1. Current and future roles of private insurance for
prescription drugs in Canada – Employer’s Perspective
Arthur A. Fabbro, Jr.
February 26, 2013

2. Table of Contents
• Magna International Corporate Overview
• Current Employer Rx Challenges
• Current Rx Benefit Structure
• U.S. & Canadian Rx Plans Compared
• Differences between U.S. and Canada
PBM Practices
• Future Canadian Rx Benefit
Considerations
March 2011 Disclosure or duplication without consent is prohibited 2

3. Global Presence
Western Europe 82
32,650 34
Canada 46
18,500 10 35
Eastern Europe
10,900 3
59 USA
16 19,700 37 Asia
22 9,375
Mexico 30
20,400 1
South America 14
5,425 2
2 Africa
100
Manufacturing/Assembly
Engineering/Product Development/Sales
Number of Employees
~ 117,000 People | 27 Countries | 305 88 | $28.7 Billion (2011 Sales)
(As of Q3 2012)
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4. Magna Overview: Global Capability
Exteriors
Roof Systems
Interiors
engineering + services
Closures
Vision Systems
product systems
Body & Chassis
Systems
vehicle assembly
Seating
Hybrid & Electric
Vehicles/Systems Electronics
Powertrain
Systems
March 2011 Disclosure or duplication without consent is prohibited 4

5. Current Employer Rx Challenges
• Increasing Rx Benefit Cost vs. Competitive Rx Benefit
• Rx Adherence for Chronic Conditions
• Limited Rx Distribution (Retail, some Mail)
• Lack of Employer negotiating power
• Limited PBM Rx Program Management
• Formulary Management
• Lack of Incentives and Value Based Rx Designs
• Lack of full price transparency
March 2011 Disclosure or duplication without consent is prohibited 5

6. Canada Rx Plan Design
Drug Plan Design Current
Reimbursement Two Tiers:
90% ODB Formulary*, 80%
Prescription Formulary
Deductible Nil
Dispensing fee cap $8 per prescription
Generic substitution Mandatory
Out-of-pocket maximum Nil
Smoking cessation $250 per lifetime
Weight loss drugs $500 per lifetime
Fertility drugs $3,000 per lifetime
Erectile dysfunction Not covered
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7. U.S. & Canadian Rx Practices
Key Rx Practice Magna U.S. Magna Canada
Pricing Discounts Mark-ups
Generic Pricing (vs. U.S.) N/A 117%
Brand Pricing (vs. U.S.) N/A -47%
Rx Rebates (professional allowances) Magna Shares Retained
Average Dispensing Fees $1.25 $9.70
Generic Dispensing Rates (% of scripts) 86% 36%
Generic Spend (as % of Total Rx $) 15% 28%
Mail Order Pharmacy Utilization Rate (% of total Rx scripts) 61% < 1%
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8. U.S. & Canada PBM Services
• US PBM • Canada PBM
– Adjudicate Claims – Contracted with Insurer
– Safety Checks and Drug – Adjudicate Claims
Utilization Review – Some Price Negotiation
– Negotiate price and – Limited $ Transparency
rebates with Pharma – Limited Distribution
– Negotiate preferred (Retail and minimal Mail)
pricing with retail Rx – Limited Clinical Programs
– Manage multiple – Limited DUR
distribution channels –
Retail, Mail, Specialty
– Clinical Programs
– Price Transparency
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9. Future Canada Rx Plan Considerations
• Annual Out-of-pocket maximums
• Annual Deductibles
• Special Tier for Biologic Rx / Specialty Rx
• Pre-authorization for certain Rx
• Automatic substitution for Generic Rx
• Expand Electronic Claim Submission
• Work with Insurance Provider to create new clinical
programs (i.e., Step Therapy)
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10. Alternatives for Rx Challenges
• PBMs must become more than claims adjudicators
– Contracting with Private Payers and Insurers (carve-in vs. carve out
strategy)
– Develop and offer Clinical Programs for effective chronic condition
management (Diabetes, Coronary Artery Disease, Asthma,
Oncology, HIV/Immunology, etc.)
– Robust Formulary Management
– Robust Retail Pharmacy Contracting (Preferred Network)
– Mail Order Distribution
– Specialty Rx / Biologic Rx Distribution
– Better Data & Analysis for adequate understanding of Rx spend, cost
drivers, utilization, adherence, etc.
• Regulatory Reform
– Full Price Transparency & Disclosure would drive more competitive
practices (Payers, Insurers, Pharma, Pharmacy)
March 2011 Disclosure or duplication without consent is prohibited 10

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