Presented by:Keenan & Associates

Debra L. Yorba, Sr. Vice PresidentFebruary 22, 2014

License 0451271

Plan Design Sub-Committee Recommendations

KPPC/ESI Prescription Plan 2015-16 Plan Year

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ESI Rx Program Key Statistics

The following statistics are based on an experience period of October 1, 2013 thru September 30, 2014:

1. Average covered employees per month - 8,082 employees

2. Average covered members per month – 19,5363. Total Rx plan costs - $22,450,384 (+7.2%)4. Total Rxs filled – 253,336 (-3.6%)5. Plan Cost Per Member Per Month (PMPM) -

$95.76 (+19.6%)

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Non-Specialty Rx /Specialty Rx Statistics

Non-Specialty Drug Plan Cost PMPM = $73.64 (+14.0%)

Specialty Drug Plan Cost PMPM = $22.12 (+42.9%)

Total Plan Cost Non-Specialty Drugs = $17,264,66 (+2.2%)

Total Plan Cost Specialty Drugs = $5,185,723 (+28.1%)

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Top 10 Drugs by Plan Cost

Brand Name Indication # of Rx

Plan Cost

Enbrel - Specialty

Inflammatory Conditions

164 $589,523

Abilify Mental/Neuro 675 $548,754

Compound Misc Conditions 1,494 $530,650

Copaxone - Specialty

Multiple Sclerosis 57 $369,360

Humira – Specialty

Inflammatory Conditions

89 $327,840

Lantus Solostar Diabetes 756 $315,714

Duloxetine HCL Depression 1,157 $304,582

Humalog Diabetes 726 $301,733

Nexium Ulcer Disease 1,037 $299,803

Solvaldi - Specialty

Hepatitis 10 $285,227

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Plan Design Sub-Committee Recommendations

• Plan Design Sub-Committee reviewed REEP claims experience and detailed claims analysis

• REEP has historically had minimal Utilization Management

• Rising Rx costs, Rx waste and extreme Specialty Drug costs require diligent management

• Recommendations do not effect the formulary; REEP remains on the broadest formulary ESI offers

• Members currently receiving medications will be grandfathered on those medications

• Estimated cost savings to REEP - $2.5 million in Rx claims costs

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Recommendation #1

Hepatitis C Drug Management• Average treatment over $100,000/patient• Estimated 3.2 million Americans living with

Hep C virus• 16,000 cases are diagnosed each year• Drug spend per insured person is expected to

increase 1800% between 2013 and 2016

• Members currently in treatment will be grandfathered on the medication they are currently receiving

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Recommendation #1 Cont’d

Preferred Specialty Management + Hepatitis Cure Value Program (HCV)• Viekira Pak dispensed as preferred 1st Line Use

drug for Hepatitis C to REEP members• Exclusively dispensed through Accredo • Accredo provides 2x greater adherence to

medication thru Clinical Specialist and patient monitoring throughout therapy

• Refund to REEP for early treatment discontinuation up to 2 fills ($56,000)

• Extended therapy cap at $100,000

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Recommendation #2

Implement Advanced Utilization Management which includes:

1. Prior Authorization 2. Step Therapy3. Drug Quantity Management

• Patients currently receiving medications will be grandfathered on current medications

• Will effect members receiving new prescriptions 7/1/15 or after

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Recommendation #2 Cont’d

Prior Authorization - Ensures clinically appropriate use of medications

How does Prior Authorization Work?1. Prescription is provided to pharmacy2. If prior auth is on file at pharmacy, Rx is

dispensed3. If no active prior auth on file, Pharmacy

calls Physician4. Physician calls Prior Auth Dept at ESI,

submits clinical criteria, claim is approved and medication dispensed

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Recommendation #2 Cont’d

Step Therapy - Reduces prescription waste by promoting use of generics with therapeutic equivalence

How Does Step Therapy Work?1. Prescription is provided to pharmacy2. System checks history for Step 1 or Step 2

drugs 3. If history is present, medication is dispensed4. If not history present, prior authorization is

required and Pharmacist calls Physician to obtain Rx for Step 1 drug

5. Patients currently receiving medications will be grandfathered on current medications

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Recommendation #2 Cont’d

Drug Quantity Management - Aligns dispensing quantity with FDA-approved dosage guidelines

How does DQM Work?1. Prescription is provided to pharmacy2. System checks for appropriate quantity and

medication is dispensed if quantity is less than or equal to limit

3. If quantity exceeds limit, pharmacist receives message with maximum quantity allowed.

4. Pharmacist can dispense within guidelines or ask prescribing physician to request an exception

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Recommendation #3

Implement Express Advantage Network• What is it? - A Preferred network of

pharmacies offering deeper discounts to REEP with substantial savings on Rx costs

• Express Advantage Network 32,000 pharmacies – Tier 1

• All other pharmacies – Tier 2• Members choose either Tier 1 or Tier 2

pharmacy• Rx filled at Tier 1 pharmacy are filled at the

regular copays• Members who use Tier 2 pharmacies will pay

an additional $15 copayment per Rx

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Recommendation #3 Cont’d

Implement Express Advantage Network

• Who are the major Tier 1 Pharmacies?Target, Ralphs, Kmart, Vons, Walmart,

Rite Aid, Albertsons, Stater Bros., COSTCO• Who are the major Tier 2 Pharmacies?

CVS, Walgreens, The Medicine Shoppe

Members can use the pharmacy of their choice. Members pay an additional $15 per Rx at Tier 2 pharmacies.

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Recommendation #3 Cont’d

Implement Express Advantage Network• Current Utilization

– 47% of members use Tier 1 pharmacies – 53% of members use Tier 2 pharmacies

• Proximity of Tier 1 pharmacies to members– With 3 miles – 99.3% of membership– Within 5 miles – 99.8% of membership– Within 15 miles – 100% of membership

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Recommendation #4

Implement Select Home Delivery• 72.3% of REEP’s maintenance drugs are filled at

the retail pharmacy • Home Delivery saves the member money and costs

REEP less• Member chooses whether to fill at retail pharmacy

or home delivery – the member chooses – it is not mandatory

• Member has up to two Rx fills at retail pharmacy to make their decision – first two fills are covered at copay

• Third fill and after will cost member 100% until member elects to continue at retail or home delivery

• Once member chooses, Rx is filled at regular copay

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In Summary

The Plan Design Sub-Committee is recommending adoption of all programs outlined: Hepatitis C Management Program Advanced Utilization Management

• Prior Authorization• Step Therapy• Drug Quantity Management

Express Advantage Network Select Home Delivery

Est. Rx claims savings $2.56 million