1. C2 Solutions
Pharmacy 201
Session 2
The C2 Value Story

2. Session 1 Assignment 1 2 3 4 C2 Solutions The C2 Value Story
Does the Client/Prospect Have a Pharmacy Contract? 1
How Long is the Term of the Contract or Agreement? 2
Is the Client/Prospect currently in a carved-in or carved-out arrangement? 3
Does the arrangement provide audit rights or allow for a market check? 4
The C2 Value Story

3. Introductions Kristen Boyd Robert Lewis
C2 Solutions
Introductions
Kristen Boyd
Director of Training, Development and Engagement
Robert Lewis
Business Development Executive
The C2 Value Story

4. Agenda 1 Pharmacy Contracts 2 Pharmacy Analysis 3
C2 Solutions
Agenda
Pharmacy Contracts 1
Pharmacy Analysis 2
Best Candidates and RxBenefits Differentiators 3
Q&A 4
The C2 Value Story

5. Key Considerations in Pharmacy Pricing
C2 Solutions
PBM Contracts:
Key Considerations in Pharmacy Pricing
The C2 Value Story

6. A Contract is Only as Good as the Sum of Its Parts
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A Contract is Only as Good as the Sum of Its Parts
The C2 Value Story

7. Pharmacy Pricing—Key Considerations
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Pharmacy Pricing—Key Considerations
Client-Held Contract OR
Carrier-Held Contract
One Year Length
Multi-Year Length
Traditional
Transparent (or Pass Through)
All-In Discounts
Discounts based on PBM Definitions
Exclusive Specialty
Open Specialty
Aligned Formulary
Non-Aligned Formulary
Rebate Credits
Administrative Fee Credits
Zero Balance Logic (ZBL Off)
Zero Balance Logic (ZBL On)
Audit Rights
Not Eligible for Audit
The C2 Value Story

8. What is the length of the contract term (number of years)?
C2 Solutions
What is the length of the contract term (number of years)?
How do you protect yourself?
Vast majority of PBM contracts are long-term three year arrangements with harsh penalties to terminate early
Why is this bad?
Stale pricing in second and third year
Inability to respond to the rapidly changing pharmacy marketplace
Costly to exit contract early
Two roads to protect yourself:
Three year contracts with annual market checks
One year price contracts
The C2 Value Story

9. Carrier-Held Contract
C2 Solutions
Who Holds the Contract?
Client-Held Contract
Carrier-Held Contract
Client-Held (Direct) Contract with PBM
Vary greatly depending upon the PBM and arrangement
Client-centric contracts
Protect clients from inadequate terms and conditions
Can provide client-level guarantees vs book of business guarantees
Provide great accountability
Carrier-Held (Or Indirect) Contract with PBM through Carrier or TPA
Client has indirect relationship with PBM since Carrier holds the contract
Relying on the holding party to look out for client’s best interest
No audit rights
Limited PBM accountability: i.e. “estimated discounts,” “book of business rates,” “aggregate not client specific,” etc.
The C2 Value Story

10. What Pharmacy Arrangement is Best?
C2 Solutions
What Pharmacy Arrangement is Best?
Traditional
Transparent (Or Pass Through)
PBM agrees to set pricing terms
PBMs has broader sources of revenue (may receive revenue from spread pricing, mail order, % rebate retention, data sales, ancillary fees, etc.)
Transparent/Pass Through Contract
All retail discounts and rebates are “passed along” to the group in return for high administrative fees
PBM has limited sources of revenue (admin fee, mail order, data sales, ancillary fees, etc.)
PBMs may receive revenue from spread pricing, mail order, % rebate retention, data sales, ancillary fees, etc.
PBMs offer less aggressive guarantees because they have zero upside.
The C2 Value Story

11. How are Brand & Generics Defined?
C2 Solutions
How are Brand & Generics Defined?
What’s best for the client?
All-in Discounts?
Discounts Based on PBM Definitions? OR
General pricing tactic in which PBMs classify brand and generics based on the PBM's proprietary algorithms or definitions.
These classifications generally result in a brand or generic being reclassified
Result: Easier for the PBM to meet their pricing guarantees during reconciliation.
Best approach: Drug Classification is determined by Medispan Prescription Pricing Guide.
This accurately places drugs in the proper categories.
The C2 Value Story

