Click to edit Master title style HC Industry

Click to edit Master title style HC Industry Environmental Scan 2016 -2030 • Click to edit Master text styles – Second level • Third level Presentation By: William Roth January 8 th, 2016 Proprietary & Confidential Copyright © 2015 Blue Fin Group, Inc. All Rights Reserved Proprietary & Confidential | |Copyright © 2016 Blue Fin Group, Inc. | |All Rights Reserved

Seeing edit Master Multiple Click to Topics Fromtitle style Dimensions • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 2

Click to edit Master title style • Click to edit Master text styles – Second level • Third level 22 2 55 JAMA Study 2013, Merritt Hawkins 2014 Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 3

What Do We Want title style Click to edit Master To Know – How It Fits (Or Doesn’t) • Click to edit Master text styles Product landscape: brands, generics, biosimilars, consumer goods, private label, pricing pressure, access of science, approval of science – Second level • Third level • Payer landscape: government reach and influence, increasing premiums, OOPs, and deductibles, restriction, Kaiserfication • Consolidation: power of big 3 anything, vertical consolidation, drivers and impacts • Globalization: strengthening business models, economies of scale • Societal trends: consumerism, waste removal, democratization, “uberization”, decline of paternalism, ubiquitous digital information • Applied technology and data – digitization of patient and provider – quantum computing, multi-dimension, patient views, mega-cohorts, telehealth, digital doctors • Innovation – regenerative, precision, testing, AI, robotics, e-health • Political trends: balance individual and society, dealing with speed Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 4

Agenda Click to edit Master title style • • Preamble and Paradigm Setting Click to edit Master text styles – Second level overview – setting the context Broad industry • Third level Grounding ourselves in one another’s viewpoints Future trends and likely impacts Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 5

Click to edit Master title style • Click to edit Master text. Preamble styles – Second level and Paradigm Setting • Third level Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

HC Chessboard – Viewed Holistically, Not in Parts Click to edit Master title style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Click to edit Master title style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 8

Click to edit Master title style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 9

Understanding And Empathizing Click to edit Master title style • • Business model – how styles Click to edit Master textwas it created - unmet – Second level Valuing one another – why was it created • Third level Abundance of opportunity Misalignment – that’s my job Getting my piece – that’s my money Saving your place – that’s my chair Goal may just be to blow it up Alignment 1+1=3 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 10

Where edit Master title Of Healthcare Insurance Click to. It’s Been - Story style • Click. NIH edit Master text styles to HHS CMS OIG – Second& Vets level Medicaid & AMA Insurance • Third level 1847 HC as cash business AMA fought against any form of “contract activity” 1945 Intro to MCOs and HMOs HC insurance as workers benefit to entice returning soldiers to business Medicare 1965 Prosperity with political gain Birth of Medicaid and Medicare But the actuaries were wrong OBRA 1980 s Knew we made a mistake as early as the 70 s. From 1960 to 1970 per capita HC consumption doubled. Series of reforms – PPS, DRGs, etc BBA 1990 s MMA 2000 DRA 2005 ACA 2010 2015 2018 2020 Clinton has HC Czar Series of reform – BBA – long term care – MMA – add Part D (plant the Trojan Horse) and reform Part B – DRA – reform generics All of the 1990 -2000 s moves supported with logic from CBO, HHS, CMS Long Term care screamed but CMS was successful Clinics complained but were not organized – sequestration as well Retail responded with coordinated effort Costs spiraling out of control. Need for accountability for population health at macro and micro levels. Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved HC insurance completely disconnected from personal responsibility Data, technology and accountability 11

Economics Master title style Click to edit– Top 11 GDP Countries Country • Click to edit Gross Healthcare Spend Domestic Master text styles as a % GDP Product Rank by Life Expectancy Avg Cost Of Care Per Patient – Second level United States $17 T 17% 7 $9063 China $10 T 6% 9 $443 Japan $5 T 11% 1 $4327 Germany $4 T 11% 5 $5432 United Kingdom $3 T 9% 6 $4236 France $3 T 11% 4 $4980 Brazil $3 T 10% 8 $1480 Italy $2 T 11% 2 $3567 India $2 T 4% 10 $65 Russia $2 T 6% 11 $842 Canada $2 T 10% 3 $5741 • Third level Source: World Bank and Wikipedia May 2015 Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Healthcare Master title style Click to edit. Cost Containment is a Mandate • Click to edit Master text styles – Second level Change level • Third Drivers Change Agents Change Reactors Global Economy Regulators Providers Demographics Employers Pharmacy Channels Public Payers Technology Commercial Payers Distribution Channels Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved Consumers Healthcare Manufacturers 13

