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Opportunities for Community Pharmacies in Specialty Products Distribution

Presented by:

David Suchanek, RPh, Vice President, Biotech & Pharmaceutical

Services, VCG & Associates Ed Dillon, RPh, Community Specialty Pharmacy Network

10:45 a.m. - 12:15 p.m., Saturday, October 13, 2007 Anaheim, California

Evaluation # 07-118-P

This program is approved by NCPA for 0.150 CEUs (1.5 contact hours) of continuing education credit. NCPA is approved by the Accreditation Council for Pharmacy Education as a provider of continuing pharmacy education.

Educational Objectives

Program: Opportunities for Community Pharmacies in Specialty Products Distribution Presenter: Ed Dillon, RPh, Community Specialty Pharmacy Network David Suchanek, RPh, Vice President, Biotech & Pharmaceutical Services, VCG & Associates Objectives:

1. Briefly outline the history of specialty pharmacy and its projected growth in market share in the next decade

2. List and discuss diseases that require treatment with specialty drugs. 3. Review the key characteristics of a drug therapy that qualifies it for definition as a specialty

drug. 4. Review the business components that a pharmacy must possess to qualify it to dispense

specialty drugs successfully. 5. To better understand the current biotechnology marketplace and pipeline 6. To understand its impact on community practice 7. Discover how you may prepare to be a provider of specialty pharmaceuticals and

biotechnology drugs. 8. Discuss revenue streams available in specialty drug distribution.

Educational Objectives

Program: Opportunities for Community Pharmacists in Specialty Products Distribution Presenter: Ed Dillon, CSPN Objectives:

1. Outline History of Specialty Pharmacy and its growth. 2. List and discuss disease states in specialty. 3. Review drug therapy that qualifies as specialty. 4. Business components of specialty pharmacy. 5. Discuss revenue streams available in specialty drug distribution.

Providing Strategic Planning and Tactical Execution in the Commercialization of Pharmaceuticals, Medical Devices and Diagnostics

David M. Suchanek, RPh. Vice President Biotech & Pharmaceutical Services

VCG & Associates Biotechnology Commercialization, Clinical Program Management, Trade Relations,

Specialty Pharmacy/ Specialty Distribution Operations David Suchanek R.Ph. recently joined VCG & A, Inc. to assist pharmaceutical and biotech organizations in the areas of commercialization and program development in the support of biotech and bio-equivalent products. Prior to joining VCG Mr. Suchanek was the Vice-President of Pharma Programs at CuraScript (the specialty pharmacy division of Express Scripts Inc.) and had responsibility for the complete management and oversight of the organizations largest and most profitable business product/ disease segments. Other positions with CuraScript included serving as the VP of Pharma Account Management and Implementation overseeing teams with responsibility of over $1B in annual sales. David had originally joined CuraScript as the VP of Operations: Biotech Solutions. In this role he had responsibility for the organizations trade relations department, wholesale operations/ distribution department, and implementation operations of new biotech products, programs, and services. Mr. Suchanek has also served as the Vice President of Pharmaceutical Services for Cardinal Health Inc. (CAH) focusing on services that enhanced the corporate offerings of their Specialty Distribution and Third Party Logistics divisions. David has also worked as the Director of Clinical Program & Product Development, Director of Trade Relations/ Business Development for Caremark’s Therapeutic Services Division, the National Clinical Director at MIM Health Plan/ BioScrip, the Director of Specialty Pharmacy Operations at Scrip Solutions/ Bioscrip mail-order and specialty pharmacy, and Clinical Manager for CVS Procare and Allscripts Pharmaceuticals. Additionally, Mr. Suchanek currently acts as independent consultant for SRI Inc. (Stanford Research International), University of California: San Francisco, and Yale University: peer-reviewing studies, grants, and proposals. He has also provided consultative services to many of the industries top biotech and traditional pharmaceutical manufacturers. David has participated in numerous advisory boards for new and emerging technologies and has been a featured Keynote Speaker and National Panel

Launch Planning Managed Markets Government Markets Trade/Distribution Contract Administration Product Sourcing & Brokering

participant on the subjects of Specialty Pharmacy, Specialty Distribution and Supply Chain Channel Management. Mr. Suchanek attended the University of Texas for undergraduate pre-pharmacy work, continuing his educational training with the attainment of a degree in Pharmacy from the Ohio Northern University College of Pharmacy. During this time he implemented and coordinated research projects on several biotechnology pipeline products at the University of Texas M.D. Anderson Cancer Center in Houston, Texas. Mr. Suchanek is a Registered Pharmacist in Ohio and a Licensed Designated Representative in Florida and currently resides in Orlando, Florida.

