1. Review of DMS large quantity
VA CMOP Bid and Award
of LifeScan Items
February 11, 2016
10:00 – 11:00 A.M. (CST)
Remote Call in # (877) 565-9999 Pass Code 94395044
DMS Pharmaceutical Group, Inc.
810 Busse Highway
Park Ridge, IL 60068

2. Review of DMS large quantity VA CMOP Bid and Award of LifeScan Items
Attendees
LifeScan LFSUS
Ron Larson, National Account Director LifeScan
Paul Smith, Government National Account
Director -JNJ
Mary Russell, Government National Account
LifeScan
DMS Pharmaceutical Group, Inc.
Bill Anderson, EVP
Jean Hawkins, VP Contracts & Administration
Susan Hennegan, VP Business Development
Tom Price, Finance Manager

3. Review of DMS large quantity VA CMOP Bid and Award of LifeScan Items
Meeting Objectives
Better Understand the VA channel and open market bid Process
Gain alignment with supply chain dynamics in government channels
Key Agenda Items
• Timing of request
• Short lead time for approval
• Large quantities
• No meters
• Lack of transparency to utilization of strips

4. Primary Object
Better understand the VA channel and open market
bid process
o Key Points
o VA Pharmaceutical Spend Dimensions
 Geographic Concentration in Midwest & CMOPs
 Market Segmentation by Facility Type
 Target Market Segmentation by Product Class
o High Level Open Market Process Flow map
o Issues in understanding and succeeding in VA Open Market Bid
space
o Key Agenda Topics Discussion

5. Understanding the VA CMOP Open Bid Market
Key Points
• Pharmaceutical Spend is controlled by a single Prime Vendor Contract currently estimated to now
total $5.2 Billion involving 7 CMOPs and over 750 VA other medical treatment centers
• Have been more recently deploying NCO1 Contract Officers in Teams tasked to expanding preferenced
entity utilization goals that have been traditionally and systematically circumvented in past
• Open Market RFQ process deployed since 2008 using FedBizOpps.gov as preferred forum for engaging
small business and preference entities who are mostly wholesale distributors who have been awarded
virtually all Non-Pharmaceutical Prime Vendor procurements
• Market participants must claim to being manufacturers under NAICS 325412 in addition to more
accurately classifying themselves as wholesale distributors under NAICS 424210
• This permits FARs to apply that favor VA bid quote requirements primarily in product pricing and
availability among others. This has also led to additional special Terms & Conditions placed on the VA
CMOP Open Market bid contracting statement of work requirements
• DMS estimates that the VA CMOP Open Market Bid Process procures less than $20 million on an
annual basis over the past 5 years, but is rapidly increasing in past year.
Note 1 Consolidated Mail Outpatient Pharmacy Acquisitions Team Network Contracting Office 15

6. State No of State No of
/ Terr. 2011 Usage Facilities / Terr. 2011 Usage Facilities
IL 572,036,427.52$ 18 DC 25,283,302.36$ 3
TN 495,429,122.39 9 KY 24,396,014.61 7
SC 486,454,667.27 9 MS 22,426,182.65 6
KS 485,473,466.75 10 PR 22,374,073.79 4
TX 348,453,255.63 43 MD 22,042,843.61 5
AZ 270,287,011.07 40 CO 21,167,209.78 12
MA 176,559,773.35 14 MT 20,967,123.13 20
FL 138,669,857.84 32 AL 20,379,873.13 13
CA 133,383,055.14 53 LA 20,320,733.36 12
OK 100,897,709.61 67 NV 19,807,692.67 14
NY 86,007,859.65 32 CT 18,357,376.41 8
PA 62,940,029.66 27 UT 16,480,667.14 2
OH 60,730,526.39 19 NJ 15,655,251.28 7
NC 48,026,741.53 12 IA 15,012,599.86 4
NM 47,974,587.68 29 ND 14,309,832.86 12
WA 42,696,767.51 19 NE 12,849,157.06 11
MN 41,293,336.01 17 ME 11,701,907.81 4
AK 39,742,230.51 18 ID 10,870,339.18 7
MI 38,489,937.06 13 WY 7,796,630.15 4
WI 37,522,587.14 14 DE 7,582,897.27 1
MO 37,462,397.50 10 RI 7,040,410.02 3
VA 34,089,106.32 7 VT 5,543,314.17 1
GA 33,586,700.19 8 HI 5,184,957.97 4
WV 30,428,274.77 11 NH 5,023,693.09 2
IN 29,848,981.50 8 MP 2,650,509.23 1
OR 27,645,092.32 17 AP 2,145,127.03 1
SD 26,018,649.08 17 PI 1,643,565.73 1
AR 25,569,847.30 4 VI 70,434.84 1
Grand Total 4,336,801,718.88$ 747(continued in next columns on right)
VA CMOP Impact on Pharmaceutical Spend No of % of
State Facilities in 2012 City 2011 Usage Facilities Facilities
IL VA CMOP HINES A-FRAME HINES 519,874,608.70$
KS VA CMOP LEAVENWORTH LEAVENWORTH 471,489,927.15
SC VA CMOP CHARLESTON NORTH CHARLESTON 465,875,872.93
TN CMOP MURF -MAN BCKORD/BULK MURFREESBORO 322,237,795.98
TX VA CMOP DALLAS MAIN LANCASTER 219,399,151.51
AZ VA CMOP - TUCSON TUCSON 186,418,874.47
MA VA NE CMOP CHELMSFORD CHELMSFORD 149,081,737.54
TN VA CMOP COOKEVILLE REPAK COOKEVILLE 25,574,787.71
TN VA CMOP COOKEVILLE TUS COOKEVILLE 105,362,241.34
56.8% 2,465,314,997.33$ 9 1.2%
ALL OTHER TREATMENT FACILITIES 43.2% 1,871,486,721.55$ 738 98.8%
100.0% 4,336,801,718.88$ 747 100.0%

