1. Comparing US and Canadian Drug Plan Design Trends: The Express Scripts Story
Steve Goldberg, MD,MBA
Chief of Medical Affairs
Value of Generics Symposium
October 26, 2011
Montreal, Canada
102411
1500 CST

2. Agenda Overview: US PBM, Express Scripts
Generics are a key strategy to maximizing quality and
mitigate cost trend
Our experience with “free” generics and tiered co-pays
There is significant opportunity in Canada with active
management of the pharmacy benefit

3. US Pharmacy Benefit Managers (PBMs)
Emerged in late 1970s to manage increasing prescription costs
Adjudicate 90% of all prescriptions processed today (approximately four billion annually)
Top three pharmacy benefit managers (PBMs) handle around 50% of outpatient prescription volume

4. Express Scripts Overview
60 million members
Respected and recognized
Our business model is in alignment with our clients
Business model does not compete with our clients
Scientific research to develop meaningful prescription-drug solutions
Express Scripts Technology & Innovation Center
Key corporate facts
More than 13,000 employees
60,000+ participating pharmacies in US
54.1 million Home Delivery and specialty prescriptions
72.7% of all prescriptions dispensed are generic drugs
At Express Scripts, we work to make the use of prescription drugs safer and more affordable

5. The Research and New Solutions Lab
Data Insights Solutions

6. Key Companies Trust Express Scripts
Confidential & Proprietary
© 2011 Express Scripts, Inc. All Rights Reserved

7. Annual US Pharmacy-Related Waste More than $403 billion
Three steps to drive out pharmacy-related waste
Step  Optimize Channel
Step  Optimize Drug Mix
Step  Maximize Adherence 
$88.3
$258.3 
$56.7 
Amounts are in billions of dollars
Source: Express Scripts, Inc.

8. Pharmacy Benefit Managers
Electronic claims processing
Benefit design and administration
Pharmacy networks
Formulary development and management
Generic substitution
Pharma rebates and discounts
Patient service
Home Delivery
Clinical management
Trend management
Reporting

9. National P&T Committee
Committee composition
18 physicians and one pharmacist
community- and academic-based practice settings
No Express Scripts employees
Term of three years
Specialties
Allergy and Asthma
Geriatrics (MD and PharmD)
Ophthalmology
Cardiology
Infectious Disease
Pediatrics
Dermatology
Internal Medicine
Psychiatry
Endocrinology
Neurology
Pulmonology
Family Practice
Obstetrics and Gynecology
Rheumatology
Gastroenterology
Oncology

10. Attacking the Waste Spending More and not Getting More
Chemical Equivalence
Therapeutic Equivalence
Occurs “automatically”
Requires interventions
Prilosec
Omeprazole
Nexium
Omeprazole
Substitution occurs 97% of the time with little intervention
Substitution occurs infrequently without intervention

11. Attacking the Waste Spending More and not Getting More
In 2007, the average retail price of a generic prescription drug was $ The average retail price of a brand name prescription drug was $ (source: The National Association of Chain Drug Stores, 2007)
30 days of one brand-name drug: $119.51
30 days of the generic equivalent: $34.34
No difference in health benefit

12. Generic Fill Rate (GFR) The “trend management metric”
Clinical Potential: 86%
The higher the
Generic Fill Rate, the lower the overall drug cost.
Every 1% increase in GFR = 1.5% decrease in Rx spend
Express Scripts Average: 72%

13. Generic Fill Rate (GFR) The “trend management metric”
Clinical Potential: 86%
WASTE: Spending money without improving health
Express Scripts Average: 72%

14. Generics Avoid Unknown Risks 25 Years, 25 “Unsafe” Drugs
1982: Ticrynafen®
1998: Seldane®
1999: Hismanal®
2001: Baycol®
2005: Palladone®
1983: Zimeldine®
1998: Duract®
1999: Trovan®
2003: Orlaam®
2005: Cylert®
1984: Methaqualone®
1998: Posicor®
2000: Rezulin®
2004: Vioxx®
2006: Tequin®
1996: Trancopal®
1999: Raxar®
2000: Propulsid®
2005: Tysabri®*
2007: Permax®
1997: Fen-Phen®
1999: RotaShield®
2000: Lotronex®*
2005: Bextra®
2007: Zelnorm®*
1982: Ticrynafen®
1998: Seldane®
1999: Hismanal®
2001: Baycol®
2005: Palladone®
1983: Zimeldine®
1998: Duract®
1999: Trovan®
2003: Orlaam®
2005: Cylert®
1984: Methaqualone®
1998: Posicor®
2000: Rezulin®
2004: Vioxx®
2006: Tequin®
1996: Trancopal®
1999: Raxar®
2000: Propulsid®
2005: Tysabri®*
2007: Permax®
1997: Fen-Phen®
1999: RotaShield®
2000: Lotronex®*
2005: Bextra®
2007: Zelnorm®*
* Reintroduced with new safety program
21 of the 25 were still brand-only

15. Optimize Plan Design, Optimize GFR

16. Optimize Your Copay Levels Two employers, two plans
Plan A (7,000 lives) and Plan B (6,300 lives)
Started at same copay levels
Made the same Tier 2 and 3 copay increases
Plan B also lowered Tier 1 copay by $3
No other benefit changes in 2005

