Specialty Pharmacy Vs. The Retail Channel

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1 Specialty Pharmacy Vs. The Retail Channel Steve Miller, MD, MBA President, CuraScript Infusion Pharmacy and Chief Medical Officer

2 Specialty Will Soon Be 28% Of Pharmacy Spend Specialty: $40B Specialty: $90B 19% 28% Traditional: $170B Traditional: $226B

3 Relative Frequency and Cost of Health Care 1/3 Fraction of Healthcare Spend 1/3 2% Rare Disease Acute Complex Multiple Co-morbidities 10% Chronic Condition Procedure >$50,000/yr Annual Total Spend $10,000/yr 1/3 88% Well Acute Condition Low Grade Chronic Condition $1000/yr 3

4 What Are Specialty Medications? Injectable or non-injectable Frequent dosing adjustments/ intensive clinical monitoring, or Intensive patient training, or Limited or exclusive distribution, specialized handling or specialized administration, or Cost in excess of $500 for a 30-day supply 4

5 Disease States Treated by Specialty Pharmaceuticals Disease Description Approximate Number Affected Estimated Annual Cost/Patient Multiple Sclerosis Degenerative disease of the central nervous system 400,000 $18,000 Hepatitis C Viral infection with potential to cause severe liver disease 2.7 million with chronic infection: only 200,000 are receiving treatment $30,000 Growth Hormone Deficiency Body produces inadequate amount of growth hormone 29,000 $26,000 Hemophilia Bleeding disorder categorized by low levels of clotting factor 18,000 $125,000 Gaucher Disease Metabolic disorder causing a fatty substance to build up in the organs 3,000 $242,000 Crohn s Disease Inflammatory disease of the small intestine 400,000 $16,000 Rheumatoid Arthritis Inflammatory disease of the joints 2.1 million $18,000 Immune Disorders Diseases which cause the body to destroy its cells as if they were foreign substances 10,000 $40,000 HIV/AIDs Viral infection that weakens the immune system 900,000 carrying the virus $20,000 Infertility Inability to become pregnant 6 million women $15,000 estimate of average per cycle cost is $4,000 to $7,000 Aetna Inc

6 Biopharmaceutical Pipeline Continues To Grow Number of Drugs Source: PhRMA, International Federation of Pharmaceutical Wholesalers & Biotech Industry Organization Biotech Drugs in Development Biotech Drugs on the Market 2005 Estimated 6

7 Emerging Explosion Of Indications Alferon Campath Humira Rebif Rituxan Xolair # of Current FDA Indications # of Indications Under Investigation 7

8 Most Of The Specialty Pipeline Is For Chronic Illnesses Number of Drugs Applications Submitted Phase 3 Phase 2 0 Oncology Rheumatoid Arthritis Crohn's Disease Hepatitis C Multiple Sclerosis Psoriasis 8

9 Routes Of Administration In Specialty Pipeline Number of Pipeline Drugs RA MS Hep C Crohn's Psoriasis Unknown IM Sub Q Intravenous Injectable* Oral *Precise route unknown 9

10 Specialty Pharmacies Add Increasing Value Safer Savings Compliance Education Satisfaction Convenience 10

11 Medication Management: Distribution Safety Acute e.g., infection Maintenance e.g., cholesterol Specialty e.g., Multiple Sclerosis Most important Important Access Cost Care Different points on the disease spectrum point to different opportunities for medication management. 11

12 Better Care, Lower Costs Specialty Pharmacy Ongoing Clinical Support Savings Retail Pharmacy Printed Materials Fulfillment Printed Materials Fulfillment Patient Financial Assistance Compliance Monitoring Side Effect Management Disease-Specific Programs Proactive Care Coordination Nursing and Social Work Support Patient Education Cost Savings Convenience Care Value 12

13 Who Are Specialty Patients? Meet Kim-Loan Le 37 y/o woman with MS since August 2005 Fatigue, numbness, insomnia Language barrier, difficult to get educational materials Nearly stopped meds due to confusion and frustration 13

14 What Does Your Kim Need? Savings Nursing and Social Work Support Patient Financial Assistance Compliance Monitoring Printed Materials Fulfillment Cost Savings Convenience Side Effect Management Disease-Specific Programs Proactive Care Coordination Value Ongoing Clinical Support Pro-Active Patient Education Care Enhancement 14

15 Natural History of HCV Infection and Its Variability From Person to Person Female sex, young age at infection Rate of progression (Fast) (Slow) 30 years Normal liver Acute infection Chronic infection develops in 80% 20 years Chronic hepatitis Cirrhosis develops in 20% Risk of carcinoma, 1-4% per year Alcohol use, coinfection Reprinted with permission from Lauer GM, et al. N Engl JMed. 2001; 345: Copyright 2001 Massachusetts Medical Society. All rights reserved. 15

16 Hepatitis C Impact on the Health 1000 liver transplants per year Liver transplant costs $300,000-$900,000 Annual spend for HCV transplants in US is over $500,000,000 System 16

17 Future Burden of HCV $83 billion in annual spend $10 billion in direct medical costs $73 billion in indirect costs 19,000 additional deaths per year 17

18 HCV Compliance Matters Hepatitis C Persistency (90 Day Follow-up) 94% 92% 92% 90% 88% 86% 84% 84% 82% 80% Retail CuraScript 18

19 Rheumatoid Arthritis CuraScript Patients are more Compliant RA Persistency 88% 87% 86% 84% 82% 80% 78% 76% 79% 82% 74% Retail Mail CuraScript 19

20 Multiple Sclerosis CuraScript Patients are more Compliant MS Persistency 94% 92% 90% 88% 86% 84% 82% 80% 78% 76% 92% 84% 82% Retail Mail CuraScript 20

21 Rheumatoid Arthritis CuraScript Patients are More Satisfied, Better Educated % 83% 86% % 72% 75% More Satisfied Rate staff as extremely skillful Better Educated CuraScript Retail 21

22 Rheumatoid Arthritis CuraScript Patients Can Better Manage their Disease % 33% Ability to Manage Disease CuraScript Retail 22

23 Who Are Specialty Patients? Meet Robert St. George 53 y/o man with Rheumatoid Arthritis since 1998 Stopped deep sea diving, golf, softball, roller hockey I was in constant pain with everything I did. 23

24 Dispensing Accuracy % 99.50% 99.00% 98.50% 98.00% 97.50% 99.98% 98.3% CuraScript Retail 97.00% Accuracy J Am Pharm Assoc 2003; 43:

25 Employer with 20k Covered Lives Channel Scripts Error Rate Dispensing Errors Retail % 17 Specialty Pharmacy % 2 25

26 Drive The Points Of Access Relative Net Price 2% Specialty Pharmacy Retail Pharmacy Serono Injectables Digest, Specialty Vol. 1. Pharmacy Retail Pharmacy 26

27 Value of Specialty Pharmacy More Convenient Higher Satisfaction Better Educated More compliant Greater savings Safer 27

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