AGENDA

Paramedical Landscape - Fraud/abuse Drugs, “The Changing Landscape” Past/Future trends Industry – EP3 Plan Design, Action or Apathy?

Paramedicals

Canadian Healthcare Anti Fraud Association CHCAA

30 plus members including Insurance companies Third Party Administrators Ontario Provincial Police

Meet Monthly Review/share/update tips, hot spots Paramedical Practitioners, Doctors, Dentists

Pharmacists and “Hospitals” - Watch list

Paramedicals One of the Top Canadian Carriers in 2012

Medical consultants reviewed in excess of $1 Million of claims

Recovered well above targeted goals in savings and recoveries

Representing a 20% increase in fraud activity year over year

Eg. 18 employee firm had $26,000 in para claims Practitioners accessing web forms and policy info

via internet CHCAA also deals with Identity Theft for

Practitioners

Paramedicals

Most activity recent years Medical braces-multiple physical locations per

patient (Knee/elbow/wrist etc…) Use of non three dimensional orthotics castings

and multi family claims Uncertified Canadian Orthotic clinics Surgical stockings Multi tier practitioner clinics (Physio, Chiro,

Massage…etc) Spa clinics using practitioner’s registration

Paramedicals

CHCAA process Monitor claims for activity separate from the

norm and random audits Forensic test on claims submitted Request practitioner’s medical notes after

interviewing patient in person Due diligence prepare report and inform

authorities and plan sponsors Employees can be charged if collusion exists

Paramedicals

What to do?...Educate Employees If it is “FREE” something is not right with service Protect health card at all times Keep benefits card for yourself/family Confirm receipt matches treatment Be vigil, request info from broker/insurance carrier

quarterly

Keep copies of all forms submitted Employees should “NEVER” sign blank claim

forms!

Paramedicals

Plan Design Considerations On-going meetings / education Reduce overall coverage $500 to $300 Cap at $500 for all practitioners Work closely with carrier on abuse/fraud Eliminate Paramedical coverage and replace with

Healthcare Spending Account (HCSP) Problem- treated like a credit card not for intention of

employee’s health

Drugs “Changing Landscape”

Rx & D: Canada’s Research-Based Pharmaceutical Companies

50 member firms Priority Issues:

Driving new Medicines Demonstrating Value Ensuring Product Safety

Regulated industry Patented Medicines Price Review Board established 1987 Only 40% of drugs internationally hit Canadian market

New Drug Discovery & Development

8 – 10 years

Drug discovery Preclinical Clinical trials Regulatory review

Scale-up tomanufacturing

Market exclusivity

One approved

drug

0.5–2 years6–7 years3–6 years

Number of volunteers

Phase 1

Phase 2

Phase 3

5250~ 5,000 – 10,000

compounds

Pre

-dis

co

very

20–100 100–500 1,000–5,000

Clin

ica

l inv

est

iga

tion

Reg

ula

tory

sub

mis

sio

n

High-risk research: more than $1 billion over 10–15 yearsMarket exclusivity following approval: 8-10 years

Adapted from: Drug Discovery and Development: Understanding the R&D Process, www.innovation.org; DiMasi et al. Managerial and Decision Economics 2007; 28:469-79.

Chemical Compound is like…

A Biologic Compound is like…

Two Main types of MedicationsChemical Compounds “Simple or small molecules Often taken orally as pills

(although not always) Manufacturing process is simple

to replicate Post-patent entities called

”generics” Health Canada assessment &

approval of generics is abbreviated – compares to original brand product

Approved generics are formally approved as “bioequivalent” and interchangeable

Biologic Compounds Complex or large molecules Living tissue – human, animal,

plant Must be injected or infused Insulin and vaccines are familiar

forms of biologics Post-patent entities called

“Subsequent Entry Biologics” SEB’s or ‘Biosimilars’

