GPO Insight – Managing Membership, Defining Class of Trade, and Ensuring Contract AccessTodd Cooper, R.Ph.

Director, Pharmacy Program Development

Who is Vizient?

Vizient Presentation │ Date │ Confidential Information2

• Combination of VHA, UHC, Novation, MedAssets SCM

and Sg2

• Pioneers in health care with the insight, purchasing

power and expert connections to drive better results for

members and customers

Purpose, mission, strategic aspirations

Purpose

To ensure our members deliver

exceptional, cost-effective care

Mission

To connect members with the

knowledge, solutions and

expertise that accelerate

performance

Vizient Presentation │ Date │ Confidential Information3

Strategic Aspirations

Become an indispensable

partner to health care

organizations

Become a leader in health care

innovation

Accelerate our growth rate

Advantages of the combined entity

Vizient Presentation │ Date │ Confidential Information4

From cost to care delivery, Vizient will provide targeted solutions to improve member’s performance

Scale and

Market

Presence

Economic

Value

Integrated

CapabilitiesInnovation

“Our central focus is helping members

apply data and insights in new ways to

achieve sustainable results. Our

success is ultimately defined by the

success of our members in serving their

patients and communities.”Curt Nonomaque, President and CEO, Vizient

Vizient Presentation │ Date │ Confidential Information5

Pharmacy Program Overview

Industry leading solutions for each category of spend

Pharmaceuticals Plasma Program

Contrast Media & Nuclear Medicine

Automation Support Services

Pharmacy Distribution

7

Vizient Pharmacy Program Spend

$33.9 Billion in 2015 Member Spend

Bill

ions

$12.3 $13.0 $14.6 $14.4

$16.0 $17.1

$18.7

$22.6

$29.1

$33.9

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Membership Database Classes of TradePrimary COT

• Acute Care

• Ambulatory Care

• Surgical Care

• Home Health Care

• Long Term Care

• Managed Care (Closed)

• Physician Clinic and Office (oncology)

• Correctional

• Retail

• Non-Pharmacy

• Education

• Business and Industry/Corporate

• MunicipalitiesVizient Presentation │ 3/23/16 │ Confidential Information8

2015 Vizient Spend Breakout by COT

9

Acute Care49.4%

Ambulatory Care2.3%

Home Health Care40.6%

Long-Term Care0.1%

Managed Care Closed0.5%

Physician Offices/Clinics

2.7%

Retail4.4%

New Members Identify COT

Vizient Presentation │ 3/23/16 │ Confidential Information10

Acute Alternate Care

Sub-Categories

• 58 combinations of COT and sub-

category

• Primary Categories:

• Acute Care

• Clinic

• Ambulatory Care

• Home Health

• Long Term Care

• HMO-Closed

• Retail Pharmacy

• Corporate

• University, College or School

Vizient Presentation │ 3/23/16 │ Confidential Information11

Acute Sub-Category Share

Acute Medical School 0.25%

Administration/ Operations/IT - Acute 0.00%

Alcoholism & Other Chemical Dependency 0.01%

Cancer Hospital 2.72%

Cardiac Hospital 0.02%

Corrections Facility 0.05%

Diagnostic Imaging 0.10%

Family Practice 0.03%

Foundation 0.13%

General Medical and Surgical 50.9%

General Surgery 0.06%

Home Health Care 0.02%

Hospice 0.00%

Hospital 6.50%

Long Term Care Hospital 0.09%

Medical Research 0.00%

Pharmacy - Acute 5.5%

Psychiatric Hospital 0.61%

Rehabilitation Center 0.36%

Rehabilitation Hospital 0.17%

Standalone Emergency Room 0.00%

Sub-Acute Facility 0.01%

Surgery Center 0.01%

Surgical Hospital 0.07%

Teaching Hospital 32.4%

Veterinary 0.00%

Communicating Membership Changes

Vizient Presentation │ 3/23/16 │ Confidential Information12

Supplier Membership Site

13

Downloading membership changes

14

Vizient Members added J/F 2016– 7,588

Vizient Presentation │ 3/23/16 │ Confidential Information15

General COT Sub-Category

2016

Count General COT Sub-Category

2016

Count

General

COT Sub-Category

2016

Count

ACUTE Acute Medical School - AMC 2 AMB Rehabilitation 7 MCO Dental 7

ACUTE Ambulatory Surgery Center - AMC 2 AMB Surgery Center 1 MCO Faculty Practice 1

ACUTE Childrens General Medical & Surgical - AMC 1 AMB Universities, Colleges, Schools 1 MCO General Medical and Surgical 2

ACUTE Clinic/Medical Group 13 AMB Urgent Care Center 94 MCO General Medical and Surgical - AMC 2

ACUTE Clinic/Medical Group - AMC 2 HOME HEALTH Home Health Services 27 MCO Home Health Services 2

ACUTE Corrections Facility 1 HOME HEALTH Home Health Services - AMC 1 MCO Home Infusion Center 4

ACUTE General Medical and Surgical 74 HOME HEALTH Home Infusion Center 155 MCO Hospitalist 1

ACUTE General Medical and Surgical - AMC 21 HOME HEALTH Hospice 5 MCO Imaging Center 9

