1. Copay Structure Principles in Practice Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 1

2. An organization that manages pharmaceutical benefits for a managed care organization, other medical providers or an employer. PBMs contract with clients interested in optimizing the clinical and economic performance of their pharmacy benefit. PBM activities may include some or all of the following: benefit plan design, creation/administration of retail and mail service networks, claims processing and managed prescription drug care services such as drug utilization review, formulary management, generic dispensing, prior authorization and disease and health management. AMCP: Guiding Principles for Effective Electronic Messaging Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 2 Pharmacy Benefit Management

3. A payment sharing agreement between the insurance company or federal entity and the patient, which often includes the copayment concept of a specific amount per visit or for an established amount of supplies (such as $10 for a doctor visit or $5 for a 30-day prescription), or a stated percentage (such as the patient’s 20% responsibility of payment). Navarro RP. Managed Care Pharmacy Practice. Gaithersburg, MD: Aspen Publishers;1999. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 3 Coinsurance

4. A payment that is the most common method of member cost sharing today. Example: $10-generic/$20-brand formulary The advantages of this type of payment are market acceptance, member satisfaction, and ease of administration. Disadvantages is that it is not indexed for inflation an may contribute to excessive utilization of benefit. Navarro RP. Managed Care Pharmacy Practice. Gaithersburg, MD: Aspen Publishers;1999. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 4 Fixed Dollar Co-Payment

5. The amount of eligible expense a covered person must pay each year before the plan will make payment for eligible benefits. Example: The drug benefit would become active after a patient has paid $200.00 in a 12 month period, and would then cover 80% of charges in excess of $200.00 level. Navarro RP. Managed Care Pharmacy Practice. Gaithersburg, MD: Aspen Publishers;1999. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 5 Deductible

6. A risk strategy that allows the potential profit a carrier traditionally receives from funding insurance risk to be experienced instead by the employer. Essentially, the health benefits are funded from internal resources without purchasing insurance. Navarro RP. Managed Care Pharmacy Practice. Gaithersburg, MD: Aspen Publishers;1999. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 6 Self-Insured

7. A benefit design that allows the member to pay a lower copayment if generics or branded formulary products are dispensed. This design helps to offset a portion of the acquisition costs and encourages generic use and formulary compliance. Navarro RP. Managed Care Pharmacy Practice. Gaithersburg, MD: Aspen Publishers;1999. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 7 Tiered Benefit Design

8. The percent increase, including inflation and utilization, a group experiences in total spending on the pharmacy benefit from one year to the next. Click here and overtype for title Copyright © 2002-2005 – Academy of Managed Care Pharmacy (AMCP)Slide 8 Trend