2015 ANNUAL MEETING

Paul Meyer - Welcome

2014 Accomplishments

• Membership Growth• New “Classic Plan” for Fast Implementation of Smaller

Members• New Ability to Access Data In House• Continued Financial Stability• Updated Computer Systems• New, Easier-to-Navigate Web Site

CEO Search

• Started Search in Late Autumn 2014• Currently in Discussions with Prospects• Hope to Announce New CEO by Summer

Open Board Seats

• Three Openings• Three Qualified Candidates

– Joy Matthews– Valarie Wunderlich– Judy Peirick

• Voting Closes at 10:00 AM Today• New Board Members Announced During Lunch

2015 ANNUAL MEETING

Deb Thomsen – Cooperative Update

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National CooperativeRx Update

1. Welcome and Introductions2. Cooperative Growth3. Financial Achievements4. Successful Clinical Programs;

Great Trend Numbers for 20145. Market Check

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Welcome

Without YOU,Our Members,

Prospective Members, Consultants and TPAs,

We Would Not Exist!

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Introductions

National CooperativeRx– Chris Schanz Strategic Account Executive

– Deb Thomsen Vice President

– Deb Sonnenberg Director of Operations

– Jen Dickman Communications – Kyle Kapusta Sales Manager

– Mike Sugden National Sales Leader

– Patti Tews-Ruehle Sales Manager

– Penny Mandt Administrative Assistant

– Wayne Salverda, R.Ph. Senior Director of Clinical Services

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Introductions

Board Members– Fred Brown – Jim Malicki Secretary

– Judy Peirick– Larry Richardson Treasurer

– Paul Meyer Board Chair

– Robin Mullins Vice Chair

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Introductions

CVS Health– Adam Jones– Deb Zuelke– Keith Sadowsky– Larry McCoy– Laura Sterling– Paschal Haywood– Shawn Young– William Ashmore– Wilson Samuel

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Coalition Growth(January 2014 – January 2015 Effective Dates)

19 new Plan Sponsor Members with 29,786 Participants

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2014 Financial Achievements

•2014 Year-end Financials (unaudited)

Revenue: $2,276,255 Expenses: $1,956,460 (10% under budget)

Net Earnings: $319,795 (member dividends)

•Member Equity: $1,824,397

•Cooperative Patronage Dividends2014: $319,7952013: $208,000 (100% cash)

Money Returned to Members In 2014

• Rebates Distributed:

• Rebate True-up:

• Patronage

• Equity Released (2006-07)

• Audit Returns(2010-12)

TOTAL

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$10,142,821

$ 2,989,665

$ 208,000

$ 323,000

$ 228,766

$13,892,252

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Audit 2013Annual review of all claims, pricing discounts off AWP, dispensing fees, and rebate guarantees. This money will be returned to Members in the next Audit Distribution.

• $10,983.04 reimbursement for discrepancies: – Lower-Of / Per Claim Pricing: $10,789.04 – Dispensing Fees: $194

• No discrepancies regarding: – Aggregate Pricing Guarantees – Claims Data Verification – MAC Pricing Assessment – Specialty Pricing – Rebate Guarantees

Impact of Cooperative

• Clinical Programs:

• Annual Drug Spend:

• Annual # of Rx’s:

$ 440,000

$176,493,597

1,850,182

—

$177,806,848

1,654,007

2013 2014

Clinical Programs to Contain Costs

• National CooperativeRx has negotiated many clinical programs at reduced or no cost (Rx Savings Guide)

• Dedicated dollars to purchase the programs/services that include a Caremark fee (Safety and Monitoring, PA and Appeals, Historical Claims)

• Client specific plans to match your appetite for aggressiveness

• Ability to customize and modify Caremark Clinical programs (Compound PA at 500.00)

• Unique Clinical Opportunities as large coalition client (Adherence Pilot Opportunity)

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Plan Participants with Telephone Contact Information on File

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June 2013 February 2014 February 20150%

10%

20%

30%

40%

50%

60%

70%

44%

62%66%

National CooperativeRx

Generic UtilizationGeneric Dispensing Rates (GDR) 2014

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CVS/caremark National CooperativeRx NatRx Best In Class75.0%

80.0%

85.0%

90.0%

81.3% 81.4%

86.5%

For each 1% increase in Generic Dispensing Rate (GDR), gross pharmacy spend is estimated to decrease 1% up toward 2.5%.

