Specialty Medical Benefit Management of IG: Issues for Consideration Lauren Barnes Senior Vice President Avalere Health, LLC

Under Medicare, the Benefit Category Determines Coverage, Coding and Payment Pump Coverage, Coding, and Payment HyQ Drug Coverage, Coding, and Payment HyQ Administration Coverage, Coding, and Payment DME Incident toDMEIncident to DME E Code DME fee schedule N/A J Code 95% AWP N/A N/A (patient self- administers) Home Health + DME E Code DME fee schedule N/A J Code 95% AWP N/A Home Health PPS 3 Physician Office E Code DME fee schedule Supply (no payment) J Code 95% AWP J Code ASP+6% 1 CPT Code MPFS HOPD* E Code DME fee schedule Supply (no payment) J Code 95% AWP C/J Code ASP+X% 2 CPT Code/APC OPPS 1 Reimbursement will be at WAC+6% until ASP is available. 2 Reimbursement will be at 95% of AWP until WAC is available and then will be WAC+6% until ASP is available. When eligible for pass- through payment, reimbursement will be ASP+6%; after pass-through status expires, reimbursement will be ASP+5% (CY2011). 3 Patient must meet eligibility criteria for home health services (patient must be deemed home bound). AWP = Average Wholesale Price MPFS = Medicare Physician Fee Schedule OPPS = Outpatient Prospective Payment System APC = Ambulatory Payment Classification PPS = Prospective Payment System HOPD = Hospital Outpatient Department CPT = Current Procedural Terminology ASP = Average Sales Price *See Appendix slides 60-61 Medicare coverage and payment varies significantly by setting of care

Private Payer Coverage, Coding and Payment for IG Varies By Setting of Care Immune Globulin Coverage and Coding IG Administration Coverage and Coding DME Drug: J-code External Infusion Pump: E/S Code Home health or home infusion benefit 1 Coding & payment vary Home Health +DME Drug: J-code External Infusion Pump: E/S Code Home health or home infusion benefit 1 Coding and payment vary Physician Office Drug: J-code External Infusion Pump: E/S Code CPT Code Fee Schedule HOPD Drug: J-code External Infusion Pump: E/S Code Coding and payment vary Private payers may use different reimbursement benchmarks for drug payments (e.g. average sales price (ASP), wholesale acquisition cost [WAC]), and Average Wholesale Price [AWP]) CPT = Current Procedural Terminology 1 Patient must meet private payer eligibility criteria for home health/home infusion benefit; these criteria are generally much less stringent than Medicares criteria. In all settings of care, other than the hospital inpatient setting, Immune Globulin is paid for separate from the administration

Private Payers Are Likely to Focus on Management of Specialty Drug Spending, Including IG Source: ESI Drug Trend Report, 2011 Specialty drugs, such as IG, are the fastest-growing segment of drug spend. This is likely to lead to an increased focus on utilization management (UM) techniques for expanded indications Drug Spending Trend, 2006-2011

Most Private Plans Manage IG Through the Medical Benefit Using a Specialty Pharmacy In addition, 80 percent of payers managed IG through specialty pharmacy in 2011 Source: EMD Sereno Specialty Digest, 2011

Private Payers Are Likely to Increase Their Focus on Management of IG Pressures to Control Costs Due to the changing landscape, health plans are likely to increase their focus on management of specialty medical benefit drugs through increased UM Increase in Specialty Products The prevalence of specialty products is increasing in the market and these products account for a large portion of total drug spend making them a target for health plans Potential for Increased Focus on Management of IG through Specialty Pharmacy 40 percent of private payers indicated that within the next year they intended to limit the number of subcutaneous IG agents on formulary based on favorable pricing or rebates from manufacturers * Source: *EMD Sereno Specialty Digest, 2011