Where edit Master title style Click to. It’s Going - Targets For Spend Reduction • Click to edit Master text styles – Second level • Third level Source: Healthcare Economist 2014 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Click to edit Master title style • Click to edit Master View Of Broad text styles – Second level Industry – Setting Context • Third level Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Industry Trends and Impacts Click to edit Master title style 2015 -2020 • Click to edit Master text styles – Second level Product Mix level • Third The shift in mix and the associated economics will drive immediate and profound change. Payer Mix/ Reimbursement Change Governments objective is cost control. Historically the systems was transactionally focused to make themselves money. Providers, Channels & Integration Channels are reinventing themselves. Lines are more blurred then ever before. Technology, Data, and Service Vendors With Payer visibility (EMR, etc) and the ability to influence the Provider and the Patient and to link technology to monitor and manage both, these serve as the great enablers of change Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Growth edit Master title style Click to Forecasts For Specialty Pharmaceuticals • Click to edit Master text styles – Second level • Third level $190 B Pharmacy $190 B Medical Source: BFG Analysis on IMS 2014 Rx Sales Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Patent edit Master title style Click to. Cliff $114 B 2010 -2020 Patent Cliff 2010 -2020 $28. 7 B • Click to edit Master text styles $30. 0 B – Second level $20. 0 B • Third level $15. 9 B $18. 3 B $12. 0 B $9. 5 B $8. 0 B $10. 0 B Generics are a losing industry come 2017 $6. 4 B $5. 4 B $2. 3 B $3. 9 B $4. 0 B 2019 2020 $. 0 B 2010 2011 2012 2013 2014 2015 2016 2017 2018 2012 -2020 Patent Cliff Impact ($B and % of 2011 Revenue) by Manufacturer $9. 0 B 60% $6. 0 B 40% $3. 0 B 20% $. 0 B 0% J& k er c No M E W isai ar ne r. C. GS K Da iic hi W BIP oc I kh ar dt Te Su va no vio n Ro ch e 80% J $12. 0 B va rti s Sa no f Am i ge n Ab bo tt Pf ize r Lil ly Fo re st Ot su ka Ta ke da 100% AZ $15. 0 B Source: 2012 Medco Patent Cliff Report and USPTO. 2012 -2020 Impact by Manufacturer shows only manufacturers with >$1 B impact Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 18

Click to Will Be Hurt By Their Retailers edit Master title style Love of the Generic Wave • Click to edit Master text styles Steady State – Second level • Third level Patent Cliff $63 M $600 M $50 M $44 M $39 M $40 M $35 M $300 M $200 M $18 M $19 M $20 M $22 M $23 M $25 M $30 M $50 M $400 M Revenue $400 M $50 M Margin $500 M $60 M $56 M $35 M $30 M $32 M $35 M $300 M $27 M $200 M $20 M $37 M $30 M $39 M $33 M $30 M $29 M $18 M $100 M $40 M $10 M $M $M $M 2011 Proj 2012 Proj 2013 Proj 2014 Proj 2015 Proj 2016 Pre-Cliff Brand Rev Pre-Cliff Generic Rev Pre-Cliff Brand Margin Pre-Cliff Generic Margin $M 2011 Proj 2012 Proj 2013 Proj 2014 Proj 2015 Proj 2016 Post-Cliff Brand Rev Post-Cliff Generic Rev Post-Cliff Brand Margin Post-Cliff Generic Margin Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 19 Margin $600 M

If They edit Master title style Click to Don’t Change – Retailers will be Generic Pill Houses • Click to Est. Rx by Drug text styles edit Master Type – Second 4, 000 M level Est. Share of Total Rx 100% • Third level 90% 3, 500 M 80% 3, 000 M Generic Rx Rx Generic Rx Generic Rx Rx Rx Generic 70% Generic Rx Generic Rx Rx Generic Rx. Generic 2, 500 M 2, 000 M 60% 50% 40% 1, 500 M 30% Pharma Rx Biotech Rx Generic Rx 10% Pharma Rx Biotech Rx 17 20 16 20 15 20 14 20 13 20 12 20 11 20 10 0% 20 0 M 2009 2010 2011 2012 2013 2014 2015 2016 2017 Pharma Rx Rx Rx Pharma 09 Pharma Rx Pharma Rx 500 M Pharma Rx Rx Pharma Rx 20% Pharma Rx Rx Pharma 20 1, 000 M Generic Rx Source: BFG estimates based upon IMS Health, Medco patent expiry, proprietary client data analysis, Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 20