12. How are Single Source Generics (SSGs) Defined?
C2 Solutions
How are Single Source Generics (SSGs) Defined?
What are the contract pitfalls?
“Single source generic” status is assigned to generic manufacturer who receives an exclusive approval to market as first time generic
6-month exclusivity period
In a typical contract, instead of the SSG drug getting a deep generic discount (74%), they get a typical discount of 35%
The C2 Value Story

13. Which is the Best Deal? Value of SSGs & DSGs in the Generic Discount
C2 Solutions
Which is the Best Deal? Value of SSGs & DSGs in the Generic Discount
Generic pricing applies to drugs with more than 2 manufacturers. SSGs & DSGs are included in the brand guarantee
Generic pricing applies to drugs with more than 1 manufacturer. SSGs are included in the brand guarantee
All-in Generic Guarantee
SSGs & DSGs are reconciled with generics
Contract 1
Contract 2
Contract 3
AWP-78.00%
AWP-77.50%
AWP-77.00%
Actual Effective Rate Performance
AWP-72.00%
AWP-74.00%
AWP-77.00%
NOTE: Dual source generics (DSG’) refer to generic with only two manufacturers
The C2 Value Story

14. How is Specialty Being Purchased?
C2 Solutions
How is Specialty Being Purchased?
What specialty network options can impact pricing?
Exclusive
Open Specialty
Specialty is accessed through an exclusive network
Generally deeper discounts
Some PBMs provide greater clinical support for members
Specialty can be accessed through open network
Discounts not as deep
Adherence and clinical support can be more difficult for members
The C2 Value Story

15. How Can Formulary Impact Pharmacy?
C2 Solutions
How Can Formulary Impact Pharmacy?
What is a Formulary?
The purpose of the formulary is to encourage the use of safe, medically appropriate and cost-effective medications that results in improved health care outcomes at a reasonable cost. Each PBM will have their own tailored and unique formulary that they will agree to cover.
Why Formularies Matter?
Successful formularies are able to:
Encourage generics,
Maintain clinical integrity,
Secure competitive pricing,
Incorporate rebates to maximize overall value, &
Adapt to the changes of the marketplace
Plans with open formularies:
Receive lower rebates,
Less competitive pricing,
More difficult to clinically manage pharmacy, &
Assume greater risk
The C2 Value Story

16. Understanding Rebates
C2 Solutions
Understanding Rebates
How do you discuss rebates with your customers?
Rebate Credits? or Administrative Fee Credits?
Rebates may approach 15%-20% of a client’s gross drug costs.
Rebates represent a significant financial opportunity for the employer
Typical optics related to rebates:
PBM retains the majority of the rebate dollars.
Carrier shares a small portion of the rebates in the form of an admin credit.
Rebates based on only a subset of brand claims (rebate-able brand drugs).
Defining rebates as a percentage with no per brand guarantees.
Days’ Supply Caveats
The C2 Value Story

17. What is Zero Balance Logic (ZBL)
C2 Solutions
What is Zero Balance Logic (ZBL)
How does Zero Balance Logic impact plan performance?
A zero balance claim is a claim where the member pays for in its entirety and the employer pays zero…often times because the pharmacy’s cash price (U&C) is lower than copay.
ZBL impacts effective rates. If a PBM uses an AWP-100% discount on ZBL claims instead of the actual discount, the PBM will inflate the overall discount performance to help them meet their guarantees.
The C2 Value Story

18. How ZBL Can Impact Members
C2 Solutions
How ZBL Can Impact Members
If ZBL is Turned On
If ZBL is Turned Off (RxB standard)
Benefits the PBM; Tactic allows pharmacy to charge “up to” the copay when the discounted claim cost is less than the copay.
For example:
Discounted claim cost = $4
Usual & Customary (Cash Price)= $15
Copay = $10
Member will pay $10 (the lower of U&C or copay). The PBM then benefits from the extra $6.
Benefit to Client; Tactic allows employees to pay the lowest possible price by paying the lowest of U&C, copay, or discounted claim cost.
For example:
Discounted claim cost = $4
Usual & Customary (Cash Price)= $15
Copay = $10
Member will pay $4 ( lower of the discounted claim cost, U&C, or copay). The member benefits from always paying the lowest available cost.
The C2 Value Story