VCG & A, Inc P.O. Box 6530

Holliston, MA 01746 Phone 314.308.2028 Fax 866.493.5886

Launch Planning Managed Markets Government Markets Trade/Distribution Contract Administration Product Sourcing & Brokering

Edward F.Dillon RPH ___________________________________________ Mr,Dillon is currently President of Community Specialty Pharmacy Network, a nationwide group of over 100 Independent Community Specialty Pharmacies. The CSPN Network provides immediate availability of specialty medications in an extended acute care setting, with the goal of driving optimal patient outcomes through the delivery of individualized medication therapy management techniques in a cost-effective environment. Prior to the formation of CSPN, he was an owner and operator of Grubbs Care Pharmacy and Medical Equipment Company on Capitol Hill in Washington DC for over 30 years. He served as a Board Member of Care Pharmacies, a Pharmacy Franchise for 25 years and was President for 8 years. He currently serves as CEO on an interim basis. He was instrumental in developing the exclusive arrangement for distribution of all HIV medications in the DC ADAP & Medicaid programs through Independent Community Pharmacies. Over the years Mr.Dillon has been an active member of NCPA, APHA and the DC Pharmaceutical Society serving on many committees and panels. He received the Bowl of Hygeia Award in 2002 and holds a BS from Brooklyn College of Pharmacy. He is an Assistant Professor at Howard University and has lectured at Both Howard and Geo Washington University.

Opportunities for Community Pharmacies in Specialty Products Distribution Programs

David M. Suchanek RPh

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Contact Information

David M. Suchanek RPhVP Biotechnology & Pharmaceutical Services

VCG & A, Inc.Phone/Cell 614-638-6380

Fax 866.493.5886email: [email protected]

www.vcgassociates.com

David M. Suchanek: General Background1. - Registered Pharmacist

- University of Texas, Ohio Northern University School of Pharmacy- Residencies/ Internships: MD Anderson Cancer Center, Houston, TX- Small Independent Pharmacy: focused on Emerging Specialty Products, then bought by Chain- Allscripts: Small Mail Order with Pharmacy Benefit Manager (PBM); built Specialty Pharmacy- CVS Procare: Acquired Allscripts; built Specialty Pharmacy (SP)- MIM Health Plans: PBM, Mail Order; built out .com and SP (now Bioscrip)– National Clinical Director, Director of Operations

- Caremark: PBM, Mail Order, SP, SD (Specialty Distribution)– Director of Clinical Programs & Product Development, Director of Trade Relations/ Pipeline Business Development

- Cardinal Health: New business venture (Cross-Sell of Pharma Services, 3PL (Third Party Logistics), SD– VP Pharmaceutical Services

- Express Scripts/ CuraScript: 3PL, SP, SD, PBM, GPO (Group Purch Org), Mail Order, Pharma Services– Had Pharma Act Mgmt P&L sales responsibility for ~$1.5B annually– VP of Operations, VP Pharma Act Mgmt, VP of Pharma Programs/ Segment Mgmt, VP Trade Relations

- Consultation: – Academic: UCSF School of Pharmacy, Yale School of Medicine, SRI (Stanford Research Intl.)– Pharma: Genzyme, Sankyo, Genentech, MedImmune, Aventis, Roche, Abbott, Élan, others– Misc: Pharma Contracting, Operational Reviews, Diligence, Pharma Services

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Goals of the Presentation

This session's goal is to provide an understanding of: 1. The current biotechnology marketplace and pipeline2. Its impact on community practice3. And how you can maybe prepare yourself to be a

provider of specialty pharmaceuticals and biotechnology drugs.

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What Is Biotechnology?

Break biotechnology into its root words and you have – bio—the use of biological processes; and – technology—to solve problems or make useful

products.

From Bio.Org

Why the big focus on Biotech...rapid growth

Sources:IMS Data through November 2004Wall Street Equity Research, 2004CMS National Healthcare Expenditure

Projection: 2003 – 2013Data on file: CuraScript.

2004 Total Outpatient Pharmacy Spend $190 Billion

2008 Projected Outpatient Pharmacy Spend $283 Billion

Source:PhRMA, International Federation of Pharmaceutical Wholesalers & Biotech Industry Organization

2 6 %

2 6 %

1 8 %

1 8 % T r a d i t i o n a l S p e n d

Tr a d i t i o n a l S p e n d

$ 2 1 B i l l i o n

$ 2 1 B i l l i o n S p e c i a l t y S p e n d

S p e c i a l t y S p e n d

$ 7 3 B i l l i o n

$ 7 3 B i l l i o n S p e c i a l t y S p e n d

S p e c i a l t y S p e n d

$ 3 5 B i l l i o n

$ 3 5 B i l l i o n

T r a d i t i o n a l S p e n d

T r a d i t i o n a l S p e n d

$ 1 5 5 B i l l i o n

$ 1 5 5 B i l l i o n

B i o t e c h D r u g s i n D e v e l o p m e n t

B i o t e c h D r u g s o n t h e M a r k e t

6 l 7E s t i m a t e d

6 l 01 9 9 5 1 9 9 06 l

5 l

4 l

3 l

2 l

1 l

l 6 l

1 9 73 6 9

9 2

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2 91 0 0 1 l N u m b e r o f D r u g s

Specialty Defined…. Varies GREATLY throughout the Pharmaceutical IndustrySpecialty is typically defined as:

– High Cost, Higher Margin– Majority: Injectables: Self-Administered, Office or Home Administered– Minority: Orals (has been increasing)– High level of Patient Support is Needed:

• Dosage adjustments, Side effect mgmt, Labs, Narrow Therapeutic Window, Registries/ FDA requirements, Injection Training, Home Health/Nursing Coordination