Retail, edit Master title style Click to. Specialty And What Is Needed In-Between Specialty • Click to edit Master text styles Tweener Retail – Second level Price >$20 k/year <$20 k and >$5 k <$5 k year Patient Population <500 k >500 k-1 M >1 M Payer Complexity Tier 4, PA, SE Phcy/Med Benefit Reimbursement Support Financial assistance

Product Mix and Key Facts Click to edit Master title style • Click to edit Master text styles – Second. Generics level Brands Specialty 84% of unit volume 13% of unit volume 15% of dollar volume 35% of dollar volume 50% of dollar volume • Third level • Generics do not currently couple with support programs • Declining brands are on auto-pilot with 10% price increases • Specialty products are 3% of population and can be targeted and managed by plan sponsors – think about # of patients per employer, per state, etc Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Overview Of Specialty Pharmaceutical Marketplace Click to edit Master title style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Specialty Drug Areas By Benefit Design Click to edit Master title style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Specialty Drugs By title Of Care Click to edit Master Site style • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Reimbursement Considerations Click to edit Master title style – Government Driving Down • Click to edit Master text styles – Second level BBA DRA ACA Control Biotech Control Generics Reinforce and control Lowered and contained rates of reimbursement to LTC Contained reimbursement on biotech spend Lower and contain excessive margin on generics vs brands Reinforce all of the former, lower MD reimbursement for lack of performance 1997 2003 2006 2011 • Third level Control LTC MMA Transcending bi-partisan activities – HHS and CMS with the support of the CBO and GAO have identified and executed on opportunities to better control the system and relative costs Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 26

Traditional Co-pay Tier Designs Migrating To Co-Insurance, Click to edit Master title style Closed Designs & Exclusion Formularies • Click to edit Master text styles Only For Illustration Purposes 100% – Second level 90% • Third level 80% 70% 60% % Closed Lives 50% % Restricted Lives 40% % Open Lives 30% 20% 10% 0% 2009 2010 2011 2012 2013 2014 2105 2016 2017 Definitions based on Tier Co-pays: Open (<$15 differential), Restricted ($15 -25 differential), Closed (>$25 differential) • • • Medicaid Expansion and the launch of Healthcare Exchanges increased the number of insured population in 2015 by 28. 1 million (11. 7 M in HIX, 16. 4 M in Medicaid expansion) Formulary benefit designs in Commercial, Medicare Part D and HIX plans are trending to 4/5 tier formularies with all preferred and non-preferred brands in the 4 th tier or higher with co-insurance co-pays Co-pay differentials between generic and brand tiers depend on the price of the product, ranging from $20 - $100 or more Source: Blue Fin Group sourced industry information and analysis Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Consolidating Payer System Click to edit Master title style Applies Pressure To Channels • 70% Click to edit Master text styles Commercial Medicaid Federal – Second level 60% 50% Medicare HIX • Third level 40% 30% 20% 10% 0% 2009 2010 2011 2012 2013 2014 2105 2016 2017 295 285 275 Total U. S. Insured Lives 265 255 245 235 2009 2010 2011 2012 2013 2014 2105 2016 2017 Source: Summary information from CBO estimates, Kaiser Family Foundation, Health Leaders Inter. Study Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Government as Payer – Doing Click to edit Master title style What Others Couldn’t • Click to edit Master text styles – Second level • Third level Medicare: Seniors and disabled Medicaid and State-Child Insurance Program (SCHIP): Low income Tricare, VA: Military Indian Health Services: Native American Indians q Under Patient Protection and Affordable Care Act of 2010, patients were herded into health insurance plans – half to govt and half to private q While it wasn’t expected until 2020, Government now covers 50% of lives q Rise of plan sponsors Source: “Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2014” http: //www. cdc. gov/nchs/data/nhis/earlyrelease/insur 201412. pdf and Kaiser Health of Healthcare 2015 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 29

