1. Managing Healthcare Costs By Adopting The New Business Model for Managing Pharmacy Benefits

2. Today’s Headlines…
“National health expenditures are projected to reach $3.4 trillion by 2013.”- Centers for Medicare & Medicaid Services
“Americans consume about 3 billion prescriptions on average….” – National Coalition on Health Care
“Drug spending in the United States rose 11 percent in 2003 to $180 billion.” – National Coalition on Health Care
“PBMs have been accused of failing to act in the best interests of their clients.” – Consumersunion.org

3. Need for CHANGE High Operating Costs Hidden $$ Incentives
Paperwork in America’s health care system is one of the largest costs. In 2003, a study done by The New England Journal of Medicine, “estimated that administrative costs took 31 cents out of every dollar the United States spent on health care….” – NY Times
Hidden $$ Incentives
“In a traditional PBM, the plan sponsor may lose $1 to $4 per claim from retained rebates or undisclosed MAIC (maximum allowable ingredient cost) prices.”
– Drug Topics

4. Closed doors between Parties
“A few have sued their PBMs for alleged abuses of fiduciary duty, including efforts to conceal rebate revenue.”– Businessinsurance.com
“Drug Switching”
Some companies “have been accused of steering clients towards more expensive drugs in order to increase their own compensation….” – Consumerunion.org

5. Time for CHANGE Infrastructure inertia results from existing business
models and delivery systems that mandate that
revenues are derived from businesses behaving in a
certain way. These behaviors have driven
fragmentation, inefficiencies and administrative burden
while doing little to improve the quality of care…
Ventegra was formed to create new channels in the
delivery of healthcare that would be more efficient and
less fragmented.
- Robert Taketomo, Pharm.D, MBA, President and CEO, Ventegra

6. is NOT a PBM… NOT a GPO… *PBM: Pharmacy Benefit Management company
**GPO: Group Purchasing Organization

7. The First Contracting Services Organization (CSO)!is
THE NEW BUSINESS MODEL …
The First Contracting Services Organization (CSO)!

8. Ventegra is the first managed care Contracting Services Organization (CSO) representing our clients as their fully transparent contracting arm to control rising drug benefit costs by providing a choice of Pharmacy Benefit Administration (PBA) services.

9. Ventegra’s CSO offers a new channel in the delivery of pharmacy benefit management services
Business Culture is based on “truth and integrity”
Payors regain control with Ventegra’s CSO
Alignment of incentives across the board

10. What’s the Difference? CHARACTERISTIC PBM GPO TPA CSO
CSO
Not focused on one segment X
Safe Harbor Protection
Fully Transparent to Clients/Vendors
Formulary Services
Pharma Contracting
Acquisition-Cost Strategy
Own "Bricks/Mortar"
Shareholders

11. Payors’ Choice Choose only what you really need
Ventegra offers a wide variety of Pharmacy Benefit Administration Services and Programs
Payors CHOOSE what they want.

12. Key Ventegra Services and Programs
Contracting for pharmaceutical drug discounts
Transparent pharmacy claims administration
Mail service prescriptions at true acquisition cost (Cost-based Model)
Ventegra Injectable Program (“VIP”)
Robo-Rebatesm System: lets you see the discounts!
Formulary management and controls
Pharmacy benefit design strategy

13. Ventegra is transparent.
Ventegra is not “going” to be transparent.
Ventegra is transparent.

14. The Difference… True Transparency via
Full disclosure on ALL discounts/rebates
Any/All administrative services fees disclosed
Full access by payors to the terms of their agreements
Discounts/rebates may be administered by payor
Full pass through on retail pharmacy rates
Acquisition cost for mail order and injectable prescriptions
Transparency in claims processing
All discounts/rebates received by payor

15. Ventegra makes a historic difference!
Room for Improvement…
Mail Service
Injectables
Rebate Processing
Ventegra makes a historic difference!

16. Issues with Current Mail Order Delivery Systems
Hidden margins on drug costs and claims
Switching programs to more costly drugs
Dispensed quantity discrepancies
Charges for errors may not be reversed
Extra charges for retail prescriptions
$$ Differences between true cost and MAC
Many Hidden Costs
& Charges!
Ventegra offers solutions!

17. Ventegra’s Cost-Based Mail Service Model
Potential Financial Return*
(all costs are per tablet/capsule)
DRUG
MAC
TRUE COST**
% SAVINGS***
Buproprion 100mg
$0.48
$0.19
60%
Fluoxetine 20mg
$0.30
$0.04
88%
Lisinopril 20mg
$0.35
$0.10
71%
Metformin 500mg
$0.08
76%
Omeprazole 20mg
$2.08
$0.95
54%
*Actual analysis for Health Plan “X” conducted on 2004 data
**Before significant generic drug bid contracting process
***Rounded to the nearest whole number

18. The “Injectable” Dilemma
Unclear definition of “Specialty Injectable”
High $$ Cost (average >$1,000/prescription)
Is it Pharmacy Cost?? Or Medical Cost??
What is the true cost?
Any hidden charges?
Need for new benefit designs and utilization management systems
Ventegra offers solutions!

19. Ventegra Injectable Program (“VIP”) The TURNKEY Solution
Acquisition Cost based business model
Discounted injectable pricing direct from manufacturers
Integrated medical and pharmacy claims processing
A well-designed distribution system
Utilization management and authorization systems
Excellent customer service
Strategic consulting

20. Rebate Processing Woes
Contract terms not fully disclosed
Hidden discounts, fees and rebates
Total rebate $$ unknown – costly audits
Payors do not have control
True drug costs unknown
Rebates treated as “revenue” instead of “cost
offset”
Ventegra offers solutions!

21. Robo-Rebate System: The Benefits are Clear
Web-based = NO costly IT/IS expense
Rebates received is what you get = 100% pass through
Accurate invoices = NO costly audits
Complete report portfolio = TRUE drug cost revealed
Forecast reports = MAXIMIZE rebate opportunities
Access to contract terms 24/7 via internet = TOTAL accessibility

22. Formulary Services Three Formularies Consumer Oriented
Preferred
Premium
Premium Plus
Consumer Oriented
Customized for Payors
Formulary management and control
Pharmacy Benefit Design Strategy

23. Alignment of Incentives
Payors
- Realize the TRUE value of discounts/rebates
- Can do business planning with confidence
- Afforded more formulary choices
Providers
- Engaged in the formulary process
- Administrative simplification
Patients
- Patients realize the benefits of reduced drug costs
- Greater access to important pharmaceutical products
Pharmaceutical Industry
- ALL discounts/rebates reach the intended parties
- Improved image with transparent discounts/rebates

24. The difference is
not in “what we do”…
…but HOW we do it!

25. Vice President Business Development
Jerry Kugler
Vice President Business Development
Peggy Frank
Public Relations
888 Prospect Street, Suite 330 La Jolla, CA (858)
GET IN TOUCH WITH VENTEGRASM

26. Sources:
“National Health Care Expenditures Projections: ”, Centers for Medicare & Medicaid Services, September 17, 2004
“Health Insurance Cost”, National Coalition on Health Care, 2005
“Fact Sheet: Disclosing Relationships Between Pharmacy Benefit Managers and Drug Companies”, Consumersunion.org, 2005
“The Medical Money Pit”, Paul Krugman, New York Times, April 15, 2005
“Under Mounting Pressure, New Breed of PBM is Born”, Fred Gebhart, Drug Topics, September 12, 2005
“Employers Pushing Their PBMs for Revenue Information, Rebate Funds”, Karen Pallarito, Business Insurance, September 19, 2005