19. Does your contract have Audit Rights?
C2 Solutions
Does your contract have Audit Rights?
Audit Rights
Not Eligible for Audits  X
Must translate to a monetary recovery process to recover any shortfalls in the pharmacy contract performance
Pricing terms on paper are not always what a client’s actual performance is
Periodic audits can ensure client are receiving the full guarantees and value of the contract
Very rare to have any monetary recovery for underperformance
Clients have general discount rates
Little can be done to address discounts performing below the stated discounts
The C2 Value Story

20. C2 Solutions
Case Study Check-In
How do PBM contracts and pricing considerations impact the customer you have identified for your case study?
The C2 Value Story

21. C2 Solutions
Pharmacy Analysis
The C2 Value Story

22. What is the Value in Completing a Pharmacy Analysis?
C2 Solutions
What is the Value in Completing a Pharmacy Analysis?
Full visibility into how the current contract is performing
Measure the current arrangement against others to see if your contract is truly competitive
RxBenefits can compare against other pharmacy offerings as well (Current, Renewal Offer, plus three RxBenefits PBM partners)
Proactive approach to pharmacy - current clients can either confirm the value of their pharmacy arrangement or transition the client to a better option before it becomes an issue
Average Overall Savings %
24.17%
Carved-In
Groups analyzed with average savings of
24.24%
Carved-Out
23.98%
The C2 Value Story

23. The Overall Value of Data Analysis
C2 Solutions
The Overall Value of Data Analysis
Contract Check- ups at No Cost for Your Clients/Prospects
Offense vs. Defense – Safeguard Your Clients/Prospects
Gain Valuable Insight into Current Arrangement
Compare against Other National PBMs
Let RxBenefits Help You Play Offense
The C2 Value Story

24. Customized Data Request Letter
C2 Solutions
Customized Data Request Letter
Detailed Analysis Requirements
Current contract pricing terms and copy of contract (if available) providing:
Brand AWP Discount
Generic AWP Discount
Brand Dispensing Fee
Generic Dispensing Fee
Specialty Discounts
Rebate Credits
Claim File Detail
Timeframe
Most recent 12 months of Rx claims history
Rx Claim File Data Elements
Member Copay/Coinsurance
Fill Date
Ingredient Cost
Brand/Generic Indicator
AWP
Etc.
The C2 Value Story

25. How It All Comes Together…the Process
C2 Solutions
How It All Comes Together…the Process 1
Initiate Strategy Call – Needs Assessment 2
Collect Data for Analysis (estimate 2 weeks) 3
Detailed Analysis of Contract Performance & Effective Rates (Estimate 8-10 business days for completion) 4
Analysis Illustrates Client Results- NDA required to release 5
Review Customer Analysis Results with Consultant 6
Present Analysis Results to Customer 7
Client’s Decision Process
The C2 Value Story

26. Key Metrics of Differentiation & Savings: Sample Pharmacy Analysis
C2 Solutions
Key Metrics of Differentiation & Savings: Sample Pharmacy Analysis
Contract Comparison
Executive Summary
Plan Design
Reprice by Channel and Drug Type
Claim Distribution by PBM
Claim Statistics
Formulary Disruption (Group & Member)
Clinical and Utilization Programs
Effective Discount Comparison
The C2 Value Story

27. C2 Solutions
Case Study Check-In
What questions/concerns do you have for completing a pharmacy analysis for the customer you’ve identified for your case study?
The C2 Value Story

28. Best Candidates Discussion
C2 Solutions
Best Candidates Discussion
The C2 Value Story

29. Other Considerations:
C2 Solutions
Things to Consider
Self -Insured
Fully-Insured
vs.
Carve-In
Carved-Out
vs.
Under 10,000 EEs
Over 10,000 EEs
vs.
Single Pharmacy Plan / Locations
Multiple Pharmacy Plans / Locations
vs.
Other Considerations:
Industry TPA/Carrier Connectivity
Formal RFP Process Implementation Timeline
The C2 Value Story