0 Payer Decision Tree – Think Click to edit Master title style Like A Payer • Click to edit Master text styles – Second level • Third level Plan Sponsor Health Plan/MCO 50% Medical or Pharmacy Benefit* Medical Director PBM Often a value prop is to medical but pharmacy has to pay Pharmacy Director Influence the provider with therapeutic pathways – preferred products Attempts to influence the consumer directly with out-of-pocket economics “Take care bringing a medical benefit story to a pharmacy director – unless it reduces pharmacy spend, it increases it – Healthplans and Plan Sponors will need to weigh in – Medical and Pharmacy still don’t talk” Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Market edit Master title style Click to Access Motives By Payer Player • Click to edit Master. Motives text styles Plan Second level – Sponsors Tactics Total quality of care at lowest premium amount possible Push payers to lower medical/drug spend balanced with employee satisfaction/retention concerns Commercial – Rx (PBM) Maximize premiums while delivering Plan Sponsor value Focused on product type to drive incremental rebates for customers and admin fees Commercial – Med (MCO) Maximize premiums while delivering Plan Sponsor value Focused on Site of Care to drive down total healthcare costs Medicare - Rx Maximize premiums while attracting low-risk individuals Focused on product type to control spend and make a profit Medicare - Med Drive fee-for-value reimbursement Migrate from FFS reimbursement to performance measures per CMS metrics Medicaid Drive patients to the out-patient setting where possible State – move to MCO management. MCO – base medical/formulary options IHS/HMO Total quality of care at lowest dollar amount possible Complete visibility to total cost of care provides visibility to pressure points for lowering costs • Third level Kaiser Family Foundation and BFG analysis 2015 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 31

Commercial Deficiencies Click to edit Master title style • Click to edit Master text styles – Second level • Third level Provider confident of drug and access Patient knows where to go Lose 5% Payer Access PA, SE, Tier, Blocks Lose 20 -40% Pharmacy or PS Hub reeducates adherence monitors reports outcomes Lose 20 -40% Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 32

Business Problem title style Click to edit Master. For Payers (And The Dilemma) § Payer needs to show immediate • Click to edit Master text removal of healthcare spend § Control more drug spend styles § Move from OAAs to SAAs – Second level § PBM’s only have control of drug spend • Third level § Do not understand (or care about) business issue around the ineffectiveness of the SPP model § PBMs/MCOs set hurdles to gain access – PA, SE, OOPs, blocks § Need to understand issue and effective models § SPP as revenue generator New Model Reality: buy & bill products work because abandonment and adherence are lower Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Business Challenges For Patient/Caregivers Click to edit Master title style • • • Make it edit Master text styles Click to about the money – Second level Health Insurance like car insurance • of pocket Out Third level – premiums, deductibles, copays and coinsurance Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 34

Manufacturers Solution Patient Services Hubs Or Resource Click to edit Master title style Centers • Attract Patients (Identify)text styles access to passionate people and high quality Click to edit Master Easy – Second level information on disease, therapy, payer coverage and service model • Third level Acquire Patients (Access) Overall service model that supports provider confidence in ability to initiate therapy and get reimbursed Convert Patients (Start) Services that support provider reimbursement, patient payment, training and first dose coordination Support Adherence (Regimen) Services that support, engage and empower patient and caregivers Retain Patient (Brand Loyalty) Communication about alternate therapies in manufacturer disease state portfolio, initiated by signal of risk to switch or discontinue Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 35

Click to edit Master. Commercial Delivery System Fixing The Broken title style IHN • Click to edit Master text styles Retail Pharmacy – Second level • Third level 1 2 HCP prescribes a selfadministrated product – leaves with an Rx for Enbrel Patient presents in a Specialty Area (ie Rheumatology) 8 • • Problem for Others Providers – losing all value and increasing the risk Patients – do not realize the care they expect from IHN Manufacturers – loss of revenue and drug viewed as either troublesome to Rx or doesn’t work Payers – really Plan Sponsors – higher overall cost of care 7 Problem for the IHN • Lost revenue $$$ Value to external pharmacy • Risk for IHN – if patient cannot gain access or be compliant – readmitted – lowering reimbursement rates Specialty Pharmacy Mfgr Patient Services IHN/Ambulatory Specialty Pharmacy Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved No support for BI/BV, copay, no re-education and no adherence support + 50% abandonment issue - 25% adherence issue 3 4 If economical for SPP, basic support for BI/BV, copay, minimal re-education and some adherence support + 40% abandonment issue - 20% adherence issue 5 If made aware of PS, support for BI/BV, copay, re-education and no adherence support - 10% abandonment issue - 10% adherence issue IF ambulatory services, support for BI/BV, copay, re-education and dedicated adherence support - 5% abandonment issue 0% adherence issue 36 6

