Annual health plan cost per employee

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Health Care Costs Increase
Annual health plan cost per employee
6,615
Four year cumulative increase 68 percent
5,752
5,001
4,349
3,939
1999
2000
2001
2002
2003
John Erb, Deloitte Touche, 2001
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As Costs Increase, Overall Health Declines

• Diabetes prevalence growing - average treated
  diabetic has average blood sugar of 220 (Normal
  is less than 100)
• Despite spending over 15 Billion in cholesterol
  meds in 2002, only 18 at goal. Most people
  dont even know their goal. (Pearson TA LTAP
  Arch Internal Medicine 2000160459-67)
• 1 in 3 U.S. adults are obese. Total direct
  indirect costs related to obesity in the U.S.
  totaled 117 Billion in 2000.
• Asthma prevalence is increasing and death rate
  among asthmatic children is rising.

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Rising Pharmacy Costs
Source HHS, report to the President, April
2000, http//aspe.hhs.gov/health/reports/drugstudy
/
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Cash Isnt King Anymore
1990 63 cash ? 1998 65 Third Party
Source HHS, report to the President, April
2000, http//aspe.hhs.gov/health/reports/drugstudy
/
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Rising Pharmacy Costs
Medical Condition Brand Medications Aggregate 2001 Sales Generic Alternative
Allergy Claritin, Zyrtec, Allegra 6.2 Billion Loratidine (Claritin)
Antibiotic Zithromax, Augmentin, Cipro 5.9 Billion Cefazolin, Amoxicilin, Bactrim
Arthritis Celebrex, Vioxx 5.7 Billion Ibuprofen, Naprosyn
Asthma Advair, Flovent, Serevent 3.7 Billion Ipratrop. Bromide, Aluterol Sulfate
Blood Pressure Norvasc, Zestril, Adalat 5.6 Billion Atenolol, Lisinopril, Verapamil
Cholesterol Lipitor, Pravachol, Zocor 15.3 Billion Lovastatin (Mevacor)
Depression Prozac, Paxil, Zoloft 7.2 Billion Fluoxetine (Prozac)
Diabetes Humulin, Glucophage 3.1 Billion Metformin, Insulin
Anti-ulcer Prilosec, Prevacid 9.2 Billion Omeprazol (Prilosec)
Available as Over the Counter
WorldDoc believes Rx costs should be decreasing
with all of the generics now available
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The Pharmacy Benefit Process
Pharmacy benefits managers (PBM) are companies
that are hired to administer drug benefit
programs for employers, government agencies, and
health insurance carriers.
Customer
Pharmacy
Claims Adjudication Is the member eligible? Is
the drug covered? What is the co pay? Are there
any interactions (DUR)
PBM Transaction Engines Can Be Rented Commodity
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PBM Conflict of Interest
The PBM Revenue Model
Claims Processing Fee paid on a per script
basis by clients for adjudicating prescription
claims (fees can vary per claim). Rebates A
fee for achieving certain market share
penetration (market share rebate). The rebates
range from 6 to 12 for brand medications.
WorldDoc passes all rebates back to client
Slotting Fee - Pharmaceutical companies pay fee
to PBM for placement of brand drug on formulary
(access rebate) WorldDoc all slotting fees back
to client Administration Fees Catch all for
other fees including management of rebate
programs. WorldDoc doesnt charge
administration fees Spreads Negotiated
difference between price PBM pays pharmacy
compared to price charged to employer. WorldDoc
doesnt do spreads
WorldDoc Rx aligns economic interests of employer
and employee with PBM
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Managers Take Markups and Still Offer
'Discounts' By BARBARA MARTINEZ Staff Reporter
of THE WALL STREET JOURNAL
How generic drugs yield big profits Example A
30-day prescription of generic Prozac Pharmacy
Charge 7.50 Patient's co-payment to pharmacy
5.00 PBM's payment to pharmacy 2.50
Pharmacy Cost from manufacturer 1.50
Pharmacy's profit 6.00(Patient's co-payment
plus PBM's payment minus manufacturer's price)
PBM bill to patient's employer 13.00 PBM's
profit 10.50(PBM bill to employer minus
payment to pharmacy)
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Payments by Managers of Drug Plans Face
Scrutiny By MILT FREUDENHEIM December 11, 2003
- The pharmacy benefit companies that manage drug
coverage for most working Americans commonly
offer millions of dollars in payments to
important customers when contracts with them are
signed, according to industry executives and
consultants. The practice is receiving
widespread attention after Justice Department
officials on Tuesday accused Medco Health
Solutions, one of the largest pharmacy benefit
managers, of violating kickback laws by paying
87.4 million to Oxford Health Plans. But
industry experts said such payments often added
to the drug costs that pharmacy benefit managers,
or PBM's, were hired to shrink. The PBMs claim
that some payments are advances against future
rebates from drug manufacturers that reward large
purchases of certain drugs. Gerry Purcell, a
consultant to health plans based in Atlanta, said
one example of this was the several million
dollars in a package of upfront payments the
Texas Employees Retirement System collected from
Medco. The kickback accusations against Medco
were added by the United States attorney in
Philadelphia, Patrick L. Meehan, to a broader
civil complaint against Medco filed in September.
The complaint linked the payments to Medco's
contracts with Oxford and Blue Cross and Blue
Shield plans to provide drugs to federal
employees and people in government financed
health care programs. The new filing also added
Robert J. Blyskal, a former Medco executive vice
president, as a defendant. He is accused of
"conducting a coverup of intentional destruction
of patient prescriptions at Medco Health's Tampa
II mail-order pharmacy in 1998.''
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What is WorldDoc Rx?
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WorldDoc Rx Product Summary

• National Presence
• Pharmacy Provider Network 55,000 (95)
  pharmacies
• Customized Benefit Design
• Claims Administration Adjudication
• Formulary/Preferred Drug List Management
• Data Management/Analysis
• Custom Reporting
• Drug Utilization Management
• Well Established DUR Committee
• Health and Disease Management Both
  Identification and Interventions
• Integration with WorldDoc Personal Evaluation
  System and other health management tools

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Personal Evaluation System
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WorldDoc Rx
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WorldDoc Rx Strategy
1. Educate consumers 2. Price transparency 3.
No Spreads 4. No rebilling (right to audit
pharmacies) 5. Pass through on all rebates 6.
Custom plan design that focuses on PMPM not PBM
(Generics, trial dose, OTC, tablet split, etc)
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Complete Product Integration
Health eValuation
Disease Mgmt.
Preventive Services
PES
Rx
Cost Control
Demand Mgmt.
Evidence Based Medicine
Cost Mgmt.
Quality Control
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WorldDoc Mission Statement
Empowering patients, payers and physicians to
make better health care decisions