Private Payer Perspective Private Payers may demand increased evidence to differentiate IG products To date, limited evidence has differentiated IG products Absent evidence, payers may view products as interchangeable and demand price concessions for preferred positioning Increases pressure on medical versus pharmacy benefit IG products Private Payers may have higher thresholds for coverage of expanded indications for IG Private Payer Perspective Private Payers may demand increased evidence to differentiate IG products To date, limited evidence has differentiated IG products Absent evidence, payers may view products as interchangeable and demand price concessions for preferred positioning Increases pressure on medical versus pharmacy benefit IG products Private Payers may have higher thresholds for coverage of expanded indications for IG Private Payer Tools Clinical policies (cover or non- cover decisions) Utilization management i.e., Step edits Guidelines and care pathways Formulary evaluations Pay-for-performance initiatives Value-based insurance designs Private Payer Tools Clinical policies (cover or non- cover decisions) Utilization management i.e., Step edits Guidelines and care pathways Formulary evaluations Pay-for-performance initiatives Value-based insurance designs Private Payers Increase Thresholds for IVIG Coverage and Payment Payers are likely to demand increased evidence to differentiate IG Products and when considering expanded indications

Panel Discussion

Specialty Medical Benefit Management: Immunoglobulin Michael Baldzicki, CRCM Vice President AxelaCare Health Solutions A National Home Infusion Provider

Payer & Specialty Medical Benefit

Payer Insight Areas: Specialty Pharmacy Average wholesale price (AWP) Average sales price (ASP) Average manufacturer price (AMP) Wholesale acquisition cost (WAC) Average wholesale price (AWP) Average sales price (ASP) Average manufacturer price (AMP) Wholesale acquisition cost (WAC) Home health Physician office Hospital (inpatient and outpatient) Ancillary Home health Physician office Hospital (inpatient and outpatient) Ancillary Copayments Coinsurance Out-of-pocket (OOP) max/min Deductibles Doughnut hole Copayments Coinsurance Out-of-pocket (OOP) max/min Deductibles Doughnut hole Data Reimbursement Site of Care Benefit Design Pharmacy claims system Medical claims system Specialty fulfillment system Pharmacy claims system Medical claims system Specialty fulfillment system

Site of Care: Shift of Reimbursement Hospital Outpatient Hospital Inpatient MD Office Buy & Bill Home Infusion Site of Care Options: Payers MD Office Specialty Medical Benefit MD Office Specialty Pharmacy Benefit Expensive Cost-effective for Member Decrease Total Cost of Care Pharmacy Benefit

MBaldzicki Product Demand & Clinical Needs Percentage of Usage Volume Patients Growth Per Year Primary Immunodeficiencies36.0%2.1% Neurology25.1%9.9% Hematology / Oncology25.7%3.8% Cardiology1.5%5.6% Rheumatology / Nephrology5.4%11.5% All Others*6.3%13.4% TOTAL100.0%8.2% IVIG & Subcutaneous Immune Globulin - United States United States IVIG Forecast, 2009 2015

A New, Proprietary Home Infusion Tool 14 A new, proprietary iPAD home infusion tool, tool functions as an outcomes reporting and medical management resource for referring physicians and payers.

Home Infusion Therapy Monitoring Physical Assessments Disability / Activities of Daily Living (ADL) Quality of Life (QOL) Validated Outcomes Measures IVIg Patient Data Collection CIDP/GBS/Peripheral Neuropathy Myasthenia Gravis Primary Immunodeficiency Outcomes vs. Dose Over Time Careators Care Support Physician Data Review Administrators Coordinators Researchers Dose, Side Effect, Clinical Monitoring Pharmacist Data Review

Case Study 1 New Neurology Patient Response to Therapy Peripheral neuropathy patient, new to IVIG, receives recommended dosing of 2gm/kg followed by 1gm/kg every three weeks. Physical ability as measured by grip strength increases over 20% after only three doses (less than two months) Outcomes tool shows physician that patient has responded to therapy, confirming diagnosis, and dramatic patient benefit. A non-responsive patient would be identified in this timeframe (2 mo.), and could come off of drug, saving payer as much as 60% to IVIG drug cost, as compared to typical 6 mo. office visit decision. This would be approximately $50k in savings for a non- responder, and faster change to a more effective therapy option. 16 Case Study Example: Immune Therapy Monitoring

Alzheimer's Indication IVIG Alzheimers Indication

Alzheimers Prediction

GLOBAL DEMAND FOR IVIG/SCIG WITH/WITHOUT ALZHEIMERS DISEASE - 2008 - 2018 (Metric Tons)

US source plasma collection forecast, 1996 -2013

Currently, IVIG is not FDA approved for the treatment of Alzheimer's disease, but physicians are free to prescribe it if they believe it is warranted in a particular case. Manufacturers are confident it will be approved in the next few years. Some analysts estimate that as many as 2,000 Alzheimer's patients in the US have received IVIG treatment. IVIG & Alzheimers