7. 2011 PPV Contract Usauge Report
VA 2010 Usage % of No of % of
Class Net Spend Spend Facilities Facilities
CMOPs 2,465,314,997.33$ 57% 9 1%
VA Hospitals 1,338,675,410.08 31% 280 37%
Indian Health Services 349,560,008.12 8% 257 34%
Bureua of Prisons 88,799,391.38 2% 107 14%
Sub-total 4,242,349,806.91$ 98% 653 87%
All Other 94,451,911.97 2% 94 13%
Grand Total 4,336,801,718.88$ 100% 747 100%
2010 PPV Brand/Generics/OTC Expenditures
Grand % of
BRAND RX GENERICS OTC Total Total
CMOPS $ 1,952,261,423.00 $365,824,184.00 $118,701,708.00 $ 2,436,787,315.00 57.6%
VA FACILITIES 1,139,674,529.00 223,816,307.00 62,838,131.00 1,426,328,967.00 33.7%
IHS FACILITIES 231,228,514.00 55,881,629.00 17,266,995.00 304,377,138.00 7.2%
BOP
FACILITIES 54,138,553.00 9,619,983.00 1,451,677.00 65,210,213.00 1.5%
$ 3,377,303,019.00 $655,142,103.00 $200,258,511.00 $ 4,232,703,633.00 100.0%
79.8% 15.5% 4.7% 100.0%

8. High Level VA CMOP Bid Process
Map

9. Review of DMS large quantity VA CMOP Bid
and Award of LifeScan Items
Understanding the VA CMOP Process
• Julian Lake, Senior Contract Officer summary response of 1/13/2016 Overview
• Open market bids are subject to Federal Acquisition Regulation (FAR) requirements
• National Acquisition Center (NAC) assigns a Contract Officer to issue a FAR compliant
solicitation for publication on line in FedBizOpps.gov.
• Vendors must monitor and acquire bid details on FedBizOpps.gov
• DMS and other vendors will bid to compete under ‘Rule of Two’ to solicitations requirements
• These requirements may include:
• Letter of Commitments as to product availability from Vendor prior to submission
• Short solicitation response times
• Manufacturer Backordered products bid not specifically available within bid metric
delivery requirements
• DSCSA pedigree requirements with 12 Month Expiration Dating
• Limited number of lots preference that does not always support FIFA inventory control
• Price assurance on bid price for ten days of bid response.

10. Review of DMS large quantity VA CMOP Bid
and Award of LifeScan Items
Understanding the VA CMOP Process (continued)
The requirements may also include:
• AS7001 Notice To Dealers and Suppliers clause which, if enforced, would negatively impact
every responding wholesale distributor bidder’s relationship with the manufacturer supplier
 Consequential damage clause with re-procurement clause permitting for cause award termination
• Manufacture allocations on products that are biased toward prime vendor demand and not
toward sporadic demand typical of most of the VA CMOP open market items and channel
• Unfavorable vendor review and adverse Past Performance evaluations when the difficult to
obtain items cannot be, or at times will not be, allocated to the CMOP open market channel
by the manufacturers
Note: DMS has been successful in both accepting and managing most risks associated with this complicated bid and award process.

