Truth + Integrity

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Top Five Pharmacy Trends for 2006
BY Robert Taketomo, Pharm.D,, M.B.A. President/C
EO, Ventegra, LLC
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Todays MEGATRENDS

• Company Consolidation Throughout
• Industry
• More Government Involvement
• Health Care Costs continue to RISE
• Lifestyle/Life Enhancing vs. Life-
• Saving
• Specialty Injectables Drugs Growing Fast

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Company Consolidation Drug Companies

• Drug companies continue on their quest to become
  bigger then the competition while trying to turn
  from red to black.
• "Drug makers have been struggling for several
  years to come up with enough new products to keep
  their revenue growing. Many have sought to
  complement their internal research by licensing
  products from smaller biotechnology
  companieslicensing is becoming increasingly
  expensive. So they look to buy. (T)heir
  favored targets could be smaller companies with
  successful drugs in sought-after therapeutic
  areas. Wall Street Journal 2/16/05
• The latest mergers, or soon to be mergers
  include
• Sankyo and Daiichi - 2005
• Fujisawa and Yamanouchi (now Astellas) - 2005
• Teva and Ivax - early 2006

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Company Consolidation Health Insurance
Companies

• Acquiring or merging with another company opens
  commercial doors that might otherwise remained
  closed. You can open up new markets, gain new
  customers by using the strength and positioning
  of another company" California Healthline,
  8/10/05
• UnitedHealth Group bought Pacificare and
  Definity Health
• WellpointPoint, Inc. bought Lumenos and
  Wellchoice
• CIGNA bought ChoiceLinx
• Aetna bought HMS Healthcare
• And that is only California. Anyone got a
  scorecard?

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Company Consolidation Retail Pharmacy

• Over the past decade, the pharmacy industry has
  consolidated and diversified their business
  model. Mom and Pop pharmacies of yesteryears
  are replaced by pharmacies in general merchandise
  stores, grocery stores and warehouse stores.
  Nothing like convenience!
• Several retail store chains have merged,
  primarily as a way to gain buying power for use
  in negotiations with drug manufacturers and
  wholesale distributors. The Health Strategies
  Consultancy, LLC
• Top Retail Pharmacy Chains
• Walgreens Company
• CVS Corporation
• RiteAid

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Increase in Government Involvement

• The latest and greatest(??) move by the
  government to control
• healthcare costs for the nation is Medicare
  Part D Prescription Drug Coverage.
• Who hasnt heard about it? Or better yetdoes
  anyone understand it?
• Other articles of how government is more
  involved
• Americans Want More RegulationOf Oil, Drug
  Companies, Poll Shows
• - THE WALL STREET JOURNAL, 11/2/05
• Pharmacy-Benefit Managers Suffer Setback in
  Federal Court
• - THE WALL STREET JOURNAL, 11/9/05
• Judge upholds Maines PBM disclosure law
• - Business Insurance, 4/14/05

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Healthcare Costs continue to RISE

• Is anyone shocked?

• Life-Style/Life Enhancing vs. Life Saving
  Treatments

• Viagra anyone? How about Lunesta? Or Nexium?
• With the direct-to-consumer marketing by
  Pharmaceutical companies, spending on average
  351 million per month, it is no surprise that
  drugs that promote improvement in todays busy
  life are popular. They address impotence,
  sleeplessness, hair loss, obesity and smoking
  cessation, to name a few.

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Specialty Injectables Growing Numbers and
Growing Costs

• There has been an increase in the use of
  specialty injectable drugs as part of patient
  medication therapies. Branded injectable agents
  can range in cost from several hundred dollars to
  tens of thousands of dollars for a given
  treatment regimen. And, with many injectables
  losing their patents over the next few years, and
  many more coming out of the pipeline, the market
  will see a further surge in this trend. Are we
  prepared?
• costs will continue to mount, and the
  industry faces a huge gap with respect to
  management strategies for injectable drugs.
  Managed Care 4/02

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Five Pharmacy Trends for 2006
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1 Move towards Transparency

• Payors desire more disclosure on drug costs,
  discounts, rebates and fees
• More information on how prices are determined by
  pharmacies, wholesalers and manufacturers
• More competition around prescription drug costs

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2 Consumer Driven Programs

• Driven by need to reduce payor costs
• More defined contribution than defined
  benefit
• defined contribution program pays first x and
  patient pays the rest
• defined benefit patients pays first x (e.g.,
  copayment) and program pays the rest

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3 Growth in Injectable Drugs

• Could mean cost explosion for payors
• Average generic prescription 15
• Average brand prescription 70
• Average injectable prescription gt 1,000!
• Shift to coinsurance ( copayment)
• Injectable drug benefits need to ensure access
  and affordability by members

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4 Medicare Part D Fallout

• Depends upon degree of success
• Will only the sickest patients join?
• Adoption of Medicare policies and practices by
  commercial sector
• Average Sales Price (ASP) concept
• Competitive Acquisition Program
• Formulary management
• Impact to Medicaid plans?
• Terms of clawback unclear

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5 Generic Drugs Availability

• Major blockbusters continue to lose patent
  protection
• Generic industry consolidation resulting in
  higher cost trends for generics than brands
• Effective means to increase education and
  utilization around generics lacking

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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. Ventegra offers
innovative programs to manage NET costs and drug
trends, such as VIP (Ventegra Injectable
Program). The difference is not in what we
dobut HOW we do it. Let us show you how truth
and integrity can work for you. For more
information, please visit www.ventegra.NET or
call 858-551-8111.