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AXESS ONCOLOGY PROJECTS UNINTENDED CONSEQUENCES OF CONTINUED CONSOLIDATION IN US PHYSICIAN MARKETPLACE

The Sunshine Act, coupled with oncology practice consolidation, are reducing interactions between oncologists and pharmaceutical companies, hampering the

sharing of vital information needed in the battle against cancer

ATLANTA (October 27, 2014) Private medical practices owned by physicians will continue to consolidate at a brisk pace over the next twelve months, according to analysis produced by Axess Oncology, Inc., a provider of timely, actionable market research and business intelligence that predicts and assesses movement in the oncology market. Axess data predict that pharmaceutical manufacturers will be challenged across 2014 and into 2015 in their efforts to educate physicians about essential treatment options available in the fight against cancer. In the last two years, the consolidation of independent, physician-owned oncology practices into both large, re-gional oncology groups and hospital-owned oncology services has accelerated, posing new challenges and unin-tended consequences for oncologists, pharmaceutical companies, and ultimately, cancer patients requiring state-of-the-art drugs and treatment protocols. In a recent survey of over 250 oncologists who consult to Axess Oncol-ogy through the Axess Oncology Physician Network, 11% of practicing medical oncologists who currently prac-tice in a physician owned, physician managed practice intend to change their practice model in 2014 and consol-idate into a larger group-based setting. Movement from Physician owned, physician managed private practice setting was projected to change, as follows:

Total number of community oncology (physician owned/physician managed model) respondents surveyed N=253

Percentage of community oncologists expressing known intent to change practice model in 2014 11%

Intend to join a larger Physician Owned/Physician-Managed Private Practice 3.3% of community oncologists

Intend to convert to a Physician Owed/Hospital Managed Private Practice Model 3.6% of community oncologists

Entering into a Physician Owned/Corporately Managed Private Practice arrangement (e.g. US Oncology, Vantage Oncology)

1.2% of community oncologists

Move from Private Practice Setting into Academic Medical Center/University 2.4 % of community oncologists

Move from Private Practice Setting into a Destination or "Boutique" Cancer Hospital

(e.g. Cancer Treatment Centers of America) 0.5% of community oncologists

The driving forces behind this continuing advance in practice consolidation are well-known: regulatory pressures and reductions in both Medicare and private sector insurance carrier payments for oncology services; expansion of the federal (340 B) Drug Pricing program intended to reduce costs for hospitals treating a disproportionate share of indigent patients. Less well known - and possibly more troubling - are the unintended consequences of these reimbursement and regulatory changes. For example, Section 6002 of the Affordable Care Act, (popularly referred to as the Sunshine Act) was designed to promote transparency in the financial dealings between pharmaceutical companies and physicians. It requires manufacturers of drugs, devices, biologicals, or medical supplies covered under title XVIII of the Social Security Act, or state Medicaid regulations, to report annually to federal regulators payments or other transfers of value to physicians and teaching hospitals. In response to economic and regulatory pressures, physicians are consolidating into both larger medical practices and hospital based medical practices that often impose new, restrictive policies against communication with pharmaceutical manufacturers. At the same time, the Federal Sunshine Act component of the Affordable Care Act has introduced challenges to traditional education tools used by pharmaceutical manufactures in their efforts to educate physicians, said Dr. Stanley Winokur, Senior Medical Director of Axess Oncology, Inc. Both conditions are reducing the educational exchanges between manufacturers and physicians that both parties rely on to deliver the most effective interventions to patients in the fight against cancer. Ambiguity in the wording of the Sunshine Act surrounding the calculation of transfer of value, differences across manufacturer policies as to what conditions will trigger reporting and institutional requirements to limit engage-ments between physicians and industry representatives have caused many physicians to retreat from communica-tions with manufacturer representatives. I avoid all Sunshine Act related events, altogether reports Sushil Bharwaj, MD, an oncologist who practices cancer care medicine in affiliation with Good Samaritan Regional Medi-cal Center in Suffern, New York. If I were to attend a presentation from a pharmaceutical company sponsored speaker even if I do not participate in the dinner that might be provided along with the talk I dont know what the company will report. That means I have to go on a website to see what they are reporting about me and may-be argue to be taken off their list --- its just too complicated. Id rather get my information from another source. Unintended Consequences: Long-established paths of communication between drug and device manufacturers and cancer physicians are fraying due to the combined impact of regulatory guidelines restrictions against manu-facturer representative communications to physicians imposed by hospitals and large medical practices. Increas-ingly, evidence suggests that the ongoing consolidation movement combined with more restrictive hospital com-pliance guidelines have begun to disrupt the vital exchange of information needed to speed the development and dissemination of critical new research, information and best practices. Further data from the survey commissioned by Axess Oncology reveals that pharmaceutical manufacturers are encountering significant difficulty in delivering vital information to medical oncologists in the U.S. market. Accord-ing to the Axess Oncology Physician Network :