11. Key issues in participation
 Timing of request
 Inconsistent Ordering Patterns in the Open Market Process
• DMS believes that this is often from either:
- Preference to PPV who has to be used if item is on FSS
- Open market accessed often in backordered situations
- VA preference has been to not utilize preferred secondary prime vendors
(unlike the DoD) to qualified entities that could obtain better contract
pricing (other than FSS) with larger annual volumes to encourage
manufacturer involvement while reducing bid response inefficiency and
process points of pain experienced by all bid responders
• Promote occasional usage disruptions for certain manufacturers
inventory allocations
• Encourage bids from non-qualified ADRs

12. Key issues in participation
 Short lead time for approval
 Bid issued with less than a week response time
• DMS believes that this is often from either:
- New contract officers who need supervisor approvals that are delayed.
- Experienced CO that seek to limit bids responses from experienced
Vendors that are capable of the performing to stated SOW requirements.
• Stress response approvals with manufacturers
• Result in less bidders who will respond
- DMS also views this as a competitive advantage and less disruptive to Mfr.

13. Key issues in participation
 Large quantities
 Trending to bids with fewer items with larger quantities
over last year
• DMS perspective:
- New efforts to utilize small business with NCO teams of contract officers
tasked to specifically engaging small business participation
- These efforts are guided by more experienced CO that assure performance
to Federal Acquisition Regulations (“FAR”) requirements
• Stress inventory utilization / allocation and financial credit
approval with manufacturers within SOW requirements
• Can stress financial debt capacity of some small business vendors
- DMS views this as a competitive advantage as a financially stable [Women
Owed Small Business Enterprise ] ‘preferenced entity.’
- DMS is also a small business with less than 500 employees under NAICS guidelines

14. Key issues in participation
 No Meters
 Utilization Report data requested, if available, from VA
• DMS perspective:
- LifeScan may not be the predominant meter with the VA but are provided
to veterans through VHA Prosthetics Supply Inventory Management.
 Lack of transparency to utilization of strips
 Utilization Report data requested, if available,
from VA
• DMS perspective:
- Committed to provide whatever support is required,
and DMS can provide.

15. DMS participation in VA CMOP with LifeScan
DMS Purchases from LifeScan 2015 2016 todate Activity
PRODUCT DESCRIPTION Purchases Quantity Purchases Quantity Purchases Quantity Purchases Quantity Purchases Quantity
ONE TOUCH STRIP ULTRA 1,207.70$ 10 9,206.64$ 72 27,648.00$ 576 38,062.34$ 658
ONE TOUCH ULTRA BLUE 50'S 11,222.80 185 202,464.00 8,436 213,686.80 8,621 331,200.00$ 7,560
ONE TOUCH ULTRA LANETS 100 10,871.04 1,248 10,871.04 1,248 12,369.60 1,440
ONETOUCH LANCETS 100EA 1,209.60 144 1,209.60 144 4,521.60 576
ONETOUCH ULTRA 2 1EA 72.00 4 72.00 4
ONETOUCH VERIO 100EA 795.90 6 16,770.00 120 17,565.90 126
PENLET PLUS LANCING DEVISE 1,083.60 72 1,083.60 72
Grand Total 13,298.40$ 205 25,976.64$ 192 243,276.24$ 10,476 282,551.28$ 10,873 348,091.20$ 9,576
DOD OTHER Total 2015 ActivityVA CMOP
• DMS Purchase activity in 2016 for VA already exceeds all of 2015 to all Segments by 23%
• Indicative of DMS past profile in ‘gulping’ rather than ‘sipping’ its past growth
• Opportunities exist with other segments

16. VA Office of Inspector General
 Continuing efforts to identify and correct internal control issues
 Office of Audits and Evaluations
 Audit of Prosthetics Supply Inventory Management, March 30, 2012
• Link to report
 http://www.va.gov/oig/pubs/VAOIG-11-00312-127.pdf
• OIG contact names and titles (if necessary)

17. Secondary Objective
 Gain alignment with supply chain risks with government supply channels
o LifeScan / DMS Initiative possibilities with the VA
 Gantt Chart of JNJ / LifeScan / DMS Risk Management discussion topics
 Ideas for discussion of possible initiatives to gain alignment
 Actions necessary to address Risk Mitigation and Management
o Why DMS ? – performance based credibility with the both Veteran Admin. & DoD
o DMS logistical presence with key Region 6, VISNs 11 & 12
o Next Steps