– Inventory Controls often Needed or Required: IMA’s, Storage, Handling,– Special Data Requirements Needed or Required: Clinical, FDA, Labs, Compliance– Overall………. Challenging to MD’s, Patients, Payors, Pharmacies, Manufacturers– Often Recombinant DNA technology– Target Indications with high unmet need: Small Niche populations or Large Populations– Novel Mechanism (pathology vs symptoms)– Advance in efficacy– Unique safety profile– Most likely fairly new to market (less than 10 years)

Sources: “Defining and characterizing the late-stage biopharmaceutical pipeline.” AM J Managed Care, 2003; 4:S124-S135, “Pros and Cons of Limited Distribution”, David Suchanek, Pinsonault Managed Markets Summit, June 2007

Specialty Product Challenges:In the Traditional Pharmacy

■ High cost of inventory

■ Inability to have same/ next day delivery

■ Special storage and delivery capabilities

■ Reimbursement: Pharmacy or Medical, inability to bill Major Medical

■ Pharmacist knowledge of injectables or disease state

■ Patient counseling and support limitations: compliance, injection training

■ Unwillingness to break package sizes

■ Administration tools not included (needles, syringe, alcohol swabs, sharps)

■ Limited Distribution products

■ FDA/ Manufacturer Registry Programs

Specialty Product Challenges: In the Prescriber Office

■ Ability to source products/ multiple vendors/ constantly changing

■ Payors all have different networks/ vendors, policies, processes

■ Facing decreasing reimbursement by payers (government legislation)

■ Formulary approval delays/ billing risks

■ Personnel required to oversee Rx ordering

■ Increasing cost of labor/ RN shortages

■ High cost of inventory, if held by doctor

■ A/R cash drain & uncertain collectibles

■ Patient support demands increasing: reimbursement, training

■ Compliance monitoring challenges

■ Limited Distribution Networks


Specialty Product Challenges: By the Patient

■ Access to products from traditional pharmacies (due to previously mentioned)

■ Delays/Interruptions in therapy created from uncommitted supply channels

■ Varied and Complex Coverage: medical and pharmacy benefit

■ Prior Authorization processes

■ Higher out of pocket expenses/ co-pays/ deductibles

■ Difficult coordination of deliveries to treatment settings

■ Product Safety: storage & stability issues

■ Counseling and support needed 24/ 7/ 365

■ Compliance monitoring needed to increase outcomes and decrease global health care costs to plan and patient (life time maximums)

■ Limited Distribution Networks


■ And Scared……

Specialty Product Challenges: By the MCO / Payer

■ Member dissatisfaction

■ Prescriber dissatisfaction

■ Major Medical U&C reimbursement vs. Managed Care Pricing

■ Lack of National Consensus Guidelines/ Formulary Controls

■ Utilization of Hidden Billing Ccodes

■ Prior Auth and approval criteria processes and labor

■ Collection of proper co-payments, co-insurance, deductibles

■ Tracking and auditing utilization, showing ROI of control programs

■ Multiple plan designs can add confusion to process

■ Multiple providers/ in-network pharmacies create confusion

■ Limited Distribution Networks/ OON contracts


■ Manufacturer Programs Counteracting Policies: PAP, Co-Pay Assistance, Sampling

Specialty Pharmacy Overview & Categories

SpecialtyPharmacy

Pharma/ Biotech

Physician

Payor

Patient

Product

Information and Services

Product Delivery

Clinical Services

Reimbursement Services

Prescription

BenefitManagement Reimbursement

Cystic FibrosisFertility/ Hormone TherapiesImmune Disorders: IVIGRespiratory Syncytial VirusHemopoietics/ Colony Stimulating Factors

Rheumatoid/ OsteoarthritisAIDS/ HIVTransplantOncologyDermatology/ PsoriasisAsthma/ Diabetes

Hemophilia/ VonWillebrandsGaucher’s DiseaseGrowth Hormone DeficienciesMultiple SclerosisHepatitis C,B,APulmonary Hypertension

The Traditional Rx Prescription Process

MD Writes Rx

- Does pt have insurance?- 30 day or 90 day mail?- Generic avail? Formulary?

Gives Rx to Patient

Local Pharmacy Mail Order

Payor/Insurance: Eligibility, CoPay/Deductible, Adjudication Electronically, Refills

Patient

SimpleEfficient

StandardizedEstablished

The Specialty Rx Prescription Process

MD Writes Rx

Is medication oral, injectable, infusion?Is medication infused: At home, office, hospital?Is nursing needed?What are insurance requirements?

