KEYS TO SUCCESS IN THE NEW PATIENT ECONOMY 5

June 23, 2016

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TODAY’S AGENDA

•  Why Outcomes – Not Prescriptions – Are the New Measure of Success •  What Patients Really Want in the New Patient Economy •  Strategies to Deliver Superior Patient Experiences and Outcomes •  Practical Steps to Get Started

THE QUEST FOR OUTCOMES AND VALUE: A POWERFUL FORCE FOR CHANGE

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PHARMACEUTICAL VALUE EXTENDS BEYOND EFFICACY

– Meet unmet medical needs –

– Superior clinical benefit over existing treatments –

– Convenience, tolerability and compliance –

– Reduce the total cost of care –

– Reduce hospitalizations and medical procedures –

– Improve the quality of life –

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MANUFACTURERS FACE PRESSURE FROM ALL SIDES

PAYERS AND PLANS PHYSICIANS CONSUMERS

Formulary Placement Pricing

Outcomes Adherence

Affordability Value

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GROWTH IN SPECIALTY MEDICINES FUELS THE FIRE

300 $848 Billi

on

Number of specialty care drugs in on market in 2015

vs. only 10 in 1990

700 specialty care drugs in development

Projected specialty care sales in 2018,

exceeding 50% of total

Affordability gap between forecasted sales of new Rx products and increase in

payer budgets

CHALLENGE: Commoditization of specialty care products IMPLICATIONS: Greater pressure to differentiate through outcomes and values

$50 Billi

on

Source: “Affordability and value—the economics of pharma’s new science”, Accenture, 2016

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INNOVATIVE OUTCOMES-BASED CONTRACTS ON THE RISE

•  Payment based on reduction in hospitalizations

•  Cigna and Aetna

•  Larger rebates for missing cholesterol goals and exceeding utilization goals

•  Harvard Pilgrim Health Care

•  Higher pricing in lung vs. pancreatic cancer based on survival benefits

•  Express Scripts

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OUTCOMES: LAUNCH CRITICAL

30% Number of new launches that miss analysts’ forecasts by 50%+ Robust outcomes data distinguishes winning brands

Source: “Affordability and value—the economics of pharma’s new science”, Accenture, 2016

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FEE-FOR-VALUE BECOMES MAINSTREAM CHALLENGE: Physicians assume more financial risk and accountability

IMPLICATIONS: Demand on pharmaceutical companies for evidence and behavioral support

30% 40% 50% Value-based payment

arrangements grew by about one-third in 2015

Of Aetna’s members – 6.2 million – are receiving care from doctors, hospitals

and others in value-based arrangements

CMS will push half its $300 billion in annual Medicare

fee-for-service spending into contracts with incentives to

manage quality and costs by 2018

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EMPLOYERS SHIFT COST BURDEN ONTO EMPLOYEES

0%

75%

150%

225%

300%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Health Insurance Premiums Workers' Contribution to Premiums Workers' Earnings Overall Inflation

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2015. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2015; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2015 (April to April).

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation and Workers’ Earnings, 1999-2015

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CONSUMERS PAY MORE FOR LESS

RISING COSTS 27% increase in family premiums

67% increase in deductible

25% enrolled in high- deductible plans

FEWER CHOICES 83% of firms offer

only one plan

Narrow networks

23% have 4+ tiers of Rx cost sharing

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HEALTH CARE AFFORDABILITY A TOP CONCERN % Who Say the Following Should Be a Top Health Priority for the President and Congress

PRIORITIES WITH > 50% AGREEMENT

Making sure that high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer, are affordable to those who need them 77%

Government action to lower prescription drug prices 63%

Making sure health plans have sufficient provider networks of doctors and hospitals 58%

Making information about the price of doctors’ visits, tests and procedures, such as hip replacements and MRIs, more available to patients 56%

Protecting people from being charged high prices when they visit hospitals or outpatient clinics covered by their health plan but are seen by a doctor not covered by their plans. 56%

Making information comparing the quality of health care provided by doctors and hospitals more available to patients 53%

