AnnuAlRepoRt

10 years in.

2014

To My Fellow Members of National CooperativeRx:

Ten years. What an achievement! Speaking personally, I’ve been on the board since the cooperative was formed in 2004. Within the past ten years, I’ve been proud to watch the cooperative develop into a major player in the pharmaceutical industry.

I watched as the cooperative quickly outgrew its WisconsinRx name and started doing business as National CooperativeRx outside of Wisconsin to include its members nationwide. I saw the headquarters change locations three times to accommodate a growing staff. My favorite part, however, has been the expansion of our membership from three founding organizations in 2004 to 159 members today. That in itself proves that we’re doing something right.

Through its expansion, the cooperative holds true to the values it was based on. Transparency. Making sure you, our members, know exactly where each dollar is spent. Returning revenue back to our members. Acting ethically. Encouraging participants to take their medications, and educating them on how they can save money on those medications.

As our health care system encounters major changes, I hope you continue to use National CooperativeRx as a resource. Whether that means meeting with your designated Strategic Account Executive to ensure that your plan meets the evolving Affordable Care Act amendments, or simply reading the eNewsletter to keep on top of the latest industry news, National CooperativeRx remains an advocate for your organization.

Thank you for being a member.

With Regards,

Words from Your Board Chairman

Paul Meyer, COOThe Alliance

Dividends

2007 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 est.

$600K$500K$400K$300K$200K$100K

Revenue and Expenses

2007 2008 2009 2010 2011 2012 2013 2014

$2.5M

$2M

$1.5M

$1M

$500K

Revenue Expenses

Unaudited Budgeted

Rebates In 2013, we distributed quarterly rebates totaling: $ 8,949,315

Audit ResultsIndependent audits were conducted on cooperative business and on our PBM. Performed by a third party, it reviewed 100% of claims assuring that all mail, retail, rebate and other financial guarantees were met.

Financial Highlights Cooperative ownership brings financial and non-financial benefits. Our legal agreement with our PBM vendor stipulates that members see every part of the financial arrangement. Another benefit is “patronage capital,” which is a payment to members when income exceeds expenses. Because we’re member-owned, this money is your money.

2005 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13

80%75%70%65%60%55%50%

National CooperativeRx Generic Dispensing Rate

Bending the TrendNational CooperativeRx controls cost through proactive recommendations, staunch advocacy on pharmacy management and the vetting and funding of clinical solutions for member groups. Our trend reflects this: our aggregate 9 year (2005 - 2013) average annual trend was -0.7%. The overall trend for 2013 was -0.8%. It continues to cost less per participant (on average and cooperative-wide) to provide pharmacy benefits than the year prior. There are a variety of factors that influence this.

Our GDR reached 80.1% in 2013.

Clinical Highlights We do not believe in a one-size fits all approach to clinical programs. Some of our members want turnkey clinical solutions based on best practices, while others want a fully-customizable program. We bring consultative expertise to help members with these important decisions, and offer a comprehensive suite of effective clinical programs at no or low cost to plans. The results speak for themselves.

Facts &

Figures

Board ChairPaul MeyerThe Alliance

Vice ChairRobin Mullins

Fairbanks North Star Borough School District

treasurerLarry Richardson

FABOH

SecretaryJim Malicki

WAICU

RepresentativeJudy Peirick

Webcrafters, Inc.

RepresentativeFred BrownHCCMCA

Your 2014 Board

“Everybody can be great because everybody can serve...” - Martin Luther King, Jr.

2013 Recap

• NationalCooperativeRxcompletedanextensiveRFP.CVSCaremarkcameoutontopinpricing,nationwideaccessibility,andvalue.

•Cooperativememberswillsaveanaggregate10%overthethreeyearcontract.Thisconservativeestimatewillsavemembers$36,000,000withourimprovedpricing.

• 98%ofmembersdecidedtostaywithNationalCooperativeRxbysigningthenewcontractthrough2016.

• 30newmembers,representing27,115participants,joinedourcooperative.Witheveryparticipant,NationalCooperativeRxgainsstrengthtobetterrepresentourmembersinthepharmacybenefitsindustry.

• NationalCooperativeRxbroughtinanewStrategicAccountExecutiveandanAccountManagerin2013tohelpsustainthegrowthmomentumandassurethatwealwaysmeettheneedsofourmembers.

• Ourfinancialstatementfor2013(unaudited): Revenue:$1,957,315 — 123% of budget Expenses:$1,761,785—92% of budget NetEarnings:$195,530(member dividends)