Gives Rx to Patient Arranges Services

Local Pharmacy Mail Order Hospital/ClinicSpecialty PharmacyNursing/LTC

Payer/Insurance: Eligibility, Min/Max, CoPay/Deductible, Medical/Pharmacy, In-Network

Patient

ComplexInefficient

Not StandardizedSemi-Established

Specialty Pharmacy: Internal Patient Care Management

Admission Coordination

• Obtain Demographic Information

• Insurance Verification

• Clinical Screening

• Initial Delivery Set-Up

• Home Nursing Coordination

Nursing Support Services• Self Injection Teaching Support

• Patient Education

• Assessment

• Clinical Intervention

• Adherence Counseling

Ongoing Patient Care Coordination

• Ongoing Eligibility Monitoring• Authorization Maintenance• Refill Follow-Up Calls• Ongoing Clinical Screening• Adherence Management• Ongoing Delivery Coordination

Social Services

• Community Resourcing

• Advocacy

• Psychosocial Assessment & Counseling

• Hardship Support

• Indigent and Patient Assistance Programs

Clinical Pharmacy Services

• DUE/Utilization Management

• MD Consultation and Education

• Formulary Management

• Patient Education

• Clinical Interventions

01/11/05

Pharmacy Billing Options/ Challenges

Patient

Electronic:• aka Pharmacy• Adjudication Process• Claim Processing • PBM’s Manage >90%

Paper:• aka Medical• HCFA, UCF• Manually • MCO manage or Carrier (Aetna, UHC)

•Yes, No: via computer•How Much/ Min/ Max•Real Time•Instant Approval to fill

•Manual Verification: phone, web•Authorization, Case #, variety•Not Real time•Not Guaranteed unless verified &

billed correctly

Specialty Rx Billing Process

ORDER FULFILLMENT/ DISPENSE/ PACKAGING/ SHIPPING/ TRACKING

DATA ENTRY

INSURANCE VERIFICATION

SCHEDULE

THE FIRST ORDER

SP RECEIVES REFERRAL

Admission to SP SERVICE?

RX REVIEW

& VERIFICATION RPH CALLBACK

TRIAGE WITHIN 24 HOURS Limited Distribution Drugs

or Benefit/ PA Denials

YES

NO

Physician contacted for RX clarification

Physician notified of receipt of referral

Physician involved in PA process if

required

Patients notified of status every 24-48

hours if delays

Physician notified of Referral outcome

Patients contacted to set-up delivery and conduct initial

assessment

Home Nursing Visit Coordination as Needed for Injection Training

PA Obtained or SP Utilization

Management Process

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Specialty TraditionalHigh level of patient training regarding usage and

proper handlingLittle patient training and enlightenment

regarding usage and proper handling other than traditional counseling.

High and continued patient interactions beyond the initial dispensing process

Generally a one time patient counseling session on first fill and availability to respond to questions as needed

Drug therapy may result in a higher frequency of side effects and are potentially more severe

Potential drug therapy side effects are less frequent and not as potentially debilitating

Dosage administration, storage condition and other factors may require altering daily patterns

Drug therapy generally does not require alteration to patients daily patterns

Patient non-compliance has potential for significant impact on expected improvements from therapy and can increase related costs.

Lack of patient compliance may have modest impact and likely be a progressive rather than immediate negative process.

Rigorous patient education is required often provided by nursing or pharmacist staff together with monitoring to assure optimal outcomes

Patient compliance education is generally limited to counseling and labeling of the product.

Differentiation: Points of Care

Industry Specialty Players…….today

■ The Specialty Industry is diverse & each segment has different strategies for driving growth & profitability

■ Typically the “Parent” company ultimately drives the business as it controls the money

■ There have been many mergers and acquisitions

■ Larger entities with multiple service offerings are often fragmented, under diff mgmt, and separate P&L’s

Baseline Limited Distribution Networks: …why & typical Specialty Requirements

Control Inventory

Data

Consistent Patient Services

Allow Multiple Billing Options

Channel, Returns, Lot #sProper ForecastingProtect from Spec Buying/IMA Agreements

Control from market dynamicsGreater Detail/ ICD-9, PA, etc.Greater FrequencyRemote Real-time Access: Purchasing, Pharmacy Director, RepsHIPAA Challenges Today

Reimbursement Support, Payment Plan Options24/ 7/ 365 ServicesRefill Reminder/ Compliance & Persistency (C&P) ProgramsNursing CoordinationAncillary Supplies

Medical, Pharmacy or Variation

Managed Care Access

Quick Backdoor Contracting/Product Specific

Case Management Support Patient Advocacy

PA ProcessingClinical AppealsFinancial Appeals (100% Copay, 50% Deductible, etc.)

Disease State Management Programs

Track Pharmacy and Medical for ROI StoryManage “Global” Patient Costs

FDA/ Clinical Programs

FDA Mandated Process or Data CaptureHigh Side Effect Product Profile/ Process and Data Capture/ Risk Avoidance

Specialty Pipeline Products

Pipeline Drug Anticipated Approval

What is this drug being developed for?

Retail Play ?

ambrisentan (Gilead) 6/18/07APPROVED

Type-A selective endothelin receptor antagonist (ETRA) for treatment of pulmonary arterial hypertension (PAH); oral

Product on market, using 8 specialty pharmacies and a Patient Registry

belimumab (LymphoStat B™ –CAB/HGS/GSK

2008 Fully human MAb that inhibits B-lymphocyte stimulator for treatment of lupus (SLE) and RA; IV infusion

Unknown at this time.

BiovaxID (Biovest) Fast Tracked for 2009

Autologous vaccine that activates tumor-specific cytotoxic immune cells for the treatment of low-grade non-Hodgkin’s B-cell lymphoma; injection

Patient Specific Product. Doubtful Retail Play




Retail Play?

