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Healthcare Brand Management Market Access ConceptsHealthcareMedicalPharmaceuticalDirectory.COM www.HealthcareMedicalPharmaceuticalDirectory.com

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Healthcare Brand Management Market Access Concepts

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What is Access?• The degree to which a healthcare product is: – Easily prescribed/used by providers – Reimbursed by health plans – Effectively promoted/sold in a market segment – Available through a variety of contractual arrangements and supply chain sources

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Access And Reimbursement• If payers do not reimburse for the product, it is less likely caregivers and patients can use it• Marketing and sales initiatives of manufacturers will be much less effective• The product will not be able to generate enough revenue to be commercially viable• Competitors will gain an advantage through their market access initiatives

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Planning Access• The product must be correctly positioned with primary prescribers and provide clear clinical value in patient treatment• Identify channel(s) your product will be used most, where it realizes greatest revenue potential – Target the predominant prescribers and payers in the channel – Develop and implement a contracting strategy for each channel, include customers and leading payers – Fortify the product’s position with physicians through clinical marketing strategy and accelerate growth with sales tactics, ongoing promotion and pull-through – KOL support establishes a conduit of influence into clinical decision makers and their peers

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Planning Access• A direct customer contract can be undermined if product is available at a lower price through a GPO contract• Distributors, wholesalers and other reseller contracts need channel alignment to protect agreements and maintain profit continuity in other market segments• Discounts, rebates and other financial features need to be accounted for throughout agreements to assure margin and true profit is realized before transactions are underway• Commercial contract pricing needs to be reconciled against government contracts requiring “best price”

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Planning Access• Sole awards and preferred product positions provide premium access but require the steepest discounts and garner the most competitive attention• Rebates based on volume contracts need clear definition and dedicated resources to maximize access and accurately manage rebates through sales tracings, chargeback data• It is necessary for pharmaceutical companies to balance direct contracting strategies with healthcare clients versus GPOs; healthcare entities engage in both arrangements depending on their procurement preferences

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Planning Access• Customer supply chains featuring distributors, wholesalers and other sources vary, contracts needs to account for these• Maintaining/expanding access requires a budget to open new initiatives and provide marketing/sales resources to propel them• Access requires selectivity, fortifying/expanding access should be based on customer need, reimbursement potential, available resources and long term ROI• The product must be correctly positioned with primary prescribers and provide high clinical utility

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Pull-Through Reinforces Access• Establishing a leading contractual arrangement and/or preferred status is just the beginning… – Physicians and patients need to know they have access to the product, be familiar with the product’s attributes and establish the processes to procure it through – Sales uptake and ongoing momentum is driven by a well- supported sales force and strong marketing initiatives to fortify and expand share/revenue – New competitors will launch pull-through initiatives to penetrate the market, established competitors will widen share and prevent newcomers from getting traction – Physicians and payers need to be continually engaged and cognizant of the product and its manufacturer’s value

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Connectivity Coordinates Access• Access is driven by connectivity and throughput of information: – Social Media propels clinical and promotional messaging to healthcare professionals, patients and consumers – Healthcare plans make data-driven decisions based on care/cost outcomes, claims processing reporting and member utilization – Pharmaceutical companies rely on blended data to effectively contract, maintain compliance, determine share, assess marketing/sales ROI – CMS/Federal and state sponsored plans are data dependent to fund programs such as Medicare, Medicaid, 340B, reimburse providers and pharmaceutical companies, as well as maintain patient eligibility files – ACOs are hugely dependent on electronic information flow to manage their protocols and assess performance

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Examples of Market Channels• Dialysis• Long Term Care• Mail Order Pharmacy• Home Infusion• Hospitals Each channel• Infusion Clinics requires an• Military Treatment Facilities/MTFs access• Oncology Clinics strategy…• Physician Practices• Retail Pharmacies• Specialty Pharmacies• Surgical Centers/Outpatient Surgery,• Veterans Administration/VA Hospitals & Clinics

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Leading Pharmacy EntitiesRetail Pharmacy PBMs* – CVSCaremark – ARGUS – Rite Aid – BioScrip – Target – Catalyst RX – Walgreens – CVSCaremark – Wal-Mart – Medco – Restat – SXC HealthIn addition to contracting with pharmaceutical manufacturers, PBMs contract withretail pharmacies to fill prescriptions for pharmacy plan customers *PBMs: Pharmacy Benefit Managers

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A Note About PBMs• PBMs contract with brand and generic manufacturers for better pharmaceutical pricing and actively manage utilization of prescription medication by customer plan members• PBMs feature their own formularies and assertively negotiate for rebates based on volume/preferred status with pharmaceutical companies• Some PBMs like Express Scripts, Medco, and SXC operate their own mail order pharmacies, others like ARGUS, CatalystRx and Restat do not• PBMs manage prescription plans for employer, government (Medicaid, Medicare, TRICARE, etc.) and other sponsors• PBMs offer clinical programs to manage some therapies closely, these provide access opportunities for manufacturers

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A Note About Mail Order Pharmacies• Mail order pharmacies dispense maintenance therapies (cholesterol, diabetes, contraceptives, hypertension, etc.) in 90-day supplies, it is key for manufacturers of maintenance therapies to have contracts with mail order pharmacies• They charge plans/patients less, the concept is patients are getting their medications “in bulk” 90-day supplies versus 30-day retail increments• Mail order pharmacies typically operate specialty pharmacy units as well to dispense injectable products to support advanced patient care• CVSCaremark, Walgreens, Rite Aid and Wal-Mart operate mail order pharmacies in addition to their retail pharmacy operations• Health plans with their own mail-order operations include Cigna (Tel Drug), Humana (FutureScripts), BCBS (Prime Therapeutics) and United HealthCare (Prescription Solutions)

