1. ExLPharma’s6th Pharmaceutical& Medical Device Pricing& ReimbursementConferenceHighlights July 26-27, 2010 Bridgewater, NJ

2. Questions to address with pricing and pharmaceconimic modeling… How do manufacturers price a product? What constitutes a “value proposition”? How is healthcare reform going to affect pricing in the future

3. What’s the right price?

4. How do manufacturers price products? Offensive! Too High Too Low $$ Lost

5. Step 1: Determine the perceived value of the product Clinical advance (dosing, delivery, etc.) Improved Safety Improved Efficacy Unmet Medical Need

6. Vested interests motivating perceptions Brand Value Product Attributes (efficacy, safety, MOD) Unmet Need Untreated Disease High Volume Market Perceived Benefits Clinical advance Economic Value Cost Effectiveness RxEcon Studies Cost Savings Medical Cost Offset Budget Impact PMPM Increase PAYERS PHYSICIANS

7. Step 2: Consider Market Factors Market Access Tier Placement = Market Share? Distribution fees Wholesaler PPD and FFS rates on rise SPPs becoming more aggressive Healthcare legislation Medicaid Med D

8. Is Tier Placement a Function of Market Share Success?

9. Focus on Net Revenue vs. Access At All Costs Assumptions: A $1000 price point and a 25% rebate

10. Focus on Net Revenue vs. Access At All Costs Assumptions: A $1000 price point and a 25% rebate

11. Inelasticity of Price Points Thresholds may be evident when the price goes above $400 and $700 WAC per month. 4th tier 3rd tier 2nd tier

12. Middlemen Everywhere!

14. What’s the “value proposition”?: Pharmacoeconomics

15. Key Organizations Driving Quality Quality NCQA(& HEDIS) PQA CMS AQA QIOs AHRQ NQF & Supplier Council AHIP Quality NCQA (& HEDIS) delete PQA CMS AQA QIOs AHRQ NQF & Supplier Council AHIP

16. Adopting Measures for Reporting and Payment Quality Metrics Developing Consensus Measurement Development Measurement Development Developing Consensus Adopting Measures for Reporting and Payment

17. Two Approaches to Pharmaceconomic Modeling Establish Predictability of Cost Outlay Budget Impact Analysis Market Share Changes Drug Volume/Market Penetration Provide Evidence for Potential Cost Offsets Pharmacoeconomic Analysis Cost Minimization Cost Effectiveness Cost Utility Cost Benefit

18. Publication of RxEcon Data Has Impact on Formulary Decision Making Survey included 95 key decision makers 77% of responders always/often rely on journals for formulary decision making HE&OR and MC journals rated highest for symptomatic diseases Clinical journals rated highest for chronic diseases Source: Journal Use for Formulary Decision-making in Managed Care. Presented at AMCP 20th Annual Meeting & Showcase, San Francisco, CA, April 16-19 2008.

19. Health Outcomes to Support Pricing and Reimbursement

20. The Question of “Effectiveness” Will the product work under real-world conditions? Concomitant disease Patient adherence Real world prescribing patterns

21. Key Pricing and Effectiveness Questions How is our product truly unique? Mechanism of action Route, frequency, onset, duration Efficacy, tolerability, safety How does this translate into clinical outcomes? Real world populations, subpopulations Ease of use Who will value the differentiation? Patient/caregiver Quality organization Payer/Purchaser Provider How much do these stakeholders influence our target market?

22. Responders Price Pressure Responders All patients All patients Responders Responders Price Pressure All patients All patients Value of Product Differentiation “Fail First” High Interchangeability “Open Access” Low Interchangeability “Own a patient type”

23. Quality and Health Reform National strategy for quality improvement HHS Secretary to develop by 1/1/2011 $95million/year 2010-2014 Development, endorsement, dissemination of quality measures Reduced payments for readmissions AMI, HF, Pneumonia To begin 10/1/2012 Quality will be tied to reimbursement

25. HTAs

26. Observational studies

27. Practice Guidelines

28. Consensus Statements

29. Publication

30. Dissemination

31. Campaigns

32. Coverage and reimbursement

33. Accreditation

34. Public reporting

35. Data standards

36. Operational definitions

37. Numerator/denominator

38. Field testing

39. Revision

42. Burden of illness

43. Real world treatment patterns

44. Quality gaps

46. Economic modeling

47. Pragmatic trials, prospective cohorts

48. Comparative effectiveness