C1-INH: Cinryze (Lev Pharmaceuticals)

BLA Submitted. Oct 1, 2007

C1 esterase (protease) inhibitor for the treatment and prevention of hereditary angioedema; IV

Doubtful. IV product with small population

CERA (Mircera - Roche) Nov 2007: DELAYED

Second-generation, long-acting erythropoietin (EPO)/continuous erythropoiesis receptor activator (CERA) for treatment of anemia due to renal failure and anemia due to cancer; SQ / IV

Yes. Will compete against Epogen, Aranesp, Procrit

certolizumab (Cimzia® -UCB Pharma)

DELAYED UNTIL 2008

Long acting TNF inhibitor for the treatment of Crohn's disease and RA; monthly SQ injection

Yes. Will be utilizing SP primarily but Retail may get access to it.

Specialty Pipeline ProductsPipeline Drug Anticipated

Approval What is this drug being

developed for? Retail Play?

eprodisate (Kiacta - Neurochem / Centocor)

7/16/2007DELAYED

AA-amyloid fibrillogenesis inhibitor / glycosaminoglycan (GAG) mimetic for treatment of secondary Amyloid A (AA) amyloidosis; oral

Small Niche Population so will be limited SP. However, also looking at Alzheimers: if successful, then will go to Retail.

golimumab (Centocor / Schering- Plough)

2008 Fully human monoclonal antibody (MAb) targeting tumor necrosis factor alpha (TNFa) for treatment of rheumatoid arthritis, ankylosing spondylitis, and psoriatic arthritis; SQ / IV

Yes. Will be a SQ product similar to Humira and Enbrel

nilotinib (Tasigna – Novartis) 9/28/2007 Next generation tyrosine inhibitor of Bcr-Abl for the treatment of patients with chronic myeloid leukemia (CML) who are either resistant to or intolerant of treatment with Gleevec; oral

Maybe. Although Gleevec went to retail, compl1ance rates were poor at retail and manufacturer may start at SP and then broaden.

pirfenidone (InterMune) 2008 Small molecule p38-gamma inhibitor for the treatment of idiopathic pulmonary fibrosis (IPF); Oral

Maybe. May have a patient registry program associated.




Retail Play?

polyribonucleotide (Ampligen –Hemispherx)

Fall 2007 Synthetic nucleic acid-based therapeutic/double-stranded RNA (dsRNA) drug for treatment of chronic fatigue syndrome (CFS, or myalgic encephalomyelitis); IV infusion

Infusion Center product. Ambulatory opportunity for community clinic.

progesterone (Gestiva – Adeza)

Approvable Long-acting form of a naturally occurring progesterone (17 alpha-hydroxyprogesterone caproate) to prevent preterm birth in women with a history of preterm delivery; IM injection

Maybe. Infertility Product. Probably going to go to Limited Distribution Network.

ranpirnase (Onconase - Alfacell)

Fall 2007 Cytotoxic ribonuclease / ribonucleotide reductase inhibitor for use in combination with doxorubicin for treatment of unresectable malignant mesothelioma and NSCLC; IV infusion





Retail Play?

rilonacept (IL-1 Trap –Regeneron)

Fall 2007 Interleukin-1 cytokine trap for the treatment of Cryopyrin-Associated Periodic Syndromes (CAPS); SQ

Small Population. Will be a Limited Distribution SP product.

sapropterin (Kuvan –BioMarin Pharmaceuticals)

Fall 2007 Second-generation formulation of the enzyme cofactor tetrahydrobiopterin (BH4) in the stereochemically pure 6R form for treatment of phenylketonuria (PKU); oral formulation

Small Population. Will be a Limited Distribution SP product.

satraplatin (BMS / GPC Biotech / Spectrum Pharmaceuticals)

8/16/2007 DELAYED

Third-generation platinum-containing compound for the treatment of hormone-refractory prostate cancer; oral

Maybe. Will be in a Limited Distribution Network initially.




Retail Play?

sipuleucel-T (Provenge –Dendreon)

5/15/2007 DELAYED

Autologous antigen-loaded dendritic cell therapy for the treatment of hormone-refractory prostate cancer; IV infusion


sitaxsentan (Thelin™ -Encysive)

6/15/2007 DELAYED

Small molecule, long half-life endothelin A receptor antagonist for the treatment of pulmonary arterial hypertension (PAH); oral

Likely Limited Distribution Network of SP’s. Likely FDA product monitoring or Registry?

temsirolimus (Torisel -Wyeth)

7/5/2007 APPROVED

Cell cycle inhibitor that inhibits mTOR-driven cell proliferation for the treatment of renal cell carcinoma; IV


tetrabenazine (Xenazine –Prestwick Pharmaceuticals / Roche)

“Approvable” Presynaptic monoamine storage depleter/postsynaptic dopamine receptor blocker for treatment of Huntington's chorea; oral

Limited Distribution Network of SP’s. Unique dosing and monitoring needed.

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Pipeline: Routes of Administration

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How Does this Affect Community Practice?

What does this mean for me?Where do I go from here?How do I move forward?When do I start?What is the best opportunity for me globally?How can I be better prepared to meet future needs?........