Source: Kaiser Family Foundation Health Tracking Poll, October 2015

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THE NEW PATIENT ECONOMY: A SEISMIC SHIFT ACROSS

THE HEALTH CARE ECOSYSTEM

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CONSUMERS TAKE MATTERS INTO THEIR OWN HANDS

17% REQUEST CHEAPER Rx

53% PAY DRUGS OVER TIME

58% WANT COST DISCUSSION

25% USE SCORECARDS

33% ACCEPT LONGER WAIT TIMES

46% TRAVEL FOR BEST CARE

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ALTERNATE CARE DELIVERY GROWS

21% 60% 60% REFILLED Rx ON

MOBILE DEVICE VISIT WILLING TO HAVE VIDEO

PHYSICIAN VISIT INTERESTED IN

REMOTE MONITORING

GENERATIONAL SHIFTS HAVE A HUGE IMPACT

Swing (68+)

10.4%

Boomers (50-68)

23.6%

GenX (38-49)

15.4%

Millennials (20-37)

24.5%

Gen Z (<19)

25.9%

DIGITAL NATIVES FLUENT ON 5 SCREENS

of the U.S. adult population are Millennial/Gen X 60% ^

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MILLENNIALS: THE FIRST DIGITAL NATIVES

EVENTS: Columbine, corruption, recession VALUES: Happiness, diversity, discovery, work-life balance HEALTH: Holistic health seekers 25% use health/fitness app 8% use wearables 25% use scorecards 28% trust online communities 62% ask doctor for Rx 62% research prescribed medicine

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GEN X: THE SANDWICH GENERATION

EVENTS: Divorce, working moms, Watergate, downsizing VALUES: Family, individuality, transparency, self-reliance HEALTH: Health-conscious moderates 17% experienced health wake-up call in past 3 years 36% obsessed with preventing sickness 59% would adopt wearables 71% have children at home 61% feel responsible to take care of aging parents

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BOOMERS: 60 IS THE NEW 40

EVENTS: Civil rights, space program, Vietnam War, economic boom VALUES: Prosperity, achievement, exploration HEALTH: Physician-centric survivors 87 average life expectancy for women 66% have multiple chronic conditions 75% influenced by doctor 57% asked doctor about Rx drug 27 hours per week spent on internet 65% of internet users engage in social media 75% have downloaded at least one health app 48% would download an app to monitor chronic condition

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WHAT CONSUMERS WANT IN THE NEW PATIENT ECONOMY

Real value For real people In real time

IT’S ALL ABOUT VALUE

HOW TO SUCCEED IN THE NEW PATIENT ECONOMY

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FOCUS ON THE PATIENT

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

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GO BEYOND ADHERENCE 1. BRAND AWARENESS

AND PERCEPTIONS How is your brand helping

create confidence and trust? Are you breaking through the clutter?

3. CONSIDERATION How well are you delivering

clear information to help the confused patient make a

decision with confidence? Are you engaging

trusted influentials?

4. PRESCRIBING Are you helping more

patients engage in shared decision making?

How are you helping patients navigate the increasingly complex

reimbursement landscape?

2. TARGETING Are you cost-effectively reaching

the right audience segments? Are you micro-targeting

niche populations?

8. ADVOCACY Do you make it easy for satisfied patients to share their stories? Are you helping survivors to cope with their challenges?

7. PERSONALIZATION Can you anticipate your customer’s next need and serve up valuable content at the right time?

5. SELECTION CONFIDENCE How are you building your patient’s confidence in the prescribed treatment?

6. EXPERIENCE Are you helping each patient manage their condition and obtain the best possible outcome?

Path to Purchase {Base Point}

Path to Passion {Bliss Point}

Precision + Empathy

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

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73% offer 6+ services Only 1 in 5 patients aware