The to edit the Channel Is Evolving – Virtual Staff Model Click. Role of Master title style • Click to edit Master text styles Kaiser – Second level VA • Third level Control of Prescriber Acute Non-Fed (ie Strict formulary with mandated internal e. RX) PBM Clinic Influence on Prescriber LTC (ie reward, penalty or relationship with a prescriber) Retail/ Mail SPP GPO Distributors Influence on Patient Control of Patient Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 37

Vertical Integration title style Click to edit Master – Health Systems Become HMOs • • Control edit Master text styles Click to of the provider and patient – importance to the payer – Second level the manufacturer –viewed as the top of the food chain Relevance to • Third level It’s all about the money in a game of musical chairs Payer either influences, controls, or integrates/owns Payer Everybody else is in the middle Patient Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 38

“ASP in Practice” – Sign title style Click to edit Master Of Amp-based FULs q Prior toto edit. Medicare Part Bstyleswere reimbursed at AWP – 15% • Click 2005, Master text drugs q Medicare Part B reimbursement transitioned to ASP basis beginning Q 1 2005 – Second level q Scenario presented below is for illustrative purposes only • Third level 2004 2005 AWP $120 WAC $120 $100 AWP-15% = $102 $100 ASP + 6% ($79. 50) $75 ASP $70 Purchase Price ASP + 4% ($78) Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved $75 $70 39

Grossto edit Master title style Click to Net Optimization – Avoid Discounts Gross • Click to edit Master text styles – Second level Pricing Strategy • Third level Product Positioning Strategy Government Strategy Payer Strategy Field Sales Strategy Managed Care Rebates/Admin Fees Medicaid Rebates Medicare Part D Rebates Chargebacks* Co-pay Assistance Cash and Channel Discounts Returns, Allowances & Credits Channel Strategy *GPO admin fees based on manufacturer interpretation Proprietary & Confidential Copyright © 2016 Blue Fin Group, Inc. All Rights Reserved Proprietary & Confidential | |Copyright © 2015 Blue Fin Group, Inc. | |All Rights Reserved Net 40

Mergers And Mega. Channels Click to edit Master title style Categoryto edit Master text styles Channels • Click – Second level Plan Sponsors • Third level 55% Government, 45% Commercial Payers UHC/CAT, Aetna/Human, Cigna/Anthem, IHSs Distributors MCK/Celesio, ABC/WAG/Alliance, CAH/MM/HVD/Zuellig Influencers Premier, Novation/UHC/Med Assets, Health. Trust Dispensers CVS/OMN/TGT, WAG/RAD, ESRX, Diplomat, IMH/Amerinet Service Providers Xerox/Inventiv, Diplomat/Envoy, Biologics/TBD, Triple. Fin, Rx. Crossroads Prescribers Consolidation of practices, into IHSs Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Industry At Master title Click to edit. A Glance style Key Message Strategic Implication – Second level the HC Ecosystem • Third level Reimbursement primary agent of change provider and pharmacy (squeeze out inefficienc) • Clickato edit Master text styles CMS has “linked” view of Assumed holistic view of the flow of the discounts down to the Government as Payer – pressuring the economics drives horizontal and vertical consolidation Product mix already is driving Decline of small molecule, the rise and fall of generics, the change explosion of specialty, and the slow adoption of biosimilars – long term stakeholders struggled to evolve New HC service models and their effort for HC effectiveness As accountability for science and how it’s delivered intensifies, manufacturers take a much more active role in ensuring optimal provider and patient journeys New models will emerge for sites of care It’s a great big game of musical chairs. IHNs create pharmacies. Providers create ITPs. GPOs go to payers and become distributors. Specialty channels emerge. Integration occurs. Channels become providers. Status quo is being rethought From patient and provider engagement, to channel relationships, to benefit constructs, and account management – there are no sacred cows - all is on the table Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Click to edit Master title style • Click to edit Master text styles Future State – Second level and Applied Concepts • Third level Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Macroeconomic Trends Click to edit Master title style • Click to. Canton – Future styles – nano, neuro, bio, quantum – rise of James edit Master text SMART AI, robotics and learning machines, human longevity 2 X+ – Second level • Third level • George Friedman – Next 10 -50 -100 years - population impacts – rise and fall of countries based upon ability and will to see and change the future, economics and societal meme shifts – flattening of the world – ubiquitous levels of connectivity – rise of the millennials – awareness shift from the individual to society - impacts that technology will have on societies • Matt Ridley – Rational Optimist - innovation has been a consistent theme of man since our inception – something is always ending – something is always beginning Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 44