Manufacturing process is highly precise, difficult to replicate

Health Canada assessment & approval of SEBs is a stand-alone product

SEBs are NOT “ bioequivalent’– not interchangeable

Value of Incremental Innovation

12

1990 2013

13

Incremental Innovation: better quality of life

1970: the first insulin pump

modern-day insulin pump

14

Incremental Innovation: Better Outcomes

1996: complex regimens with high pill counts 2006: one pill once daily

Drug Information Association

HIV

Specialty Drugs1.0%

Traditional Drugs99.0%

% of Claims

15

Stakeholder challenges Specialty drug spend continues

to increase and anticipated to grow to 35% by 2015

Source: Express Scripts Canada

Top 10 Therapy Classes by Spend(Inflammatory Conditions Overtakes High Blood Pressure)

17

To Ten MedicinesRank 2009 2010 2011 2012

1 REMICADE REMICADE REMICADE REMICADE

2 NEXIUM 40MG SR NEXIUM 40MG SR CRESTOR 10MG HUMIRA

3 LIPITOR 20MG CRESTOR 10mgNEXIUM 40MG SR

TAB

ENBREL

4 LIPITOR 10MG ENBREL HUMIRA

ESOMEPRAZOLE 40MG ER

5 CRESTOR 10MG HUMIRA ENBREL NEXIUM 40MG SR

6 ENBREL LIPITOR 20MG CRESTOR 20MG CRESTOR 10MG

7 HUMIRA LIPITOR 10MG CYMBALTA 60MG

DR

CIPRALEX 10MG

8 LIPITOR 40MG CRESTOR 20MG TAB

SYMBICORT 200 TURBUHALER

CYMBALTA 60MG

9 PREVACID 30MG PLAVIX 75MG CIPRALEX 10MG

SYMBICORT 200 TURBUHALER

10 PLAVIX 75MG SYMBICORT 200 TURBUHALER

PLAVIX 75MG EZETROL 10MGSource: Manulife Financial national claims data

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Specialty drugs Specialty drug cost pressures

will continue Research and development is

focused on1: Orphan drugs - 43% of specialty

pipeline Cancer Inflammatory disease

Represents lifelong spendSource: 1) Express Scripts research, AMCP Conference April 2013

Specialty Medication Eg. Solaris Medication

Rare blood disorder Manufacturer is in United States Authorized via Health Canada and PMPRB

Annual Treatment Spend

Approx. $600,000 per year Roughly 70 Canadians require Solaris currently One major carrier has four certificates

Industry responds……EP3

Industry EP3 Statement

Reinsurance for carriers over the long term On going claims in excess of $25,000 annually Reimbursed back to carrier each year Insured plans only, ASO and Refund Accounting

programs excluded

Plan Sponsor protected for market study EP3 statement included in annual renewal Forms part of specs for RFP from carriers Carriers compete on first $25,000 of claims for

pricing

22

Opportunity Traditional/Specialty

Don’t lose sight of the almost 80% of current spend

Drug reforms have given employers the time to plan

It’s time to take advantage of savings opportunities

Chronic disease spend will continue to play an important role

Action or Apathy

Action Recent Patent Cliff Lipitor, Crestor, Plavix etc…

Bill C102 for Ontario Drug Benefit Program ODB Generic Pricing is 25% of Brand for Ontario Opportunity exists for savings on traditional meds

Apathy Do nothing……..$$$$$$

Traditional Spend “Action”

Our approach….proactive!

Action Top fifty drug report

Identify “Illness category” – Wellness Identify Brand where Generic is available Identify Brand coming off patent in next few years

Plan Design Considerations Offer Two Tier drug plan Eg. 80% coinsurance for Brand and 100% Generic Company spend is decreased 75% Employee driven- win win

Action

Opportunity for savings Patent Cliff

Coming to an end for traditional drugs

Future is much different Specialty Drugs SEB’s

Creste

r

Oxycontin

EprexNeulasta

Thank You : Q&A