18. Gain Alignment in Reducing Gray Market
Risks through Partnered Awareness and
Focused Risk Mitigation Processes

19. DMS suggested possible initiatives to gain
alignment with LifeScan in providing the VA
1. Assist LifeScan to expand penetration into this large pharmaceutical spend market.
2. Continue to offer LifeScan as a an Open Market Channel to the CMOP supply chain.
3. Use DMS as a preferred Authorized Distributor of Record for provisioning this specific channel
4. Participate in VA education campaign to existing VA patients with LifeScan new or future meter
features and product offerings to convert to LifeScan from existing meter providers:
a. Literature distribution via CMOP and/ or Prosthetics Inventory Supply Management
b. Identify and assist in sample distribution to targeted Prosthetics Supply Inventory Management
purchasing leadership or Formulary Panels
5. Target VA Prosthetics Supply Inventory Management to promote LifeScan as the VAs ‘glucose meter
provider of choice’ with value based business case development
6. Consider the development of a new LifeScan [ Veterans’ First Meter Discount Card ] / Program to
encourage or incent JNJ / LifeScan channel compliance
7. Request VA CMOP NOC Issue Secondary Prime vendor contracts or Blanket Purchase Agreement (BPA)
for larger annual volumes of LifeScan diabetic supplies

20. DMS credibility with the both
Veterans Administration & DoD
 Capable small business full line
pharmaceutical wholesaler
 20 years experience with more complex
Government Contracts
 Highly qualified performance reviews
 Often tasked to sensitive and difficult
procurements with key order status
follow up with DMS Signature Service
Model
 National Woman’s Business Enterprise
Certified Cert No.200512711
 Founding Sponsor for Fisher House for
Hines
 (Veteran patient family housing similar to McDonald House)

21. Location pins plots indicating DMS (Headquartered in Park Ridge, Illinois) ability to serve VA Region 6 – VISN 11
& 12, which represent the small business set-aside regions that were cancelled in past Pharmaceutical Prime
Vendor bids that were awarded to a single PPV who now provides 99.5% of VA Total Pharmaceutical Spend.
Cluster
Ref
Pin
Ref
Government Facility Location
Miles
from
DMS
6 - 12 A 3001 Green Bay Road #133, North Chicago, IL 60064 25
6 - 12 B 2500 Overlook Terrace, Madison, WI 53705 137
6 - 12 C 5000 West National Ave, Milwaukee, WI 53295 78
6 - 12 D 500 E Veterans Street, Tomah, WI 54660 226
6 - 12 E 325 East H Street, Iron Mountain, MI 49801 292
6 - 12 F Roosevelt & 5Th Avenue, Hines, IL 60141 17
6 - 12 G N 2665 County Road QQ, King, WI 54946 198
6 - 12 H 425 Fisher Street, Marquette, MI 49855 371
6 - 12 I 10 Tri Park Way, Appleton, WI 54914 178
6 - 12 J 820 S Damen Ave , Chicago, IL 60612 19
6 - 12 K One Veterans Drive, Manteno, IL 60950 70
6 - 12 L 9330 S Broadway, Crown Point, IN 46307 60
6 - 12 M 4940 East State Street, Rockford, IL 61108 68
6 - 12 N Roosevelt & 5Th Ave, Hines, IL 60141 17
6 - 12 O 820 South Damen Avenue, Chicago, IL 60612 19
6 - 12 P 1 Blk N Cermak on 1st Ave, Hines, IL 60141 19
6 - 12 Q FCI Oxford - Federal, P.O. Box 1000, Oxford, WI 53952 187
6 - 12 R 525 Airport Road, Oneida, WI 54155 193
6 - 12 S W12802 County Hwy A, Bowler, WI 54416 227
6 - 12 T 71 West Van Buren Street, Chicago, IL 60605 17
6 - 12 U 129 Old Abe Road, Lac Du Flambeau, WI 54538 339
6 - 12 V 129 Old Abe Road, Lac Du Flambeau, WI 54538 339
Region 6 – VISN 12

22. Region 6 – VISN 11

23. Next Steps
Near term action steps
• Key issues that need immediate or near-term resolution
Long term action steps
• Key issues that need immediate or near-term resolution
• Consequences of postponement of risk mitigation

24. 24
810 Busse Highway
Park Ridge, Illinois 60068
P(847) 518-1100
F(847) 518-1105
www.dmspharma.com
Thank you for your time and
consideration of DMS as a
valued business partner.