©2018 SCIOInspire, Corp. d/b/a SCIO Health Analytics®. Confidential and Proprietary. All rights reserved.

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Once We Understand; Change Results.

A Guide for Pharma and Payers

OUTCOMES-BASED CONTRACTING

©2018 SCIOInspire, Corp. d/b/a SCIO Health Analytics®. Confidential and Proprietary. All rights reserved.2

MARKET DYNAMICS AND CHALLENGES

KEY SUCCESS FACTORS

Both manufacturers and payers need to commit the time and resources for the design, implementation, and monitoring of outcomes-based contracts. Having an objective 3rd-party with an experienced analytics team to create the patient models removes any doubt of each side being “self-fulfilling”.

Both parties need to define the outcomes or “endpoints” that will be monitored over time, and to agree on “acceptable” levels of success.

Clearly-define metrics: Commitment & Trust:

Outcomes-based contracting is the burgeoning solution to address these challenges.

THE SCIO SOLUTIONSCIO Health Analytics, given its practical experiences with both payers and life sciences companies, can serve as the engine that helps drive the decisions, applications, and tracking of outcomes-based contracts, including the monitoring of patient outcomes over time.

Our capabilities allow you to:

• Stratify patient populations based on risk and impactability, enabling you to refocus you brand and HCP marketing messaging and efforts.

• Quantify the safety, efficacy, and cost effectiveness of your products, demonstrating the proven impact and outcomes needed to support the shift to value-based contracting with payers.

• Produce and disseminate user-defined reports in a SaaS-based solution that allows for qualitative and quantitative measurements post contract execution.

• Develop and enhance business relationships with your payer colleagues.

• Our mission is to provide insights and actionable information to define prospective and concurrent risk, improve and align patient outcomes that can easily be measured and agreed upon, improve revenue, address costs, and deliver optimal program outcomes.

• SCIO is the trusted, third-party that brings an unbiased perspective to key healthcare stakeholders, including life sciences companies, payers, and providers. Our extensive experience with payers enables you to develop managed markets strategies and to build relationships with your risk- and outcomes-based partners.

• Our foundational strength is derived from its broad base of over 100 healthcare customers who own the financial and clinical risk for over 130M patient/member lives each month.

• SCIO analyzes over 1B Medical claims and 1.3B Pharmacy claims annually. Our 55M patient database, updated monthly, is used to measure improvements in patient health. By leveraging demographic, clinical, socioeconomic, and behavioral data, SCIO’s Patient Personas provide a better understand of a patient segment’s prospective risk in terms of the level of additional medication and medical services they will require as measured in dollars, as well as disease-specific insights.

• The US healthcare system, facing ever increasing costs of care, needs to improve the efficient and appropriate use of healthcare products and services.

• Drug prices have been raised as a concern, impacting patient care and compliance.

• Payers are demanding proof of value and improved patient outcomes tied to drug utilization.

• Manufacturers need to demonstrate the value of their products in terms of clinical efficacy, as well as economic and quality-of-life outcomes.

• Drug makers need to work with payers to identify patient types who present the highest risk and greatest opportunity to demonstrate positive patient outcomes via measurable metrics.

Not all conditions and medications/devices are good candidates for outcomes-based contracting. The selected conditions and products need to have endpoints that can be easily obtained through the patient model, plus reliable and objectively agreed upon, while being quantitatively, not subjectively, measured in a fair timeframe.

Selection of Conditions and Products:

WHY SCIO?

©2018 SCIOInspire, Corp. d/b/a SCIO Health Analytics®. Confidential and Proprietary. All rights reserved.3

CONGESTIVE HEART FAILURE – PATIENT ANALYTICS STUDY

• Facility PMPM accounts for 71% of Total PMPM• High risk patients are the top 15% sickest patients• High risk patients are 10x more costly than Medium risk patients

• High and Medium risk Patients on Product A have significantly lower costs of care than patients not on Product A

• Particularly for Facility PMPM costs for High Risk patients

• Comparing Patients on Product A to baseline (all CHF Patients), Patients not on Product A therapy, and patients with 1+ Comorbid conditions

• Product A, Non Product A and 1+ Comorbidity Patient segment values are % deviations from baseline.

ALL CHF Patients Product A Patients Non Product A Patients 1+ Comorbidity*Patients

High Risk Medium Risk High Risk Medium Risk High Risk Medium Risk High Risk Medium Risk

Inpatient acute 1.2 <1.0 -31.3% -100.0% 0.5% 1.9% 6.7% 11.5%

Emergency room 1.0 <1.0 -28.9% -31.6% 0.5% 0.8% 8.5% -1.6%

Evaluation & management 29.9 5.8 -26.1% -0.6% 0.4% 0.0% 6.8% 10.4%

Outpatient medical 28.4 6.2 -19.6% 58.0% 0.3% -1.3% 6.0% 10.7%

Outpatient surgical <1.0 <1.0 -22.3% -100.0% 0.3% 2.7% 8.4% 21.6%

Ancillary 34.5 7.1 -27.2% 9.8% 0.4% -0.2% 5.8% 14.5%

Patient Utilization By Segment per year

• Patients on Product A therapy have 39% lower PMPM Total costs compared to patients not on Product A therapy and 21% lower PMPM Total costs compared to patients on ACE or ARB therapy

• Takeaways:• Patient costs, across the board, for our drug (Product A) are significantly lower than the

baseline (All CHF) and for our competitors (Non Product A Patients)• Need to focus the message on the lower total care costs and share how interventions can be

driven to each Patient Persona

ALL CHF Patients Product A Patients Non Product A Patients 1+ Comorbidity*Patients

High Risk Medium Risk High Risk Medium Risk High Risk Medium Risk High Risk Medium Risk

Inpatient acute $31,022 $812 $15,671 $0 $31,259 $830 $32,069 $600

Emergency room $2,236 $549 $1,088 $113 $2,254 $559 $2,538 $604

Evaluation & management $4,622 $762 $3,283 $784 $4,643 $761 $4,651 $811

Outpatient medical $20,321 $1,576 $14,874 $1,802 $20,405 $1,571 $20,582 $1,970

Outpatient surgical $4,615 $637 $4,269 $0 $4,620 $651 $4,976 $762

Ancillary $13,197 $1,445 $9,194 $1,312 $13,259 $1,448 $13,253 $929

Patient Utilization By Segment per year

©2018 SCIOInspire, Corp. d/b/a SCIO Health Analytics®. Confidential and Proprietary. All rights reserved.

Based in West Hartford, Connecticut, SCIO Health Analytics is a leading health analytics solution and services

company. It serves over 100 healthcare organizations representing over 130 million covered lives across

the continuum including providers, health plans, PBMs, employers, health services and global life sciences

companies. SCIO provides predictive analytic solutions and services that transform data into actionable

insights, helping healthcare organizations create the understanding that drives change and proven outcomes.

SCIO delivers more than $540 million in client value annually through the elimination of healthcare waste and

improved performance associated with its reimbursement and care optimization solutions. Through SCIO’s

value-based approach that enables healthcare organizations to reduce the total cost of care while improving

care quality, SCIO is dedicated to helping our clients solve the underlying issues that lead to excessive

spending and suboptimal outcomes. Visit SCIO’s website for up to date information on their product and

service solution offerings: www.sciohealthanalytics.com.

Driving positive change in healthcare by delivering actionable insights to solve complicated problems simply and efficiently.

About SCIO Health Analytics®

433 South Main St., Suite 203West Hartford, CT 06110

P: 1.800.653.3144F: 1.860.676.8848

E-mail.: info@sciohealthanalytics.comwww.sciohealthanalytics.com