. How does Elect Rx provide “True Lowest Net Cost”?(cont’d) • By providing a free no-obligation analysis of detailed claims data from your current PBM. This line by line analysis of 3 months or more of claims data is 100% evidence based and mathematically indisputable. Elect Rx provides objective evidence of the actual savings generated by our program. Your detailed claims data is run using the same drug pricing our other clients paid for the same drugs on the same day. • By indemnifying you from any liability. The Elect Rx program is fully insured. Elect Rx has set “best in industry” benchmarks for care, custody, and control in the supply chain of all PI brand medications between the manufacturer and the end consumer. • By managing your plan attributes with a laser like focus. Our technology assures that your plan design will be rigidly adhered to. With real time Drug Utilization Review (DUR) at every point of sale (POS), both plan governance and client safety is guaranteed.

11. Why use Personal Importation (PI)? • Enormous savings on the cost of Brand “Maintenance Medications.” Brand prices through PI are up to 60% cheaper than US priced Brands. • The average savings to your plan per Brand drug claim per year using PI is $440. • Using PI for brand drugs make rebates a non-issue because of the enormous price difference over US Brand prices. • If the FDA subsequently approves a Generic equivalent of a Brand drug available through PI, the Member is referred to their local Pharmacy for a 90 day fill of the new Generic product. This maximizes savings to you, the Plan Sponsor. • If a Member’s PI order is delayed for any reason, the US Mail Order division will provide interim product to ensure therapeutic continuity.

12. Why are our Brand prices up to 60% cheaper than in the United States? • Canadian, European, and Australian Brands are up to 60% less because: No rebates are permitted. There are significant differences in the policies and tax codes on sales and marketing soft costs.

13. Options Presented by Elect Rx • A “fully integrated” Elect Rx program with all components including US Retail, US Mail Order, International Mail Order (PI) and Specialty, all with PBM oversight and governance. • A stand alone International Mail Order (PI) only program to provide brand medications with no generic equivalent to Plan Members which can be coupled with a US Mail Order facility providing the lowest available pricing on the 30 top Generic “Maintenance Medications”.

14. No Risk Trial • Take the “no risk test drive” to ensure your complete satisfaction. • Keep your current program in place . • Run individual components or the entire Elect Rx program in parallel with your current PBM for three to six months. • Analyze the metrics of your overall drug spend in months four and five. You will validate the significant savings while seeing clearly the new dynamics created by Elect Rx that changes the drug buying behavior of plan members.

15. What are “Maintenance Medications”? • Maintenance Medications are for the treatment of numerous chronic medical conditions. Some of these include High Blood Pressure, Diabetes, High Cholesterol, and Asthma. • A Physician has already monitored the effect of the medication on a Plan Member for at least 60 days (2 months). • If the therapeutic goals and outcomes are satisfactory to the Physician, a Plan Member is then likely to be on that same medication for extended periods without significant dosage adjustments or new side effect profile. • With subsequent repeat prescriptions from the Physician, these medications can be safely fulfilled in ninety (90) day fills.

16. Program Monitoring • Initial evaluation reports completed after the end of the third month. • Detailed claims data provided monthly to Client. • Quarterly progress reports. • No risk and open ended contracts. The Client can cancel without cause with 30 days written notice.

17. Future Cost Containment The Proactive Approach • Currently over $1 trillion annually is spent on the direct and indirect cost of Chronic Disease. • Sponsors of Drug Benefit Plans just like you continue to underwrite some of that cost through ongoing benefit utilization by your employees and retirees. • Sponsors can help employees maintain healthier lifestyles. • Sponsors can reduce the risk of many Chronic Diseases in both their workforce and retiree populations through our co-sponsored programs • On-site Employee Health Centers • Wellness Programs • Disease Management Programs • Disability Management Programs

18. Frequently Asked Questions (FAQ’s) about our program 1. How do we move forward with an analysis? 2. What does the detailed claims file consist of? How do we get it ? 3. Will our current PBM/Insurance Company allow us do this? • What is the effect on our “Stop Loss” coverage? 5. How do we know if the International Mail Order/PI drugs are safe? Are they the same as FDA approved versions? What countries do these medications come from? Do those countries have similar regulatory agencies like the FDA? • Are you insured? Are Sponsors fully indemnified? 7. Is PI legal and are others currently using PI? Have there been seizures and or cease and desist action taken by the FDA?