Major Change Drivers Click to edit Master title style • • • • Growth of specialty text styles Click to edit Master – Second level Decline of brands • of the Generic Wave End. Third level Biosimilars 3 Types of payers AMP based FULs CPIU and price increases Rise of the Plan Sponsor Site of Care maneuvering Distribution fragmentation Pharmacy fragmentation Rise of the IHS as the new MCO • • • • Patient data Genetic data Behavioral data Cohort data Integrated and longitudinal data Use of Data (Voice of Truth) Health Analytics Bundles and Value-based Future of innovation Personalized Medicine Regenerative Medicine Rise of the Kaiser Model Democratization Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 45

Health edit Master title style Click to. Insurance Applied And Consumed Differently Boomers • Click to edit Master text styles X’rs Y’rs – Second Commercially level • Insured. Third level Federally Insured Innovation, access and programs are being rationalized in sub-segments State Insured Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved Millennials

Reimbursement Going style Click to edit Master titleto Become Incredibly Complex • Click to edit Master text styles – Second level • Third level Clinical Pathways Financial Incentives for Outcomes HIT with data to support preferred outcome Source: Mc. Kesson ACO White Paper 7. 2012 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 47

Data to edit Master title style Click Evolution - Integrated Care Journey Overview • Where We edit and Pending styles Click to Are Master text Where We Need to Be Outcomes Journey – Second level • Third level Care Journey Enhanced Rx Journey 301 201 Patient monitoring wearables and selfdiagnostics 101 Pharmacy Systems 401 Pharmacy and Case Mgmt Systems Pharmacy, Case Integrated and Mgmt, Claims, Labs, Automated and EMR Systems Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Data to edit Master title style Click Evolution – Potential Role of Channel and Services Risk for Disease • Click to edit Master text styles – Second level • • • Confirmed Disease • Third level Considering therapy HCP approved therapy MC Os What do they know? Can they share? Will they share? Can we act on it? Will it be meaningful? Attempted to gain access to therapy IHN/SPPs On therapy, compliant, outcomes s linic an C ysici Patient Services Retail PBMs SP Ps Ph • How can we “optimize the radar”? • Enhance our visibility and influence with services and channel design? Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Data to edit Master title style Click Evolution – Hierarchy of Needs • Click to edit Master text styles Risk– Second level For Disease • Third level Identifying and interacting with patients at risk for disease Considering Testing On A 1 L or Competing Therapy Interacting with patients on a pre-cursor therapy Interacting with patients not meeting health goals, current therapy might be failing Broader Patient Mix Identify patients that are progressing in disease and that have been identified as mutation + Access Granted to My product On My Therapy Support patient’s insurance and financial journey Initiated, trained, timely, compliant, data to that effect Manufacturer must do the basics well before progressing Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved .

Healthcare Master title style Click to edit. Quadrant View of Influence – Value of an ACO • Click to edit Master text styles 1 – Second level • Third level Kaiser Control of Prescriber 2 (i. e. Strict formulary with mandated internal e. RX) Kaiser Model = best commercial leverage IHN Acute Non-Fed PBM Influence on Prescriber (i. e. reward, penalty or relationship with a prescriber) Control = $ leverage VA Retail/ Mail 3 New Technologies enable the IHN Clinic LTC SPP GPO 4 Payers support this migration Distributor Influence on Patient Control of Patient Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 51

Payers edit Master title style Click to and IHNs will Rely on Remote Patient Monitoring • Click to edit Master text styles – Second level • Third level Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 52