30. C2 Solutions
Why RxBenefits?
The C2 Value Story

31. C2 Solutions
Market Niche
THERE IS A VOID IN THE MARKET
Three largest PBMs earn $200 billion in combined revenue.
Majority of resources focused around health plans, governmental and large commercial employers.
Best resources assigned or reallocated to larger payor market.
Choose “not to quote” on smaller groups.
Approach has created a void in the marketplace.
RxBenefits is uniquely positioned to fill this void with our advanced capabilities and dynamic, personalized service approach.
The C2 Value Story

32. RxBenefits Model Delivers…
C2 Solutions
RxBenefits Model Delivers…
Real Program Savings
Full Suite of Services
Meaningful Analytics Rx
Aggregate Purchasing for All Employers
Client-Facing Services
Contracting
Clinical Management
Data Analytics
Independent Audits
Billing
Performance Reviews
Account Management
Performance Guarantee/Oversight
Core PBM Services
Pharmacy Networks
Clinical Resources
Mail Order
Mobile App
Account Management
Performance Guarantee/Oversight
The C2 Value Story

33. The Ongoing Value of RxBenefits in the Numbers
C2 Solutions
The Ongoing Value of RxBenefits in the Numbers
“Our clients not only experience real savings in year one, but ongoing value through “evergreen” pricing that ensures our clients’ contracts remain highly competitive.”
Average Savings over Previous Contract for RxBenefits Prospects
20%+
Average Contract Price Improvement Year over Year 9%
Clients Had a Surplus of Savings over Contract Guarantees
90%+
NOTE: Statistics based on national consulting firm book of business with RxBenefits
The C2 Value Story

34. Our Approach to Serving C2 Clients
C2 Solutions
Our Approach to Serving C2 Clients
The C2 Value Story

35. RxBenefits Service Model
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RxBenefits Service Model
IMPLEMENTATION TEAM
DATA MANAGEMENT
CONCIERGE SERVICES
Strategic Oversight & Expertise acting as an Extension of HR
MEMBER SERVICES
CLINICAL SERVICES
PLAN PERFORMANCE
The C2 Value Story

36. Account Management Approach
C2 Solutions
Account Management Approach
Proactive Resource Team & Consulting Partner to Support HR
Each Client has an assigned Strategic Account Executive with one or more Account Managers to support all account-related activities
Seasoned team
Extensive experience
Monthly
Customized plan reporting
Customized
Clinical recommendations
30+
Service standards employed to ensure client satisfaction
The C2 Value Story

37. C2 Solutions
Member Services
Individualized High Service Approach for Members with Better Support
In-house Member Service Reps
Dedicated service team to respond to s
Average 8+ years experience
RxAssure
Individualized – High Touch Service
Hands-on approach and 1st call resolution –
Emergency access to Pharmacist
Member access 24/7
Dedicated and toll-free number for members
Saves member time and money
Supports Member’s Rx Management
Service standards employed to ensure client satisfaction
The C2 Value Story

38. Client and Member Services Teams
C2 Solutions
Client and Member Services Teams
Issue resolution for clients, consultants, and members
For HR and Consultants: ,
For Members: ,
Specialized team supporting the daily needs of clients, consultants and account management teams
Experienced, high-performing call center team delivering superior level of service to members
Client Services
Stacy Bell, Manager
Member Services Latrina Hicks, Manager
Client Services Case Manager
Member Services Supervisors
Client Services Associates
Member Services Representatives
The C2 Value Story

39. Open Discussion: Questions from the Field
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Open Discussion: Questions from the Field
Thinking of your case study, how will you position RxBenefits based on your clients needs?
What additional questions do you think your customer will have?
What additional information do you need in order to close this sale?
The C2 Value Story

40. What’s Next? Complete the “Top 10 Pharmacy Questions” worksheet
C2 Solutions
What’s Next?
Complete the “Top 10 Pharmacy Questions” worksheet
Complete Part 2
Prepare to discuss with your customer
Complete the course evaluation
You will receive the evaluation through
Your thoughtful feedback is very valuable to us
Think Pharmacy
Integrate pharmacy into your planning and customer conversations
Consider the impact Rx has on your customer’s total spend
The C2 Value Story

41. C2 Solutions
Questions?
The C2 Value Story