9 of top 10 services drive above- average business impact

Adherence programs are the exception

85% of companies raising investment

Moderate alignment with patient needs

≠

WHAT PHARMA COMPANIES OFFER

Source: “The Patient Is In”; Accenture, 2016

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WHAT PATIENTS WANT

85% 79% 79% 79% 77%

55%  

68%  

54%  

100%  

73%  

0%

25%

50%

75%

100%

Medication delivery/support

Remote monitoring

Reminders and outreach

Benefit and access support

Adherence program

Patient Value Company Investment

Source: “The Patient Is In”; Accenture, 2016

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STRATEGIES FOR DIFFERENTIATING BEYOND THE PILL

– Consider the entire patient journey –

– Enable patients to do what they couldn’t do before –

– Seamless integration –

– Create real, tangible value at scale –

– Prove the patient and economic value –

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

\

A billion journalists

Mobile first

Time-/space-shifting

Power to switch on and off

Chooses to opt in

NOW THEN

Received the facts

TV-centric

Fixed parameters

Captive audience

Forced to opt out

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The World

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CRM IS NOW CMR EN

GAGE

MEN

T

The Consumer Relationship Curve

PRECISION

Linear Communications

Push Communications

Customer Profiles

Versioning

Campaign Management

Direct Response

Modeling

Segmentation

Dynamic and Modular

Automated

Business Rules

Behavioral Profiles

Platform-Based Programs

Connected Touch Points

Big Data Integration

The Higher Purpose Powerful Stories, Perfectly Told

I WANT TO PARTICIPATE

Built around people’s motivations Differentiated value

beyond product Creates emotional

attachment Identifies the anonymous

I CONTROL THE EXPERIENCE

Putting them in charge of their data

Highly personalized Adaptive and progressive

Meaningful and valuable

CMR CONSUMER-MOTIVATED

RESPONSE

CMR CUSTOMER-MANAGED

RELATIONSHIPS

Enabling the opt-in culture to manage their relationships with brands on their own terms

CMR2

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CMR MEETS PATIENT’S MINDSET IN THE NEW PATIENT ECONOMY

SEGMENTS

TRIBES

People cluster around shared passions.

Can you contribute?

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CMR IS WHEREVER YOUR PATIENTS ARE

OPTING OUT

OPTING IN

People decide whether or not to let you into their lives.

AVAILABLE

ADDRESSABLE

People know you have data. They

expect you to use it well.

CAMPAIGNS

PLATFORMS

People engage when it suits them.

Be on. Be ready.

INTERRUPTION

ASSIMILATION

People associate with brands that

share their outlook.

MARKETING

MATTERING

People welcome you in if you add

value to their lives.

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

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REFINE THE DEFINITION: SOME OUTSIDE PERSPECTIVE

Experiences so distinctly valuable and finely tuned that once consumers get on the path they are irresistibly and permanently engaged.

Source: “Competing on Customer Journeys”, HBR, Nov. 2015

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TRANSFORMING ENGAGEMENT IN THE NEW PATIENT ECONOMY

Mass market Precision targeting

Patients People

What you say to them What you do for them

Linear engagement Personalized pacing

One size fits all One size fits none

Slow Fast

Reactive Predictive

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5 KEYS TO SUCCESS

1. Deliver value across the journey

2. Differentiate beyond the pill

3. Engage patients on their terms

4. Create a winning experience

5. Use meaningful measurements

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OUTCOMES — NOT PRESCRIPTIONS — ARE THE NEW MEASURE OF SUCCESS

ENGAGEMENT PRESCRIPTIONS

TOMORROW TODAY

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OUTCOMES — NOT PRESCRIPTIONS — ARE THE NEW MEASURE OF SUCCESS

ENGAGEMENT PRESCRIPTIONS BEHAVIORS OUTCOMES VALUE

TOMORROW TODAY

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HOW TO GET STARTED

– Understand what your patients really want in the New Patient Economy –

– Design for purpose –

– Leverage marketing automation –

– Set up a new measurement framework –

– Test, learn, optimize –

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STAY TUNED FOR OUR UPCOMING WEBINAR SERIES: UNLOCKING VALUE ACROSS THE GENERATIONS

Session 1: Millennials Session 2: Gen X Session 3: Boomers

CORE DIALOGTM High-precision brand engagement for a digital-smart world

THANK YOU

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Rick Doerr Managing Director, NY rick.doerr@rapp.com 212.619.6917

Maryann Kuzel SVP, Healthcare Strategy maryann.kuzel@rapp.com 212.619.6847