19. FAQ’s : (Cont.) 8. What happens if a Member’s local pharmacy is not part of your Pharmacy Network? 9. How much more work will this be for our Administration Staff? 10. What are your hours of operation and customer support levels? How do I know if a drug is covered? Is there a number to call if I have a question or if a medication order is delayed and I am running out of my prescription? 11. How long does it take to receive medications from the International Mail Order (PI) program? Do you use Courier Mail or US Postal Services? 12. Is Elect Rx a US company? Do you provide references. Do you have a web site?

20. FAQ’s : (Cont.) 13. Walk me through the process of how a Plan Member would order prescription drugs using International Mail Order (PI). 14. What if my Physician will not fax the script? 15. What is the difference between a Generic Utilization Index and a Generic Utilization Rate? 16. What is the cost of setting up an Elect Rx program? 17. How do we set up an Employer based Health Center? 18. How will this work with our existent Collective Bargaining Agreement (CBA)?

21. Is International Mail Order/Personal Importation (PI) Legal in the US? • The Short Answer – No • The Long Answer – International Mail Order/PI is referred to as “a permissive violative transaction” in the current FDA Operations Manual. Yes, that is the Food and Drug Administration’s current Operations Manual. This is FDA jargon for: It’s allowed under certain circumstances even though it is against the law. • How did this come about? The US Congress passed “The Medicare Prescription Drug, Improvement and Modernization Act of 2003” and in “Subtitle C—Importation of Prescription Drugs” Congress made it’s intent clear that individuals could obtain a waiver with a valid prescription to import drugs through a Canadian Pharmacy in quantities of up to 90 days (3 months) for personal consumption only and where it was economically justified. In fact, Congress decreed that the Secretary of the FDA shall, by regulation, grant an individual a waiver in these circumstances. Sec 1121-sub section (j) Titled “Waiver Authority for Importation by Individuals”.

22. Is Personal Importation Legal in the US?(cont’d) • In 2006, Congress went even further. They withdrew the funding for enforcement of the ban on International Mail Order/PI by the Department of Homeland Security and the FDA when that importation was consistent with the criteria outlined in the above Act • The FDA’s current Operations Manual clearly directs personnel to use “discretionary enforcement“ with regard to the importation of drugs through a Canadian Pharmacy that meet the criteria specified in the Act. Hence the jargon of a “permissive violative transaction“. • Cities, Counties, and businesses began implementing International Mail Order/PI options as a part of their Employee Benefit Plans after passage of this Act in 2003. Numerous communities across the United States from Anderson, IN to Montgomery, AL and businesses across the United States have operated International Mail Order/PI options for their employees since 2003. Millions of dollars have been saved through significantly reduced brand drug costs. Millions more dollars have been put back into the pockets of their employees through Zero or reduced Co-Pays on prescription drugs.

23. Is Personal Importation Legal in the US?(cont’d) • Several individual States, including Nevada, home to US Senate Leader Harry Reid, have adopted International Mail Order/PI programs. Any resident of Nevada can import drugs through a Canadian pharmacy. There is even a link on the Nevada State Web Site. Nevada’s program has been running without issue since 2005. Seehttp://govcha.state.nv.us/new_CP_Index.htm • The Department of Defense and Veterans Administration are the largest purchasers of international drugs according to CBS Evening news reported by Cynthia Bowers “Inside Story” shown on December 09/2003. Since then, a growing number of Law Makers in both Houses from both sides of the aisle want to see further relaxation of FDA regulations on the importation of prescription drug products. They see potential savings of billions of dollars a year to healthcare budgets.