Prospects for Reform – The Private Sector Purchasers’ View

1. Prospects for Reform – The Private Sector Purchasers’ View Public Sector Healthcare Roundtable Annette Guarisco Executive Director, Federal Affairs Public Policy CenterGeneral Motors Corporation November 28, 2006

2. Health Care – Not a Public or Private Sector Problem but a National Problem • 44,000 to 98,000 deaths due to medical error costing $37.6 billion annually • American adults on average receive only 54.9% of recommended healthcare • Large “Quality Chasm”: 30-40% waste • U.S. ranks 12th out of 13 industrialized nations on 16 top health indicators • Fragmented Health Care System, 45+ million uninsured, unsustainable cost increases • U.S. spends greater % GDP on Health Care than any other nation (2004) • U.S. 15.3% Germany 11.6% Japan 8% • U.S. has much higher per capita health care costs (private + public) than any other nation (2004) • U.S. $6,102 Germany $3,005 Japan $2,249 • 60% of employers offer coverage – down 9% since 2000 • 35% of large firms offer retiree health coverage, down from 66% in 1988

3. Critical Focus for GM • 1-2 deaths per day in GM family from preventable medical errors • GM pays 0.4% of America’s health care cost • GM has an older work force and large retiree base • Everyone recognizes need to improve situation • Largest private purchaser of health care in the U.S. • 1.1 million employees, retirees and dependents • GM spends: • Over $5 billion for health care each year • Nearly $2 billion for prescription drugs Our Beneficiaries Deserve Better Care

4. GM’s Health Care Priorities • Driving patient safety and quality improvement efforts • Transparency/Public disclosure/Informed consumers • Information technology/E-prescribing • Reducing waste and inappropriate care in delivery system and improving efficiencies • Supporting federal policies to enable the uninsured to obtain affordable health insurance • Encouraging the appropriate use of prescription drugs • Managing cost, benefits of overall GM Program • Limited dollars • Need to use dollars wisely

5. Opportunities for Public and Private Sector to Work Together • Coverage of the uninsured • Address high costs cases (chronic disease and catastrophic illness) • Prescription Drugs • Biogenerics • Patent extensions for brand drugs • Comparative effectiveness for drugs and technologies • Medicare drug law oversight • Medical liability reform

6. Prescription Drug Challenge • GM spends almost $2 billion on drugs • GM has comprehensive Rx management program in place • 15-20% increase • Demographics, new drugs, DTC, high U.S. prices, inappropriate prescribing • Hospital, surgical and medical costs have not declined as drug costs have increased

7. Drug Market Competition -- Opportunity to Work Together • Coalition for a Competitive Pharmaceutical Market (CCPM) -- organization of employers, insurers, PBMs, chain drug stores, generic drug manufacturers and others committed to improving consumer access to affordable pharmaceuticals and promoting a vigorous, competitive prescription drug market • CCPM supports public policies that facilitate timely access to affordable pharmaceuticals • Teams with AARP to support specific measures

8. Aetna America’s Health Insurance PlansBarr Laboratories, Inc.BlueCross BlueShield Association CaremarkCaterpillar, Inc. DaimlerChryslerEastman Kodak Company Express ScriptsFord Motor Company General Motors Corporation Generic Pharmaceutical Association Hospira Medco Mylan LabsNational Assn of Chain Drug StoresNational Assn of Health Underwriters Pharmaceutical Care Management AssnRanbaxy PharmaceuticalsTEVA USA Three Rivers Pharmaceuticals Walgreen Watson Pharmaceuticals Wellpoint, Inc. CCPM Members

9. CCPM Priorities -- Biogenerics • Biogenerics • Biological drugs are drugs of the future • extremely expensive • large number of biologicals in the pipeline • Congress waiting for FDA action to determine if science available to approve generic biologics • Congress should clarify legal pathway for FDA to approve generic biologicals • Critical to ensure market competition

10. Biogenerics • Waxman bill provides pathway for FDA to approve comparable products • CCPM supportive of safe, timely and efficient process for FDA approval of biogenerics • Open and competitive drug market helps all, especially the uninsured and underinsured • Substitutability will drive best cost savings • No additional market exclusivity or patent extensions needed for brand and biotech industry to develop biologics • FDA needs more resources to review generic drug applications • Expecting a vigorous Congressional debate in 2007 Need to act now to prevent future cost increases

11. Lower PRICED Drug Act • The Stabenow-Lott Lower PRICED Drugs Act would increase access to affordable generic drugs by: • Ensuring proper use of the current pediatric exclusivity rule • Removing an arbitrary roadblock to the entry of generic versions of certain antibiotics • Preventing delays in the generic drug approval process (clarifying current law to prevent abuse of the 30-month stay-of-effectiveness period) • Preventing abuse of the citizen petition process Drug legislation expected next year

12. Comparative Effectiveness Funding • GM is part of the Alliance for Better Health Care and is actively supporting federal funding for government to compare drugs and technologies • This coalition consists of public and private sector members, including AFL-CIO, AARP, Kaiser Permanente, BCBSA, Verizon, American Academy of Family Physicians, American Pharmacists Assn, Consumers Union, Caremark • $15M appropriated, 10 priority diseases identified, but much more is needed As individuals spend more of their own funds on health care they need info to make better choices

13. Medical Liability Reform • Bipartisan discussion/debate needed • Focus should be on defensive medical practices that increase costs for all and patient safety • Health courts and other alternatives should be explored at state level • Demonstration projects needed Together, Public and Private Sector Purchasers Can Find Common Ground

14. Conclusion • Increasing interest among major corporations in healthcare policy • Employer coverage at risk • Opportunities for private and public sector employers to work together • GM welcomes opportunity to work together Public and Private Sector Purchasers Have Critical Role to Play