17. Optimize Your Copay Levels Two employers, two plans
Results
Plan A GFR: 1.4% higher than expected; saved $0.91 pmpm
Plan B GFR: 4% higher than expected; saved $2.60 pmpm
Plan A (7,000 lives) and Plan B (6,300 lives)
Started at same copay levels
Made the same Tier 2 and 3 copay increases
Plan B also lowered Tier 1 copay by $3
No other benefit changes in 2005
Plan A missed a win/win:
$1.69 in additional savings by lowering Tier 1 copay by $3

18. Landscape in Canada Drug Trend GFR 2003 11.2% 32.1% 2004 9.6% 34.7%
2005
9.4%
37.5%
2006
8.4%
38.8%
2007
7.1%
41.4%
2008
5.0%
45.0%
2009
5.4%
47.0%
2010
2.8%
49.0%

19. Generic Fill Rate

20. Landscape in Canada
The vast majority (approx 80%) of plans in Canada are using a single-tier plan that covers all items that require a prescription (vs multiple tiers or step therapy)
Decline in drug trend due primarily to patent cliff and generic price reform
Canada GFR rate of 49% vs US 72%
The clinical potential GFR is much higher through active benefit management (e.g., exchanges of therapeutic equivalents)

21. Step Therapy and FormularyRapidResponse
Medical Exception Criteria
Back-up Drugs
Higher-cost Brands
Back-up Drugs
Lower-cost Brands
Front-Line Drugs
Generics
Step Therapy RapidResponse :
Patient + Physician

22. Benefit Changes Have Limited Impact on Calls 10,000 Enrollee Plan, Changed from 2 to 3 Tier Benefit
Extra Calls Per Week
Express Scripts
Call Center HR
Department
Source: Express Scripts Office of Research and Development based on a 2-tier to 3-tier benefit change

23. How Clinical 360® Works Reduce Enable Prescription Waste
We have a comprehensive mix of programs that will deliver immediate, short term, and long term clinical goals to:
Reduce
Prescription Waste
Manage
Medication Therapy and Safety
Enrich
The Care Continuum
Enable
Better Overall Health and Value

24. Path to Greater Care and Zero Waste
Turn2Generics®
Zero $ Generic Copay
Drug Quantity Mgmt
Prior Authorization
Select Step Therapy*
Step Therapy
Clinical 360® Trend
Drug Utilization Review
Medication Adherence
Fraud, Waste, and Abuse
ExpressAlliance®
Integrated Data Services
MTM
Clinical 360®Health Solutions
Specialty Pharmacy and Distribution
Specialty Pharmacy Benefit Management
Select Specialty*
Medical Benefit Management
Specialty Benefit Services
Retiree Drug Subsidy
Medicare Part B
2-Tier (open)
3-Tier
Copayment Differential
2-Tier (closed)
High Performance
Prime
National Preferred
Prescription-Drug Plan
Medicare Solutions
Formulary
Benefit Design *
Retail Network
Standard Network (50k)
Select Network*
Preferred Network
Exclusive Network
Exclusive HD
Preferred HD
Select HD*
Home Delivery Education
Home Delivery

25. Generics Reduce Prescription Waste
Program
Description
How it Works
Implementa-tion Time
Clinical Edits
Reporting
PMPM Savings
Value
Turn2
Generics®
Member fills brand at retail.
Letter alert.
Savings with generics.
Program targets expensive brands.
Proposes therapeutic shift.
Practitioner engaged.
Letter mails 10 days from date of data analysis.
ACE
ARB
CCB
Cox2
NSAID
HMG
Lyrica
PPI
Activities and Outcomes
$0.09
PMPM
Reduces waste both plan sponsors and members.
ROI up to 8:1
Switch rate 7.4%
Zero Dollar Generic Copay
Plan sponsor waives copayments up to six months to motivate members to try generics.
Members receive a materials to share with practitioner.
Educates them about therapeutically equivalent generics .
Notes they will have and $0 copayment if their physician provides a new prescription for a generic alternative.
Standard=4 weeks, Custom=6 weeks.
Brand ACE Inhibitors, ARB, ARB/HCTZ Combo, Beta Blockers, BisphosphonatesOthers
$0.03 PMPM
ROI up to 23:1
Express Scripts Proprietary & Confidential

26. Express Scripts National Formularies
National Preferred
Prime
High Performance
Generic Drugs*
99.3%
Brand Drugs*
54.6%
45%
36%
Features
Manages drug trend with a three-tier or open formulary benefit design
Features a broad brand selection and low-cost generic products
Manages drug trend with a three-tier or closed formulary benefit design
Limited number of brands
Aggressively manages drug trend with a closed formulary benefit design
Comprised of generics and the lowest cost brand drug in each therapeutic class
Trend Focus
Optional Trend programs
Recommended for use with Enhanced Trend Package
Mandatory Trend Package
Ideal Plan Sponsor Type
Marginally managed
$20 Copayment differential and less
Well-managed
Greater than $20 Copayment differential
Aggressive
Closed benefit design

27. Summary
Drug plans in the US that are actively managed by PBM's show significant savings compared to plans that are passively managed
Much of the savings from actively managed US plans come from maximizing the use of generics
Most plans in Canada are not actively managed (proven US PBM tools are not used) so generics are underutilized
Savings opportunity for private plans in Canada with increased use of both interchangeable and therapeutically equivalent generics

28. Thank you
Questions?