We’ve been here before, but Click to edit Master title style this time things are different! Payer-Driven Change is text styles • Click to edit Master Provider Reactions Not New – Second level • Third level Cost Controls • • Capitation Bundling Profit-sharing Risk-sharing 1. Consolidation • Control patient touchpoints along continuum of care for key disease states • Create leverage to influence reimbursement rates and acquisition costs Some Things are Different This Time Information Technology • Digitization of healthcare information • Tools for big data and smart data 2. Integration Quality Controls • Quality of care metrics • Patient experience • Transparency • Integrate clinical and financial systems • Align with standards, pathways and formularies 3. Measurement • Measure and analyze outcomes, quality, cost • Optimize patient journey and standards of care Consensus & Alignment • Unsustainable costs and perverse incentives • Aging and unhealthy population • Threat to strength of US firms and government • Healthcare Reform Provider Positioning to Protect their Profitability Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Vision 2020 – The “Integrated System” Will Be a Common and Click to edit Master title style Influential Component of US Healthcare Delivery • Integrated System: Click to edit Master text styles – Second level Standards of Care / Clinical Pathways / Formulary • Third level Technology Integration (EMR) Measurement of Outcomes, Quality, Cost Care and Transition Coordination Inpatient Hospital PCP / Specialist Practices Insurer HOPD / ASC Imaging / Labs / Diagnostic Hospital Pharmacy / SPP MTM / Support Services SNF / LTC / AL Home Care Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved Geisinger, Mayo, Kaiser, UPMC got here first for a key reason – the insurer was part of the system Many emerging integrated systems don’t have insurers in the ownership mix, but are being driven to the model by payers and insurers Tenet-Vanguard deal – Tenet grew organically till this; Vanguard insurance products

Impact to Channels - How will Consolidation and Integration Click to edit Master title style impact Intermediaries? • Click to Plan Master text styles Payer / Plan Payer / edit Payer / Plan Current State – Second level • Third level Physician Practices Specialty Distributor Hospital Alternate Sites of Care Retail Pharmacy Specialty Pharmacy Full-Line Wholesale Labs / Imaging Full-Line Wholesale • • • Fragmented Siloed No coordination No accountability Redundant care / costs Full-Line Wholesale / MFR Direct Future State Payer / Plan Physician Practices - Labs / Imaging - Hospital - Alternate Sites of Care How will integrated systems interface with retail and specialty pharmacy? How will integrated systems acquire product (pricing and physical flow)? Integrated systems will acquire intermediary margin to protect their own profitability Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Impact edit Master – Retail Click toto Channels title styleand Specialty Pharmacy Opportunities to Protect Profitability, Control Costs and • Click to edit Master Optimize Patient Clinical Outcomes text styles – Second level → Can the Integrated System support and manage a pharmacy operation? → Does a bundle/capitation include the drug cost? • Third level → Is the patient self-managing drug and medical equipment? Does this impact outcomes? Integrated System Pharmacy Strategies 1. System MTM + Open Pharmacy • System has its own MTM • Allows dispensing by any retail or specialty pharmacy 2. Limited Pharmacy Network • System establishes network of retail and specialty pharmacies with MTM and data integration d. S te gra te In HME Pha em yst SPP / Mail MTM (part of System Care and Transition Coordination function) 3. Integrated System Pharmacy • See graphic to the right Specialty @ Retail Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved rm a cy Mo del Retail Pharmacy

Impact edit Master – Wholesalers and GPO’s Click toto Channels title style Future of Wholesalers and GPO’s depends on the “long tail” • →Click integrated systems will contract directly with manufacturers. Some will buy direct to edit Master text styles Large –from manufacturers. They will claim the intermediary margin. Second level → How. Third level and sites of care will not be part of integrated systems? • many hospitals → How many integrated systems will be too small to influence acquisition prices? FLW + GPO GPO ip, rsh ices, Manufacturer be o em , Inv ack M rs Ad eb e ct, Pr min Orders, Invoices, Payments; Prompt Pay, Performance ra Ord harg ice nt ; F Co cing ts; C dits Fees, Admin Fees, Price Di ees Chargeback Claims & Credits n Cre s i sc , Pr me ou , ay Fee Discounts & y nt t P ce Pa ims s mp man a o Cl Pr for r Pe FLW • Many providers will still need GPO and Full Line Wholesale services • Tighter reimbursement means that providers will need better pricing from GPO and FLW • Where will intermediaries look for more margin? Future State Current State Changes to Intermediaries • To Manufacturers? Yes • To Consolidation? Yes Customer Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved Customer