Questions

References International Blood & Plasma News The Marketing Research Bureau, Inc. PPTA (Plasma Protein Therapeutics Association) NDDR=National Donor Deferral Registry FFF - Plasma New Products and Development Dermatology, Infectious diseases, Ophthalmology, Obstetrics/Gynecology, others IVIG 2015: A Forecast of the Polyvalent Intravenous Immune Globulin (IVIG) Market in the United States in 2015. Orange, CT *AMR Patient Profile "Intravenous Immune Globulin Hospital Patient Profile Reports" - United States Edition 2009 Axelacare Health Solutions Internal Data Analytics & Outcomes Annual Reports of major pharmaceutical companies: Baxter, CSL, Grifols, Octapharma, Telecris U.S. Census Bureaus released data

Specialty Medical Benefit Management: Immunoglobulin Site of Service Implications on IVIG Cost to Treat Michael T. Einodshofer, RPh, MBA Director of Utilization Management, Walgreens Specialty Pharmacy Division [email protected] 2013 Walgreen Co. All rights reserved.

Site selection for infusion is largely dictated by the prescribing physician Each place of service may have different fee schedules for medications Each place of service may have different benefit implications and limitations Remicade, IVIG, Tysabri are the most prevalent non-chemo drugs in medical. Site of Care Optimization distribution of drugs covered in the medical benefit generally reside in 3 main sites of service 2013 Walgreen Co. All rights reserved. Typical drug related medical benefit costs by site of care* Outpatient Hospital Physician Office All Others Home Infusion / Infusion Suite *Allowable amounts based on Walgreens internal analysis, will vary by client ~10% ~5% ~45% ~40%

Site of Care Optimization to manage medical pharmacy costs 2013 Walgreen Co. All rights reserved. Lower cost, lower risk, more convenient ATS options Specialty Infusion Site of Care Optimization Move clinically appropriate patients from high cost of care delivery settings to lower cost of care alternate treatment sites (aka ATS) Physician Office Home Infusion Infusion Suites

Site of Care Optimization 2013 Walgreen Co. All rights reserved. Walgreens client date on file. Dates of service 1/1/2011 12/31/2011 1.9 million commercial lives. IVIG defined as J1459, J1557, J1561, J1566,J1567, J1568,J1569, J1572, J1599. Claims meeting specified exclusion rules are not included herein. Each dot represents the cost per 500mg per immune globulin claim. Significant pricing variability is observed within hospital outpatient site of service. Site of Care Optimization lowers the average price per unit and provides more price consistency.

Much lower variance and lower average cost per unit at MD office and Home Infusion / Infusion Suite 2013 Walgreen Co. All rights reserved. Walgreens client date on file. Dates of service 1/1/2011 12/31/2011 1.9 million commercial lives. IVIG defined as J1459, J1557, J1561, J1566,J1567, J1568,J1569, J1572, J1599. Claims meeting specified exclusion rules are not included herein.

While home infusion offers the lowest cost per unit, majority of patients are treated in the most costly place of service 2013 Walgreen Co. All rights reserved. Walgreens client date on file. Dates of service 1/1/2011 12/31/2011 1.9 million commercial lives. IVIG defined as J1459, J1557, J1561, J1566,J1567, J1568,J1569, J1572, J1599. Claims meeting specified exclusion rules are not included herein.

Specialty Medical Benefit Management: Immunoglobulin Ann Nguyen, PharmD Staff Vice President

Immunoglobulins Challenges IVIG Products Clinical mechanism of IVIG/SQIG action remains undetermined Lack of disease specificity, numerous FDA indications and many off label uses Outcomes Clinical effectiveness and follow-up are often not documented Extended treatment length without clinical outcomes observed Market Market consolidation, fewer manufacturers controlling distribution channel and allocation Consumer demand and consumption continuing to grow

Immunoglobulins Mgmt Strategies MemberPhysician Ancillary HIT & SPP Utilization Mgmt Care Mgmt Benefit alignment: Rx & Med In-Network incentives In office infusion incentives Limit IVIG distribution channel to a select few Preferred HITs / SPPs w/demonstrable outcomes Contract pricing Appropriate use w/clinical outcomes & length of therapy criteria Preferred product selections Pre-cert required (med) Case Mgmt & Coordination Robust meaningful analytics