16.2% (41 of 253 respondents) of surveyed medical oncologists reported that restrictions against phar-maceutical industry access to their medical practice were already in place prior to September, 2013.

26.1% (66 of 253 respondents) of practicing medical oncologists have imposed new restrictions against pharmaceutical Industry representative access to their oncology practice since the launch of the Federal Sunshine Act in September, 2013.

Thus, 42.3% percent (107 of 253 respondents) report significant restrictions to pharmaceutical industry representative access to their physician practice.

17.8% percent (45 of 253 ) say they will further reduce or fully eliminate participation in pharmaceutical industry-sponsored forums as a direct result of the launch of the Sunshine Act.

It is becoming more and more difficult to speak with reps commented Dr. Bhardwaj. It is more difficult to communicate with pharma reps when you work in a hospital-based practice. They [hospitals] have strict regula-tions surrounding compliance. There are lots of restrictions that prevent reps from getting to see us. So I must work within those regulations. And I avoid Sunshine Act related events, so it is hard to see new reps you did not already have a close relationship before, from your private practice.

In response to market changes, manufacturers are scrambling to establish new modes of communication and find new access points to doctors. To determine the best approach, many manufacturers are relying on the capabilities of Axess Oncology. Dr. Winokur, describes the Axess Oncology approach: Our Network is being called upon with increasing frequency to help manufacturers define the most appropriate entry points for educational messaging, to define what gaps exist in current physician understanding and to define the regional variation in factors that impact physician decision making. Our goal is to facilitate communication between manufacturers and physicians and to make sure that manufacturers are positioned to deliver the information that has the greatest positive im-pact on patient care when the two parties come together. ABOUT AXESS ONCOLOGY Headquartered in Atlanta, GA, Axess Oncology is a provider of analytics, market research, business intelligence and training to clients with vested interest in the oncology and hematology marketplace. Further, Axess is an infor-mation exchange that produces venues for exchange of knowledge, opinion and insight among constituents in the oncology/hematology market space, including: patients, physicians and other healthcare providers, patient advo-cates, medical product manufacturers, marketing entities and investors. Axess leverages a unique business model and exceptional relationships with both physicians and medical product manufacturers/marketers to create oppor-tunities for constituents to exchange critical information in a manner that protects protected health information and which facilitates compliance with State and Federal regulations. For more information, visit www.axessoncology.com | 855.292.9377 ABOUT AXESS ONCOLOGY PHYSICIAN NETWORK The Axess Oncology Physician Network is a proprietary network of more than 400 consulting physicians who are board certified in oncology, hematology, or both. Carefully crafted to reflect the proportional representation of oncologists by state, as well as the proportional representation of practice setting among physicians in the US, physicians are invited to join the Network in consideration of a range of features, including years in practice, clini-cal research experience, medical specialty, number of patient cases managed per year and more. Consultants are bound to Axess Oncology through a formal consulting agreement. Neither Axess Oncology nor Axess Network physicians are compensated in regard to utilization of any medical product or service. For more information, visit www.axessoncology.com | 855.292.9377

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