Lets start by discussing some changes and trends… then Strategy.. .then Tactics

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AmeriHealth Benefits Customers with Sweeping Changes to Prescription Drug Program:

Since October 1, 2006, AmeriHealth members enrolled in a Select Drug Benefit program and whose employers are based in Pennsylvania and Delaware, now have the convenience of being able to get many self-injectable medications at their local pharmacies, while employer groups benefit from the discounts that FutureScripts has negotiated. Previously, many self-injectable drugs were covered only under medical benefits.

New Injectable Programs are Emerging

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Generic Biotech Medicines Could Save Plan Sponsors and Patients $71 Billion

ST LOUIS, Feb 15, 2007 (BUSINESS WIRE) -- Generic biotech medicines could save U.S. plan sponsors and patients $71 billion over ten years, with $3.5 billion of the savings occurring the first year, according to a report issued by Express Scripts, one of the nation's largest managers of pharmacy benefit plans. Savings for plan sponsors could amount to $1,900 in the first year for a multiple sclerosis patient with a therapy treatment that includes biotech medicines. "Given the savings potential for plan sponsors and the patient, we believe it is critical that an approval pathway for generic biotech medicines be established," says Steve Miller, Express Scripts chief medical officer and vice president, specialty pharmacy. A pathway for generic biotech medicines would be created with the enactment of The Access to Life Saving Medicine Act of 2007, which is sponsored by Senators Charles Schumer (D-NY), Hillary Rodham Clinton (D-NY), David Vitter (R-LA) and Susan M. Collins (R-ME) and Representatives Henry Waxman (D-CA) and Jo Ann Emerson (R-MO). Miller says, "Express Scripts applauds and supports this important legislation to make biotech drugs more affordable."

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Generic Biotech Legislation

■ Legislation is in process in both the House and Senate would allow the Food and Drug Administration (FDA) to approve generic versions of “biotech” drugs, or “biologics” - products made from biological substances obtained from living organisms.■ The “Access to Life-Saving Medicine Act” (HR 1038 and S 623), would authorize the

FDA to approve “comparable” and “interchangeable” generic versions of brand-name biotech products.

■ Either kind of generic could be approved under abbreviated procedures that would be less arduous than those required of the original manufacturer.

■ “Comparable” products would have to show only that their active ingredients are similar to those in the original products. “Interchangeable” products would need to meet a higher standard, by proving both that their molecular structures are comparable to those of the original products and that they would be expected to produce the same clinical result as the original in any given patient. The bills would not require clinical studies of either kind of generic drug

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More Changes/ Trends: ■ Larger Organizations are having service issues

■ Mergers/ Acquisitions have led to distractions and “widget mentality” to meet numbers promised to the street

■ New products and programs trend to be customized moving focus away from the core business

■ As the space has matured, there has been a lot of consolidation. It will continue.■ Walgreens recently acquired Option Care for ~$850M. They are growing their offering and

now have PBM, Specialty (acquired MedMark previously), Infusion (Option Care), and Schraft’s (Niche Infertility) and Retail

■ Many SP’s continue to acquire “synergistic” business (with new services) to enhance their offering & differentiate themselves in the marketplace■ This makes sense to a point. Many are too large to manage and compete against one another

internally leading to confusion externally

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More Changes/ Trends:

■ Niche Players in the Sub-Specialty Market continues to meet an unmet need and is a potential area for growth ■ Bioscrip is the preferred Niche solution for UHC to provide Transplant and HIV Meds

■ Major Infertility Pharmacies have been acquired (IVP Care, Freedom, Schraft’s)

■ Limited Distribution Networks are not what they used to be■ There are always exceptions: ex Kaiser

■ The Major Payors(Wellpoint, Aetna, Cigna) now have built strong SP infrastructures that meet larger players

■ Payors are demanding that their “preferred” regional SP’s be included as a one- offs in the networks

■ Manufacturers look to Pharmacies that provide great services in Niche disease categories

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■ Some Disease Categories are no longer being “contracted” due to ASP reporting■ Meaning: what were good margin products at one time, may not be a focus of larger

organizations anymore

■ This could be opportunity in certain disease states/ products

■ Some Disease Categories are no longer being “contracted” as they are “older”■ Meaning: what was a focus of larger organizations at one time, may not be a focus anymore

■ Manufacturers tend to put efforts towards new product launches

■ It is difficult to move market share on “older” products

■ This could be opportunity in certain disease states/ products

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■ Be Aware that Network Lock-outs are occuring more frequently and could potentially put other business at risk

■ Meaning: PBM’s are trying to funnel products to their own SP’s

■ If you are “on the radar” screen, you could be locked out of their network

■ Some States have any willing provider statutes for their networks

■ Meaning: Medicaid prescriptions often have less risk associated

■ Medicare Part D often does not restrict specialty products, but can direct to a preferred arrangement with patient incentives

■ Meaning: You can fly under the radar screen by servicing Medicare Part D prescriptions

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Specialty Products by Practice Sites

Source: SPN

!