Chronic Care Management 40% + of the US population has one or more chronic condition 1 50% of working age Americans have at least one chronic condition 2 The prevalence of chronic disease is increasing in the elderly and non-elderly populations 3,4 A significant number of people have multiple chronic diseases Chronic conditions account for 75% of health spending in the US 5 By 2017, insurers will be spending an average of 32% more for their individual members' medical claims 6 Adapted from Health ReformGPS, L. Cartwright-Smith, 2011 [1] Chronic diseases are conditions that last a year or more and require ongoing medical attention and/or limit activities of daily living.W. Hwang, et al., Out of Pocket Medical Spending for Care for Chronic Conditions. Health Affairs. 20:2689 (2001). [2] C. Hoffman and K. Schwartz. Eroding Access Among Nonelderly U.S. Adults with Ch ronic Conditions: Ten Years of Change.Health Affairs. 27:w340 w348 (2008). [3] K. A. Paez, L. Zhao, W. Hwang. Rising Out Of Pocket Spending for Chronic Conditions: A Ten Year Trend. Health Affaris. 28:1525 (2009). [4] K. E. Thorpe, Lydia L. Ogden, K. Galactionova. Chronic Conditions Account for Rise in Medicare Compass BioPharma, LLC- All Rights Reserved [5] H.Tecco, Rock Health, HIT Consultant, February2013 Cost of the Future Newly Insured under the Affordable Care Act (ACA), Society of Actuaries, March 2013

Immunoglobulin Dynamics Primary Immunodeficiency (PI) 300K patient population 10% ~ 28,000-30,000 patients receive Ig therapy Neurologists have demonstrated a growing acceptance of IVIg for patients with Neurological conditions Safety, Efficacy, Supply, and Outcomes (CIDP, MNN, MG, GB, and AD) Ig Manufacturers' have leveraged significant investments to ensure: Expanded donation, efficient Ig fractionation, and adequate Ig supply Disease state awareness and education Distribution and service models to provide access to care Compass BioPharma, LLC- All Rights Reserved

Ig Ambulatory Variables Compass BioPharma, LLC- All rights reserved Specialty Infusion/Pharmacy Reimbursement Compression Cost of Goods (acquisition / procurement) Competition M&A Consolidation MCO AWP to ASP Methodology Labor Costs (Fixed/Variable Clinical/Ops/Corporate) Infrastructure (IT, Logistics, DMPs) Appropriate Patient Cost Containment HC Reform? Opportunity To Adapt

Moving from Volume to Value Compass BioPharma, LLC- All Rights Reserved IVIg PI Patien t IVIg PI Patien t Medical Benefit Hospital Homecare Med Benefit IVIg Pharmacy Med Benefit SCIg Pharmacy Benefit SCIg (1-2X) Pharmacy Medical and Pharmacy Benefit Designs that encourage benefit and SOC migration Med Benefit IVIg Med Benefit IVIg Med Benefit IVIg AIS Phys Office Amb Clinic AIS Phys Office Amb Clinic AIS Phys Office Amb Clinic SOC significantly influences Ig Total Cost of Care under the medical benefit 60-65% of all IVIg grams still administered in a hospital setting 60-65% of all IVIg grams still administered in a hospital setting 1 1 3 3 2 2 4 4 5 5

Ig Efficiency Considerations Although only 7 FDA approved indications, 100+ ICD-9 codes support Ig through proven clinical data and historical acceptance Leads to inefficient/experimental Ig dosing patterns Opportunity for Clinical / Medical treatment algorithms (IVIg /SCIg) Medical Benefit data barriers exist to track, monitor, and manage IT / data management enhancement- integrated EMR/EHR transference Medical Benefit Data Stratification (Hospital, OPIC, HIT, AIS, Phys Office) Compass BioPharma, LLC- All Rights Reserved New models of care represent an effort to solve deeply embedded Healthcare delivery problems experienced by organizations of all sizes and SOCs New models of care represent an effort to solve deeply embedded Healthcare delivery problems experienced by organizations of all sizes and SOCs GE Health, 2011, 01-Elhauge-Chap-01.indd, Oxford Press, 2010

Documents

Specialty Medical Benefit Management of IG: Issues for Consideration Lauren Barnes Senior Vice President Avalere Health, LLC