2020 Vision – Manufacturer Segmentation and Strategies Click to edit Master title style • Click to Actively piloting new styles assessing edit Master text Actively models of engagement, – Second level influence access and • Third level impact of new customers and learning from the Innovator pilots Hanging on to the traditional commercial model until their customers force them to change MFR strategies being pursued Account Management Flexibility - Cross-functional account teams that integrate Marketing, Hecon, Medical, Market Access, Sales and Trade roles into agile and flexible teams that “self-configure” at a local system level Speak Their Language - Support claims of product superiority with relevant clinical data and support product price with pharmacoeconomic data Own the Disease - Offer holistic and customizable suite of TA-specific product treatments, relevant and hightouch services, and related diagnostics that span the continuum of care Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved

Vertical Consolidation Occurring at Many Points Click to edit Master title style Upstream Self • Click to edit Master text styles manufacturing – Second level • Third level Pharmacy Downstream Self manufacturing Healthplan PBM Distributor GPO Self distribution Collaborative Contracting IHN Clinics, HH, HMO, LTC, GP, SP Insurer http: //www. repertoiremag. com/Article. asp? Id=1767 Proprietary Confidential | | Copyright 2015 Blue Fin Group, Inc. | | All Rights Reserved Proprietary && Confidential Copyright ©© 2016 Blue Fin Group, Inc. All Rights Reserved 59

Future edit Master title Click toof Globalization style • Click to edit Master text styles – 2015 Second level 2020 • Third level § Healthcare remains local § As commodity and private § label products gain in § Growth into related demand, globally oriented markets companies can harness larger and larger § Brands have no global economies of scale synergies With a growing global § Channels evolve behind footprint, global channel sourcing leverage and are companies will be able to integrated into better spot opportunities manufacturing to control and influence § Highly likely for APIs and other raw commodity goods materials – control supply § Commodity goods such as § Shifts in packaging § Channels could potentially § Given varied approvals leverage common generics or private label vertically integrate into around the world, global backbone can be leveraged for brand manufacturing and channels could sourcing synergy § Still little to no benefit for marketing theoretically understand brands – perhaps § Global brand identity for which products are § Integrated channel biosimilars (assumes manufacturers and receiving uptake and management and leveragable pathway) patients apply this to other products delivering better § Servicing Global customers markets outcomes Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 60

A Forward Looking title style Click to edit Master View • Click to edit Pricing Master text styles rationalization – Second level Decline of • generics Value Third level bundles Precision FDA struggles with Precision 2015 Artificial Intelligence Data Regenerative Neurological Advancements 2020 Human Design Biosynthetics 2022 2025 2030 Empowered Patient Integrated & Aligned System Genetic Testing Data Accountable System Targeting of Payer Types Mobile & Telehealth Payer fragmentation Human Longevity 3 D applications IHS as MCO Patient Journey Robotics Democratization Decline of Paternalism Proprietary & Confidential | Copyright © 2016 Blue Fin Group, Inc. | All Rights Reserved Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved

Click to edit Master title style • Click to edit Master text styles William Roth Founding Partner Mail: wroth@consultbfg. com M: T: 678. 522. 3728 @rxchangeagent www. linkedin. com/in/williamroth – Second level • Third level www. consultbfg. com http: //consultbfg. com/finsights/ website blog The content within this presentation is subject to the confidentiality agreement between Blue Fin Group, Inc. (BFG) and Client is entitled to use content within this presentation solely for its own internal business purposes and is prohibited from modifying, translating, or otherwise creating derivative works based on the content of this presentation. Client is further prohibited from licensing, selling, leasing, distributing, lending or otherwise transferring the content within this presentation to any third party regardless of the relationship between third party and Client may not make any copies of any BFG presentations and related content except for internal distribution purposes as described and agreed to in the confidentiality agreement, provided that all such copies are reproduced with and incorporate all of BFG’s protective notices, including this and all copyright notices. Nothing in the content within this presentation and/or any agreement applicable thereto between Client and BFG constitutes a waiver of BFG’s rights under United States copyright law or any other law. This information has been obtained from sources which BFG believes to be reliable but we do not guarantee the accuracy or completeness of this information. Proprietary & Confidential | Copyright © 2015 Blue Fin Group, Inc. | All Rights Reserved 62