ACUTE Long Term Care Hospital 4 HOME HEALTH Specialty Pharmacy 12 MCO Laboratory 14

ACUTE Long Term Care Hospital - AMC 1 LTC Assisted Living 3 MCO Long Term Care 1

ACUTE Pharmacy 3 LTC Corrections Facility 1 MCO Non Care Giving 1

ACUTE Pharmacy Closed 3 LTC General Medical and Surgical 1 MCO Obstetrics and Gynecology 34

ACUTE Pharmacy/Retail 2 LTC Home Health Services 1 MCO Oncology/Radiation Center 88

ACUTE Psychiatric Hospital 4 LTC Hospice 1 MCO Orthopedic 1

ACUTE Ship To Location/Acute 1 LTC Long Term Care 9 MCO Osteopathic 1

ACUTE Specialty Pharmacy 1 LTC Pharmacy 1 MCO Pharmacy 1

ACUTE Warehouse 4 MCC Clinic/Medical Group 5 MCO Physicians 2

AMB Ambulance Service/EMT 1 MCC Mgmt. Service Organization 3 MCO Ship To Locations 7

AMB Ambulatory Care Center 38 MCC Pharmacy 2 MCO Student Health - Clinic 2

AMB Ambulatory Surgery Center 254 MCC Pharmacy Closed 1 MCO Urgent Care Center 22

AMB Blood Bank 42 MCC Pharmacy Retail/Closed 2 MCO Warehouse 4

AMB Clinic/Medical Group 46 MCO Acute Division/ Regional entity 2 RETAIL Clinic/Medical Group 4

AMB Clinic/Medical Group - AMC 1 MCO Ambulance Service/EMT 5 RETAIL General Medical and Surgical - AMC 1

AMB General Medical and Surgical 1 MCO Ambulatory Care Center 16 RETAIL Home Infusion Center 2

AMB Home Health Services 1 MCO Ambulatory Surgery Center 30 RETAIL Managed Care Plan 1

AMB Imaging Center 26 MCO Blood Bank 21 RETAIL Pharmacy 34

AMB Laboratory 4 MCO Business and Industry 4 RETAIL Pharmacy/Retail 17

AMB Oncology/Radiation Center 300 MCO Clinic/Medical Group 6,039 RETAIL Urgent Care Center 2

AMB Pharmacy 4 MCO Clinic/Medical Group - AMC 8 SCHOOL School (K-12) 2

AMB Physicians 1 MCO Corrections Facility 1 SCHOOL Universities, Colleges, Schools 2

340B Eligibility Changes

• Quarterly eligibility match to membership from HRSA

• Notice to contracted suppliers and distributors – all

eligible

• 340B PED changes also communicated

• No DSH program under PED

Vizient Presentation │ 3/23/16 │ Confidential Information16

Class of Trade & “Own Use”

Vizient Member Training Materials

What is Class of Trade?

Patient location (acute versus non-acute)

Prescriber control (clinic versus retail)

Drug Reimbursement (3rd party insurance)

Competition (open versus closed door)

Attempt to identify purchasing locations, grouped by specific purchaser characteristics

Why Suppliers Use Class of Trade in Contracts

“What kind of purchaser can influence the use of this product?”

Conversion from a competing product

Training on a complicated new drug to gain prescriber acceptance

Key Concern of Pharma:

Limit exposure to multiple discounts paid

Avoidance of “double dip” discounts to purchaser and payor

Strategy set by the Product Brand Team for each product

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The Double Dip

GPO discount

Pharma Supplier

Provider Paid through

Pharmacy Benefit (PBM)

Provider paid through Medical Benefit (Acute)

Federal Provider (VA, DoD)

Rebate

Best Price

Discount

PBM GPO

COT Granularity

DEA License

(2)

Sample Supplier

(2-?)

Vizient

Membership

(7)

IMS

(135+)

IMS’s Healthcare Organization Services™ (HCOS) database

Vizient Presentation │ 3/23/16 │ Confidential Information22

From IMSHealth.com - HCOS documentation

Who Determines Class of Trade?

Not Vizient

Not the Health System

Supplier often determines COT choices and variables to evaluate

• Membership, regional sales, local reps

• Supplier field or internal staff

• Third party company (IMS)

• National association rosters and accreditations

• Member’s website

COT determined at the DEA level

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“I should be getting acute pricing”

Vizient Presentation │ Date │ Confidential Information

North Memorial Urgent Care Clinic

9855 Hospital Drive

Any City, MT 55000

763-555-6666

North Memorial Urgent Care Clinic offers urgent care services to our patients on a walk-in, no appointment basis.

Hours

Monday through Friday, 8 a.m. - 8 p.m.

Saturday and Sunday, 8 a.m. - 8 p.m.

North Memorial Urgency Center in Other City is open 10 a.m. to 10 p.m. daily, including holidays.

Wholesaler

Eligible Purchasing Vs “Own Use”

“own use” regulations and COT restrictions

*Consult hospital Legal for guidance

HospitalClinic

Acute-only

In summary:

Lack of standard definitions causes member confusion

GPO COT assignment is often overruled

Fast-changing provider options blurring the issue even more

Vizient Presentation │ Date │ Confidential Information26

Thank You!