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Leading Payer PlansCommercial Plans Government Payers – Aetna – Medicaid (state-based, – BlueCross BlueShield plans* federally subsidized) – Cigna – Medicare – Humana – TRICARE (active/retired – Kaiser military) – United Healthcare – 340B Plans – WellPoint (14 BCBS plans)**There are 38 BlueCross BlueShield plans affiliated with theBlueCross BlueShield Association

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A Note About 340Bs• 340B is a Federal drug discount program established in 1992, it requires drug manufacturers to provide outpatient drugs to eligible health centers, clinics and hospitals at a discounted/negotiated rate (average 50% below retail)• The 340B market segment has been growing due to issues with the economy and larger numbers of uninsured persons but margin is lower as 340B is price driven• 340B is also known as "PHS pricing" or "602 pricing“, patients discounts are created by contractual arrangements between the care provider and a pharmacy• Entities eligible to participate in 340B include: – Black Lung Clinics – Disproportionate Share Hospitals (DSHs) – Family Planning Clinics – Federally Qualified Health Centers (FQHCs) – Federally Qualified Health Center look-alikes (FQHCLAs) – Hemophilia treatment centers – HIV / Ryan White Clinics – Sexually transmitted disease and tuberculosis clinics – State-operated AIDS Drug Assistance Programs – Urban Indian organizations

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GPO and Healthcare System LeadersGPOs Healthcare Systems – Amerinet – Dept. of Veteran Affairs/VA – Gerimed – HCA Inc. – Epic – Community Health Systems – HealthTrust Purchasing – Trinity Health Group (HPG) – Partners Healthcare – Innovatix – NYC Health & Hospitals Corp. – ION (M – Kaiser Permanente – MedAssets – Universal Health Services Inc. – MHA – Catholic Healthcare West – Novation – Adventist Health System – PDM – Tenet Healthcare Corp. – Premier GPOs are frequently a part of the Healthcare System access formula

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A Note About GPOs• Group Purchasing Organizations (GPOs) contract with manufacturers of brand or generic pharmaceutical products, medical devices, equipment and other items used in healthcare settings• Healthcare entities pay a membership fee to “join” a GPO to get access to discounted pricing GPOs negotiate with manufacturers, GPOs also collect 1-3% margin from drug products and provide other services to gain• Some GPOs are business units of distributors/wholesalers but do not take possession of products, they are price-driven, contracting entities• HPG, MedAssets, Novation and Premier are larger independent GPOs• Wholesaler operated GPOs include INN, ION (AmerisourceBergen), VitalSource (Cardinal Health), Onmark, U.S. Oncology (McKesson)• An array of customer groups use GPOs including healthcare systems, hospitals, oncology clinics, home infusion, surgical centers, dialysis clinics, physician groups and long term care companies

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Nursing and Assisted Living Facilities Nursing Facilities Assisted Living – HCR ManorCare – Emeritus Corp. – Golden Living – Brookdale Senior Living – Life Care Centers – Sunrise Senior Living – Kindred Healthcare – Altria Senior Living – Genesis Healthcare Corp. – Five Star Quality Care – Sun Healthcare Corp. – Assisted Living Concepts – SavaSeniorCare – Merrill Gardens – Extendicare Health Services – HCR ManorCare – ELGS – One Eighty-Leisure Care – Skilled Healthcare Corp. – Life Care ServicesOnce highly fragmented, consolidation among nursing and assisted living facilityoperators continues which will greatly concentrate revenue sources in the future

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Long Term Care Pharmacy and Home InfusionLTC Pharmacies Home Infusion Providers – Guardian Pharmacy – Apria – Millenium Pharmacy – AxelaCare Home Solutions – Omnicare – CarePoint Partners – Partners Pharmacy – Healix – PharMerica – Home Solutions – Senior Care Pharmacy – Infuscience – Lincare – OptionCare/Walgreens – Vital CareThe home infusion provider market continues to evolve through consolidation ofexisting providers and hospitals expanding their services into home infusion offerings

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Surgical Centers and Dialysis ClinicsSurgical Centers Dialysis Providers – Amsurg – American Renal Associates – HVP – Centers for Dialysis Care – Meridian Surgical Partners – DaVita – SCA – Dialysis Clinic Inc. – Surgical Care Affiliates – Fresenius – Symbion – United Surgical Partners – Innovative Dialysis Systems – Renal AdvantageGPOs are frequently a part of the Surgical – Renal Care PartnersCenter access formula – Satellite Healthcare – U.S. Renal CareDaVita and Fresenius control two-thirds of the U.S. dialysis market, consolidation inthe channel is frequent and driven by cost controls to generate revenue underMedicare patient care performance standards and reimbursement limits

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Access Summary• Each market channel requires its own access strategy• Fully account for primary physicians and payers in each channel to position, price and promote product successfully• Contracting may involve direct-to-customer, distributor, GPO, wholesaler, payer and other arrangements to succeed in the channel• Competitors are selectively stronger/weaker in different channels, exploit channels they are weakest in to grow product sales• Contracts are only part of market access, contract management, pull- through and connectivity are necessary to maintain/expand sales/share performance• Be selective, fortification and expansion of access requires clinical performance to demonstrate true value and gain acceptable reimbursement levels --plus suitable resources to sustain initiatives for acceptable financial returns

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