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Pharmacy Benefit Management

Improving Health and Reducing Costs While each Plan Sponsor is able to choose the Pharmacy Benefit Manger (PBM) that best meets their needs, we believe there are significant benefits to integration of medical and prescription drug benefits from a financial, administrative and clinical perspective. In order to facilitate this integration for our clients we have arranged for a very aggressive contract with one of the nation's leading PBMs.

Use of this arrangement provides the following:

	Complete administrative integration, including access by our Customer Care Department to Caremark's system, integration of drug claims into our system so we can see the complete picture on a patient and integration of management reporting.

	Very competitive drug pricing, including Average Wholesale Price (AWP) minus a 15.5% discount on retail name brand drugs and AWP-23% on mail order name brand drugs. For generic drugs, the combination of Maximum Allowable Cost or MAC pricing plus AWP discounts yields overall savings on generics of more than 50%. We have negotiated a dispensing fee of $1.70 per script (this does not apply to mail order scripts) and there is no administrative fee applied to any script.

	In addition to the deep discounts on drug pricing and dispensing fees, we pass 100% of manufacturer's rebates received from Caremark back to the Plan Sponsor. Our contract calls for a guaranteed rebate applicable to all scripts of $2.62 per retail script and $8.15 per mail order script.

	One of the most important aspects of our partnership with Caremark is the extent to which we have integrated our medical management programs with the clinical intervention programs of the PBM. There are clear lines of communication between our nurses and their pharmacists, as well as integrated data and the use of all resources available. A couple of examples are - an immediate warning from Caremark on any patient receiving certain types of drugs and a deeply discounted specialty pharmacy where our Care Managers are able to arrange home delivery or delivery to a physician's office.

	The final component of our financial relationship is an unusual credit of $1.35 per script that is designed to offset any hidden costs in Caremark pricing. When the manufacturer's rebates and credit are taken together they represent an average offset to cost of over $4.00 per script.

	Finally, we dont have our heads in the sand relative to the concerns in the industry regarding PBMs and the "black box" they sometimes present. As such, we have dedicated a staff member to monitoring Caremark according to our contract and complete an annual, independent audit of the contract versus claim payments and rebates.

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