PLEASE NOTE: THESE SLIDES MAY NOT DISPLAY PROPERLY ONLINE, BUT THEY ARE READABLE IF DOWNLOADED. October 28, 2018 This one-day conference explored the current pharmaceutical pricing landscape by bringing together leaders from the pharmaceutical industry, policymakers, legal practitioners, and scholars to engage in novel, interdisciplinary discussions to better understand current challenges and articulate best practices to address these issues. Participants assessed the current challenges presented in drug pricing policy, from development to delivery, in both the United States and international context. We also explored and articulated best practices to expand access to medicines and worked toward developing a plan for disseminating these practices more widely.

1. ©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
From Development to
Delivery in the U.S.
Surya Singh, MD
Vice President & CMO, Specialty,
CVS Health

2. 2©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
Advances in Pharmacotherapy Have
Transformed the Treatment of Complex Diseases
Image source: CVS Health Creative Resource Library, accessed 2018.
Future
19th
Century
Plant Derived
Treatments
Early 20th
Century
Chemical
Synthesis
Late 20th
Century
Small
Molecules
Early 21st
Century
Biologics
Gene Therapy
(monogenic)
Gene Editing
Treatment of
Polygenic
Disorders
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3. 3©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
Rising
launch prices
The Complexity of Patients and Market Changes
Require Broad Set of Interventions
Rising spend
across benefits
Complex
multi-drug regimens
Technology driving
clinical innovation
Pipeline
(new drugs, indications)
Emerging
management models
Biosimilars
Value-based
management
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4. 4©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
$0
$40
$80
$120
$160
$200
$240
1997 1998 2002 2004 2006 2007 2008 2011 2013 2013 2014 2014 2015 2016 2017
Higher Launch Prices Contribute to Rising
Specialty Spend
ANNUAL PRICE IN THOUSANDS1
1. CVS Specialty™ analysis of Medispan data. Annual drug costs based on average wholesale price (AWP) accessed December 2017. This slide contains references to brand-
name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Specialty.
Manufacturers set drug prices
based on their perception of value
Launch prices increase
year after year
Pricing may not reflect
indication efficacy

5. 5©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
Duke-Margolis Value-Based Advisory Group
Framework

6. 6©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
VBM Approaches are Helping Payors
Meet Outcome and Cost Goals
Pricing and/or
rebates align with
drug’s effectiveness
for the specific
indication
Efficacy validated
by independent
P&T Committee
Indication-Based
Aligns costs with
drug’s effectiveness
at achieving a
specified clinical
marker, such as
cholesterol, A1C
levels or other
biomarker levels
Outcomes-Based
PMPM cost
threshold defined;
manufacturer may
provide additional
value if threshold is
exceeded
Cost Cap-Based
Use of cost-
effective analyses
to determine if the
therapy being
evaluated meets a
pre-defined
threshold for cost
per unit of benefit
Value-Based
Plan Design
P&T Committee (The CVS Caremark Pharmacy and Therapeutics Committee). PMPM (Per member per month).
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7. 7©2018 CVS Health and/or one of its affiliates: Confidential & Proprietary
Dupixent Case Study: Value-Based
Benchmarking Helps Improve Access
350K-400K eligible U.S. patients
First biologic, and no near-term
competitor
Expected launch price: $60K/year
BACKGROUND – A NEW TREATMENT
FOR SEVERE ATOPIC DERMATITIS
PRE AND POST-ICER ASSESSMENT
RESULT: Quicker uptake, improved patient access, costs lower than predicted
and improved overall payor/manufacturer relationship
PRE-ASSESSMENT:
Stiff prior authorization to limit
access and concerns over future
premiums and cost-sharing
POST-ASSESSMENT:
ICER recommended price 50% less
than market expectation; reasonable
access was successfully negotiated
Source: Institute for Clinical and Economic Review, 2017.