2007 Drug Trend Brian Seiz, PharmD Express Scripts

2007 Drug Trend

Brian Seiz, PharmDExpress Scripts

2008 Express Scripts, Inc. All Rights Reserved.

2

What Does Express Scripts Mean by “Drug Trend”?

• We report total ingredient cost year over year– Plan design decisions determine cost-

sharing

• We report Express Scripts commercial book of business

• We track specialty separately

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3

Lowest Drug Trend Since 1994…

Note: Specialty tracked separately as of 2003

Drug Trend

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4

Lowest Drug Trend Since 1994……Record High Generic Fill Rate

Note: Specialty tracked separately as of 2003

GFRDrug Trend

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Drug Safety Concerns

One Lesson From Vioxx: Approach New Drugs With CautionBy MARY DUENWALD

October 5, 2004

One Lesson From Vioxx: Approach New Drugs With CautionBy MARY DUENWALD

October 5, 2004

New Avandia study reaffirms heart riskBy Rita Rubin, USA TODAY January 16, 2008

New Avandia study reaffirms heart riskBy Rita Rubin, USA TODAY January 16, 2008

FDA reviewing asthma drug, suicide linkBloomberg News / March 28, 2008

FDA reviewing asthma drug, suicide linkBloomberg News / March 28, 2008

2008 Express Scripts, Inc. All Rights Reserved.

66

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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77

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

Price: The difference in average price per unit of common drugs compared to previous year. Typical drivers include market dynamics and competition.

Price: The difference in average price per unit of common drugs compared to previous year. Typical drivers include market dynamics and competition.

2008 Express Scripts, Inc. All Rights Reserved.

88

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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99

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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1010

Brand Drug Prices UpGeneric Drug Prices Down

Brand Price Drivers:Hypnotics: + 19.2%

Dermatologicals: + 13.5%

Contraceptives: + 10.7%

Brand Price Drivers:Hypnotics: + 19.2%

Dermatologicals: + 13.5%

Contraceptives: + 10.7%

Brands:Prices Up 7.4%

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1111

Brand Drug Prices UpGeneric Drug Prices Down

Brands:Prices Up 7.4%

Generic Price Drivers:Antihyperlipidemics: - 38.4%

Antidepressants: - 14.9%

Gastrointestinals: - 14.0%

Generic Price Drivers:Antihyperlipidemics: - 38.4%

Antidepressants: - 14.9%

Gastrointestinals: - 14.0%

Generics:Prices down

3.1%

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1212

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

2008 Express Scripts, Inc. All Rights Reserved.

1313

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

Brand/Generic Mix: Reflects the cost impact of increased or decreased generic use. Typical drivers: new generics and maturation of the therapy class

Brand/Generic Mix: Reflects the cost impact of increased or decreased generic use. Typical drivers: new generics and maturation of the therapy class

2008 Express Scripts, Inc. All Rights Reserved.

1414

Top Brand/Generic Mix Changes

Ranked by Percent Change

2008 Express Scripts, Inc. All Rights Reserved.

1515

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

Therapeutic Mix: Changes in the cost per Rx due to use of more or less expensive drugs and drug strengths. Typical drivers include new products replacing old products.

Therapeutic Mix: Changes in the cost per Rx due to use of more or less expensive drugs and drug strengths. Typical drivers include new products replacing old products.

2008 Express Scripts, Inc. All Rights Reserved.

Top Therapeutic Mix Changes

1616

Januvia®

Combo Products

Lyrica®

Lamictal ®

Seroquel ®

Abilify®

Crestor ®

Vytorin®

Prilosec OTC ®

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1717

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

2008 Express Scripts, Inc. All Rights Reserved.

1818

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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1919

Utilization = Prevalence + Intensity

0.7%

0.7%

2008 Express Scripts, Inc. All Rights Reserved.

2020

Utilization = Prevalence + Intensity

0.7%

0.7%

1.8%

1.8%

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Impact of Utilization on Trend

2121

% Change in Utilization

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2222

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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2323

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

2008 Express Scripts, Inc. All Rights Reserved.

24

Continued Drop in New Drug Approvals

Lowest approval rate since 1983

U.S. Food and Drug Administration

Ap

pro

ved

New

Mole

cula

r E

nti

ties

2008 Express Scripts, Inc. All Rights Reserved.

2525

Components of Rx Cost Trend*

* Excluding Specialty starting in 2003

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26

Females Had a Higher Trend on a Higher Base

Trend 5.1%Trend 5.1%

Trend 4.4%Trend 4.4%PMPY

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Children Had aHigher Trend on a Lower Base

PMPY

Trend

5.5%

Trend

5.5%

Trend 6%Trend 6%

Trend

3.3%

Trend

3.3%

Trend 4%Trend 4%

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28

Top Therapy Classes 2007

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Top Therapy Classes 2007

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Therapy Class #1: Lipids

Generics Drove Down Trend

3030

Class Trend: -9.0%

Class Trend: -9.0%

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Therapy Class #1: Lipids

Generics Drove Down Trend

3131

Class Trend: -9.0%

Class Trend: -9.0%

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32

Active Management Drove Down Lipid Trend

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Therapy Class #21: Hypnotics

Generics Drove Down Trend

3333

Class Trend: -7.7%

Class Trend: -7.7%

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Therapy Class #21: Hypnotics

Generics Drove Down Trend

3434

Class Trend: -7.7%

Class Trend: -7.7%

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35

Hypnotic Trend Reversed in 2007

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36

Active Management Drove Down Hypnotic Trend

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37

Member Share of Costs is Stable

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Member Share of Costs is Stable

2008 Express Scripts, Inc. All Rights Reserved.

Average Copays

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Average Copays

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41

Trend Forecast

5.9%

4.7%

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42

Trend Forecast

5.9%

4.7%

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Trend Forecast

5.9%

4.7%

6.1%

8.2%

5.6%

7.2%

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44

An

nu

al S

ale

s $

Bill

ion

Imitrex

LamictalRisperd

al

Fosamax

Effexor XR

Other

ValtrexTopamax

Prevacid

Other

Cozaar/Hyzaar

Lipitor

Other

LevaquinZyprexa

Actos

Protonix

Other

Brand Drugs Going Generic Soon

More than $65 billion within the next five years

Adderall XR Seroquel

Lexapro

Plavix

Singulair

Other

Depakote

FlomaxDiovan/HCT

$13.1 Billion

$10.3 Billion

$13.7 Billion

$9.1 Billion

$19.6 Billion

Other

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45

Generic Opportunities Remain Strong

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46

Generic Opportunities Remain Strong

2008 Express Scripts, Inc. All Rights Reserved.

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Drug Trend Highlights