8 Essential Cost Management Programs

September 28, 2016

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Monthly hepatitis treatment cost and claimants*

Newer rare disease drugs

Breakthrough drugs come at a significant cost

Drug Disease Annual cost

ORKAMBI Cystic Fibrosis $260K

RAVICTI Urea Cycle Disorder (Rare Disease) US$250K - $290K

STRENSIQ Pediatric-onset Hypophosphatasia $285K - $2.5M

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000

0100200300400500600700800900

1,0001,1001,2001,3001,400

Elig

ible

Cos

ts

Dis

tinct

Cla

iman

ts

Ave Cost per Claimant Distinct Claimants

*TELUS Block of business

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Looking ahead : Pipeline Drugs of Interest

Name Therapeutic Area Manufacturer(s) Indications Cost Impact and Notes

Patisiran Immune system Alnylam Pharmaceuticals, Inc.; Arbutus Biopharma; Genzyme Corporation; Sanofi

Hereditary ATTR Amyloidosis with Polyneuropathy (hATTR-PN)

Likely $250K per year or more. Disease affects 10,000 people worldwide. Precise Canadian prevalence unknown. Life expectancy without treatment is 5-15 years from symptom onset.

Herpes Zoster Vaccine Shingrix

Infectious disease GlaxoSmithKline plc

Herpes Zoster (shingles) vaccine

Similar to cost of Zostavax High expectations for manufacturer revenue, but private plan impact is lower due to the development of public vaccination programs (e.g. Ontario). In the absence of a public program, expect similar uptake to Zostavax for plans that cover vaccines.

Crisaborole Dermatology Anacor Pharmaceuticals, Inc.

Atopic Dermatitis Up to $20K per year High potential impact. Will be the first topical, non-biologic therapy with anti-TNF activity. Basically, works like an injectable biologic, but is non-biologic, and topically administered.

Acalabrutinib Cancer Acerta Pharma BV; AstraZeneca PLC; Merck & Co., Inc.

Many cancer indications. Chronic Lymphocytic Leukemia (CLL) is most advanced.

$100K per year, similar to other CLL therapies

High potential impact. Impact will grow as the drug is approved in more tumour types.

Cannabidiol Epidiolex

Central Nervous System

Gw Pharmaceuticals

Intractable epilepsy: Dravet and Lennox-Gastaut syndromes.

Up to US$2,5K to US$5K per month. This is considerably more than the cost of medical marijuana, as well as more than the cost of other therapies for this type of epilepsy.

Expected 9K-10K Canadian patients. Impact could be very high in the absence of Prior Authorization to control potential off-label use.

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Specialty drugs have grown to almost a quarter of total costs but remain less than 1% of claims.

Non-speciality drugs represent 77% of total eligible costs and an important

opportunity for savings

Speciality Drug Share of Cost & Claims

10% 11%

13% 14%

17% 18%

21% 23%

0.3% 0.3% 0.3% 0.4% 0.4% 0.5% 0.5% 0.5%

-1%1%3%5%7%9%

11%13%15%17%19%21%23%25%

2008 2009 2010 2011 2012 2013 2014 2015

Shar

e of

Tot

al E

ligib

le C

ost

% of Total Cost % of Total Claims

*TELUS Block of business

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70% of plan sponsors faced with a cost increase made no changes to their plan design in response.*

The 8 Essentials

Dru

g Be

nefit

Pla

n St

rate

gies

Drug Choice

Claim Cost

Cost Sharing

Managed formularies Generic Substitution Prior Authorization Step Therapy

Co-pays / Co-insurance

MAC Pricing Dispensing Fee Limits Trial Drug

*TELUS Health 2014 Plan Sponsor Survey

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There is no one definitive approach to managing drug spend a few changes bundled together can

have a significant impact on improving the bottom line.

As TELUS experienced in its own Living Lab, these programs have the potential to generate significant savings depending on the design of the existing plan.

A combination of different drug cost management programs can maximize savings

Cost management programs

TELUS plan savings**

○ Mandatory generic substitution 2.3%

○ Maximum Allowable Cost pricing 4.4%

○ Dispensing fee cap 1.9%

○ Prior authorization program 0.9%

Total potential savings 9.5%

*As of December 2014; **Results are strictly based on the TELUS plan. Other plan sponsors' results may differ based on province, plan design and other factors.

https://s3.amazonaws.com/telus_sante/wp-content/uploads/2015/09/article-medmanagement_en.pdf

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Plan sponsors can take advantage of the many existing programs to reduce costs without having a material impact on their plan members’ experience.

Drug cost management tools can be layered to meet the needs of specific customers. It is not a one-size fits all approach.

Communication with plan members is key to the success of implementing new drug cost management programs.

Key Takeaways

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