Bending the Trend

Source: WisconsinRx/National CooperativeRx CVS/caremark RxInsights 2014 report and ad-hoc claims analysishttp://lab.express-scripts.com/drug-trend-report/?utm_source=corpbanner&utm_medium=banner&utm_campaign=dtr201

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National CooperativeRx overall Trend and Non-Specialty Trend less than CVS/caremark and Express Scripts

Book of Business TrendSpecialty

Trend

Non-Specialty

Trend

National CooperativeRx

8.2% 41.2% -0.6%

CVS/caremark Employer

12.7% 31.6% 7.0%

Express-Scripts Commercially Insured

13.1% 30.9% 6.4%

Hepatitis C

• 3-5 Million Infected• 3 of 4 may not even be aware they’re infected• 4 new drugs approved in 2014• $84,000-150,000 for a 12 week treatment• Hep C accounted for 4.2% of overall trend• Over half of the increase in specialty cost (11.6 M) was

accounted for by Hep C cost (7M)• HCV prevalence varies widely from state to state: 1.3% to

0.4%

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HCV Disease and Cost Progression

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For Every 100 People Infected with HCV

75-85 Will Develop Chronic Infection

60-70 Will Develop Chronic Liver Disease

5-20 Will Develop Cirrhosis

1-5 Will Die of Cirrhosis or Liver Cancer

Source: www.PhRMA.org Twenty-Five Years of Progress Against Hepatitis C: Setbacks and Stepping Stones, December 2014

$84,000 -$150,000

$24,000$60,000

$115,000

$500,000

Incidence of Acute Hepatitis CUSA by Race/Ethnicity Years 2000-2011

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

0.2

0.4

0.6

0.8

1

1.2

1.4American Indian/Alaskan NativeAsian/Pacific IslanderBlackWhiteHispanic

Re

po

rte

d c

ase

s/1

00

,00

0 p

op

ula

tion

Source: http://www.cdc.gov/hepatitis/Statistics/2011Surveillance/Slide4.4.htm

Compounds

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Compounding: When a licensed pharmacist combines, mixes or alters ingredients in response to a prescription. This tailors medication to the medical needs of a patient.

• Safety and efficacy

• 7,500 pharmacies specialize in compounding services

• 2,500 of these added since 2009

• HIPPA required reimbursement

• Compounds can be warranted for various reasons

Source: CVS Caremark White Paper Compound Medications for Topical Use, March 2014

Bending the Trend

Source: WisconsinRx/National CooperativeRx CVS/caremark RxInsights 2014 report and ad-hoc claims analysishttp://lab.express-scripts.com/drug-trend-report/?utm_source=corpbanner&utm_medium=banner&utm_campaign=dtr201

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National CooperativeRx member-owner groups potentially avoided more than $5,000,000 in drug spend for compounds compared to benchmarks.

Book of Business TrendSpecialty

Trend

Non-Specialty

Trend

Trend for Compounds

Compounds Gross Cost

PMPM

National CooperativeRx

8.2% 41.2% -0.6% 93.1% $1.47

CVS/caremark Employer

12.7% 31.6% 7.0% 374.0% $3.95

Express-Scripts Commercially Insured

13.1% 30.9% 6.4% 128.4% $3.84

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National CooperativeRx Market Check

Our current 3 year agreement contains language to evaluate agreement for market competitiveness.

• Changing Market Dynamics – especially in a 3 year agreement

• Market Review is underway and we will report results• Potential adjustments will be agreed to contractually by

9/1/2015 and become effective 1/1/2016

Results will either demonstrate that we have the strongest contract available, or will show room for negotiation and the Cooperative will work on your behalf while closing any gaps.

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Thank You!

“Together we control our collective success…Individually we surrender control of our destiny”

YOU are that Strength!

2015 ANNUAL MEETING

Thank you!