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Targeted Disease States by Most SP’s

Source: SPN

= Retail Potential

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Top Existing ProductsMedication Name Therapeutic Class Rank,

2006Share of Total Sales,

2006

Enbrel® Biolgic response modifiers 1 15.5%

Lovenox® Anticoagulants 2 8.4%

Humira® Biolgic response modifiers 3 6.2%

Avonex® Multiple sclerosis 4 5.0%

Copaxone® Multiple sclerosis 5 4.8%

Gleevec® Oral oncology 6 4.2%

Thalomid® Oral oncology 7 3.6%

Procrit® Blood modifiers 8 3.4%

Tarceva® Oral oncology 9 2.7%

Betaseron® Multiple sclerosis 10 2.4%

Forteo® Osteoporosis 11 2.4%

Rebif® Multiple sclerosis 12 2.3%

Temodar® Oral oncology 13 2.2%

Pegasys® Hepatitis C 14 2.1%

Xeloda® Oral oncology 15 2.1%

Follistim® AQ Infertility 16 1.7%

Synagis® Respiratory syncytial virus 17 1.5%

Aranesp® Blood modifiers 18 1.4%

Neupogen® Blood modifiers 19 1.4%

Peg-Intron® Hepatitis C 20 1.3%

2007 Entrants:- Nexavar: Onc- Revlimid: Onc- Sutent: Onc- Tysabri: MS- Vivaglobin: IG- Myozyme: LSD- Vivitrol: EtOH

= Good at Retail= Primary SP

Products

40

Current Fills of Specialty in Retail

!

41

1. Bio-pharmaceuticals and emerging targeted therapies will increasingly require customized supply chains

2. Traditional full service, broad distribution is not well suited for products with complex handling requirements or very limited end points

3. Payer relationships will become a significant success driver foreveryone involved in specialty pharmacy care

4. As branded Pharma becomes increasingly reliant on Specialty and Biotech their relationship with providers will change significantly

– Retail and mail are at risk in becoming less important to branded manufacturers

– Manufacturers will increasingly focus their sales efforts on specialty providers

3

Reality… but how can you change this?

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Let’s Start….. Do I want to be in this space?

You must do it full heartedly or it will cost you $$$$You will need to develop a full workplan including:

Research:Existing PatientsMD Information

How to work with ManufacturersToday vs FutureData

How to work with PayorsToday vs FutureData

Monitoring of ReimbursementPharmacy and Major Medical/ Paper Billing

Education/ Disease KnowledgeToday vs Future PipelineResources available

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How to Work with ManufacturersToday:

Manufacturers typically view retail as black holesData typically provided/sold to IMS but takes 30-90 days to get to repsData is not longitudinalManufacturer reps drive business to where they think pts get best compliance levels and where they can get data

It will be important to engage PharmaYou will need to track SP product data moving forward (elec, manual)HIPAA compliant information exchangeProof of compliance/ refillsThis data or other services can help rep “sell” the pharmacy to the office Manufacturers also help Payors know who does a good job in particular disease categoriesInvite them to train you Pharmacy StaffYou must make time for them and embrace their ideas

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How to Work with ManufacturersManufacturer Websites offer a lot of good information

Drug InfoLinks to valid OrganizationsPatient Assistance Programs InformationCo-Pay Assistance Program InformationFrequent Q & A’s/ TipsOften have a Reimbursement HUB to assist youMay have Patient Opt-In “Education/Compliance Programs”

Local Manufacturer RepsMay provide Drug Info Brochures, Videos etcAlthough this may take up space, a fax form/email process to the rep can help eliminate stocking large amountsWork with you local rep to have “Community Education Forums”

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How to Work with MD’sHave a “Story” to tell the officeHave testimonials from some of their patientsAsk the staff how you can make their lives easier/more efficientSet up a meeting btwn the office, manfac rep, and yourselfSet up a direct link (fax, phone number) for the office(s) specific to the disease categoryProvide updates on all steps of the process and outcomesProvide compliance info to the officeSet up an emergency protocol btwn office and pharmacyEstablish an on-call process and provide info to office staffInvite them to all educational sessionsVisit the office in person 2 times a month… take the staff to lunch to discuss how things are going and patient care

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How to Work with PayorsToday:

Payors ultimately “pay the bills”Usually involves a network contractSpecialty Products are usually updated qtrly, so important to stay currentPolicies are created for each specialty product and disease categoryThese are made public by almost all organizations and can be found on the Payor website

It will be important to engage PayorsCan you provide data that shows that if patients come to your pharmacy that they are more compliant, are happy, do not get hospitalized… a better ROI vs the next pharmacy?Attending local Payor activities/ Forums is importantVisit Payor/ Pharmacy Director and discuss your “Story”Is the Payor Case Management team willing to work with you? How?

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Operations and Reimbursement

- Put a process in place collect data

- Make sure patients getall refills

- Monitor reimb rates- Monitor medical pymts- Document payer PA

rqmts & policies- Have info on

manufac programs- Get nursing agency

info and process- Educate team & that

mistakes are costly

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Education and Disease KnowledgeAdvocacy Groups:

Patients with chronic diseases go to people who care about themLearn about each organization, when they meet, what you can do to helpProvide a sponsorship to a dinner or meetingLet your store be utilized as a meeting space (if available)Advocacy groups will let payors know that you do a good job and can provide letters to them saying such.

Make sure the entire pharmacy team is involved in the education process as every member has a partSee what national conventions there are on a particular disease category and make sure to attend if possibleAsk every Pharma company that has a product in the disease category to contact you if they have any dinner programs. This will be a great way to meet MD’s that prescribe the product.Have a refill reminder program in place for disease category

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Opportunities for Community Pharmacists in Specialty Products

DistributionEd Dillon, RPh

Community Specialty Pharmacy Network

What Is Specialty Pharmacy

• Drug Category Based• Disease State Based• Specialized Services Required• Economics Based

Specialty Disease States

• HIV-Aids• Oncology• Transplant• Hepatitis• Hemophilia• Infertility• Multiple Sclerosis• Growth Hormone – Pain Management• Immune Disorder – Crohn’s Disease• Psoriasis – Rheumatoid Arthritis

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Specialty Pharmacy Is About

• Highly interactive closely monitored patient care

• Working cooperatively with all members of the Healthcare Team

• Demonstrated Clinical Benefits• Proven Economic Value

Specialty Pharmaceuticals Characteristics

• Special Administration Requirements• Special Handling• Special Access Requirements• Special Clinical Support• Special Billing Requirements- Both Medical &

Pharmacy

Specialty Pharmacy Past

• Easy to enter• Community Based• Open to all• Performance based success• Poorly defined• Highly profitable when developed

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Specialty Pharmacy Present

• Currently being defined• True expertise required• Increasingly sophisticated• Gradually becoming restricted• Reimbursement Assistance• Enormous growth potential• More specialization-less generalization• Profitability being squeezed

Specialty Pharmacy Future

• Access to patients critical• Certification or Credentials• New revenue sources• Patient support services• Access to new drugs• Business risk in specialization• Stand alone in danger of disappearing• Margins constantly eroding

Who Is Your Customer

• Payer• MCO• Physician• Patient

4

Changes in Access

• Diseases• Drugs• Patients• Length or Type of Therapy• Pharmacy Requirements

New Marketing Paradigm

• Customize Your Marketing• Focus On The Needs Of The Target• Out-Reach Is Essential

New Revenue

• Exclusive Distribution Agreements• Disease State Management Payment• Payment For Uniform Data Collection• Alternative Distribution Pricing• Group Purchasing Arrangements

Learning Assessment Questions

Program: Opportunities for Community Pharmacies in Specialty Products Distribution Programs Presenter: David Suchanek, RPh Questions:

1. Biotechnology products are distributed by various channels of distribution. Over the past 5 years, which channel of distribution has grown the most? A. Retail/ Community Pharmacy B. Infusion Pharmacy C. Specialty Pharmacy: due to services provided by SP’s, manufacturers have migrated to SP’s to distribute

products D. Wholesalers E. Hospital Pharmacy

2. Approximately 20% of the “specialty” products in the pipeline today are via what route of administration?

A. Oral B. SQ C. IM D. Infusion: Infusion products and services will grow in the next several years. Many products are IV

before they become available in a SQ dosage form.

3. What are challenges faced by Community Pharmacies today when attempting to dispense “specialty” medications? A. Knowledge about the drug and/or disease state B. Complexity of Reimbursement C. Products are often in limited distribution channels D. Filling “specialty” products may put pharmacy on radar screen for being locked out of network E. All of the above: Understanding the challenges faced will allow greater success in the long run.

4. Retail/Community Pharmacies can enter into the “specialty” distribution marketplace by?

A. Understanding the existing channels of distribution, B. Learning targeted disease states and products/ Engaging the manufacturer to teach/train your staff C. Working with key MD specialists in the area and providing non-traditional services D. Get involved with the health care plans in your area E. All of the above: Knowing who the decision makers are helps in the development of the business plan

5. Retail/Community Pharmacies are at the right time and place to provide “specialty” services because:

A. Many new products are oral B. Medicare Part D has any willing provider inclusion C. States often require in-state pharmacies to provide services D. Existing Specialty Pharmacies are having service issues due to mergers and acquisitions E. Payors typically like to work with local entities if pricing is competitive F. New models are emerging that will allow Retail/Community Pharmacies to provide new services G. All of the above: The market is changing and there is a lot of opportunity for those who decide to enter

the “specialty” marketplace

Learning Assessment Answers

Program: Opportunities for Community Pharmacies in Specialty Products Distribution Programs

Presenter: David Suchanek, RPh

Answers:

1. c 2. d 3. e 4. e 5. g

Learning Assessment Questions

Program: Opportunities for Community Pharmacists in Specialty Products Distribution Presenter: Ed Dillon, CSPN

Questions:

1. What is the greatest challenge to independent community pharmacies in specialty pharmacy today?

2. List at least 2 revenue streams available to specialty pharmacy not available to retail.

3. Who is the customer in specialty – list in order of importance to the system? 4. What is the projected percentage of specialty drugs in the 2008 drug cost? 5. What is the largest specialty drug therapy class currently served by

community independent pharmacies?

Learning Assessment Answers

Program: Opportunities for Community Pharmacists in Specialty Products Distribution Presenter: Ed Dillon, CSPN

Answers:

1. Access to patient lives 2. Value of data, manufacturer fee for service 3. Payor, MCO, prescriber, patient 4. 26% 5. HIV/AIDS

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