Specialty Pharmacy: Today’s Prescription for a Better Tomorrow Steve Miller, MD Chief Medical Officer

Specialty Pharmacy:Today’s Prescription for a

Better Tomorrow

Steve Miller, MDChief Medical Officer

2 2007 Express Scripts, Inc. All Rights Reserved.

What Are Specialty Medications?

• Injectable or non-injectable;

• Frequent dosing adjustments, or

• Intensive clinical monitoring, or

• Intensive patient training, or

• Limited or exclusive distribution, specialized handling or specialized administration, or

• Cost in excess of $500 for a 30-day supply


Anemia

Cancer

Growth Deficiency

Hemophilia

Hepatitis

Infertility

Multiple Sclerosis

Pulmonary HTN

Rheumatoid Arthritis

Many others

Know Your Specialty Patients


Specialty Growth Continues to Outpace Traditional Drug Market

Source: Express Scripts analysis of IMS data.


Relatively Few People Use Specialty Drugs

88%

10%2%

0%

20%

40%

60%

80%

100%

Pre

vale

nce

WellAcute condition

Low-grade chronic

Chronic conditions and/or

procedures

Rare Diseases, Acute Complex,

Multiple co-morbidities

Medical Care 41:1153, 2003


Each Specialty Patient Has Large Annual Costs

1,000

10,000

50,000

$0

$20,000

$40,000

$60,000

Ann

ual C

ost /

pt

WellAcute condition

Low-grade chronic

Chronic conditions and/or

procedures

Rare Diseases, Acute Complex,

Multiple co-morbidities

Medical Care 41:1153, 2003


Specialty Patients Remain With Their Health Plans

• Continuous eligibility from July 2003 through June 2006

• Members utilizing their Rx benefit for MS or RA vs. non-utilizers of Rx benefit

• GIC data

82.0%

70.9%

0% 25% 50% 75% 100%

Utilizers

Non-utilizers

Health Plan Retention Rate


Overall Specialty Trend: 21%

$0

$20

$40

$60

$80

2005 2006

$60.02$72.58

PMPY


New Drugs Have A Growing Impact in Specialty Trend

59%43%

39%

40%

17%

0%

25%

50%

75%

100%

Non-Specialty Specialty

New Drugs

Utilization

Cost/Rx

Contribution to Trend


Top Six Specialty Therapy Classes2005:2006

$0 $5 $10 $15 $20

Hepatitis C

GrowthDeficiencies

Blood CellDeficiencies

Cancer

Multiple Sclerosis

InflammatoryConditions

20052006

PM

PY

+ 22.8%+ 22.8%

- 8.3%- 8.3%

+ 4.0%+ 4.0%

+ 39.5%+ 39.5%

+ 19.0%+ 19.0%

+ 22.7%+ 22.7%

PMPY


Top Six Specialty Therapy Classes2005:2006

$0 $5 $10 $15 $20

Hepatitis C

GrowthDeficiencies

Blood CellDeficiencies

Cancer

Multiple Sclerosis

InflammatoryConditions

20052006

PM

PY

+ 22.8%

- 8.3%- 8.3%

+ 4.0%+ 4.0%

+ 39.5%

+ 19.0%

+ 22.7%

PMPY


A Common Disease Pathway

-1.5%

6.0%

1.4%

-1.8%

17.9%

0.1%

0.0%

-5% 0% 5% 10% 15% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #1: Inflammatory Conditions

Units / Rx


A Common Disease Pathway

-1.5%

6.0%

1.4%

-1.8%

17.9%

0.1%

0.0%

-5% 0% 5% 10% 15% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #1: Inflammatory Conditions

Units / Rx

Fast Facts

Cost PMPY $19.04

Avg Cost/Rx

$1479

Rx/User/Yr 8.3

Class Trend 22.7%


Price Increases Drove MS

0.4%

14.4%

0.2%

0.6%

2.7%

0.0%

0.0%

-5% 0% 5% 10% 15% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #2: Multiple Sclerosis

Units / Rx


Price Increases Drove MS

0.4%

14.4%

0.2%

0.6%

2.7%

0.0%

0.0%

-5% 0% 5% 10% 15% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #2: Multiple Sclerosis

Units / RxFast Facts

Cost PMPY $13.60

Avg Cost/Rx

$1470

Rx/User/Yr 9.65

Class Trend 19.0%


Cancer Pipeline Starts to Mature

0.2%

13.1%

-5.1%

-2.6%

8.3%

26.4%

-0.3%

-10% 0% 10% 20% 30%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #3: Cancer

Units / Rx


Cancer Pipeline Starts to Mature

0.2%

13.1%

-5.1%

-2.6%

8.3%

26.4%

-0.3%

-10% 0% 10% 20% 30%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #3: Cancer

Units / Rx Fast Facts

Cost PMPY $10.44

Avg Cost/Rx

$1593

Rx/User/Yr 3.92

Class Trend 39.5%


Cautious Use in More Patients

0.7%

1.8%

2.4%

-5.9%

5.3%

0.0%

0.0%

-10% 0% 10% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #4: Blood Cell Deficiencies

Units / Rx



0.7%

1.8%

2.4%

-5.9%

5.3%

0.0%

0.0%

-10% 0% 10% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price


Units / Rx

Fast Facts

Cost PMPY $5.01

Avg Cost/Rx

$1683

Rx/User/Yr 4.54

Class Trend 4.0%





More Use and Higher Doses

10.7%

5.6%

1.9%

-3.2%

6.3%

0.3%

0.0%

-10% 0% 10% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #5: Growth Deficiencies

Units / Rx


More Use and Higher Doses

10.7%

5.6%

1.9%

-3.2%

6.3%

0.3%

0.0%

-10% 0% 10% 20%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #5: Growth Deficiencies

Units / Rx

Fast Facts

Cost PMPY $4.59

Avg Cost/Rx

$2552

Rx/User/Yr 8.47

Class Trend22.8

%


Growth Hormone Use Is Rapidly Moving Into Older

Patients

23%

25%

24%

20%

22%

24%

26%

2004 2005 2006

GH users above age 20


Generic Drugs Impact Specialty

-0.1%

6.7%

1.7%

5.7%

-11.0%

0.0%

-10.1%

-15% -10% -5% 0% 5% 10%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #6: Hepatitis C

Units / Rx


Generic Drugs Impact Specialty

-0.1%

6.7%

1.7%

5.7%

-11.0%

0.0%

-10.1%

-15% -10% -5% 0% 5% 10%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand / Generic Mix

Price

Therapy Class #6: Hepatitis C

Units / RxFast Facts

Cost PMPY $3.45

Avg Cost/Rx

$1133

Rx/User/Yr 10.17

Class Trend -8.3%


What Have We Learned?Where Do We Go?

• Specialty drugs are an increasingly large part of the pharmacy spend

• Few patients are impacted today

• Programs can have a significant financial impact with little patient disruption

• Generic drugs can make a difference… even in specialty


Biopharmaceutical Pipeline Continues To

Grow

Source:PhRMA, International Federation of Pharmaceutical Wholesalers & Biotech Industry Organization

10 2992

197

100

240

369

600

1990 1995 2000 2005

Biotech Drugs on the Market

Biotech Drugs in Development


Most of the Specialty Pipeline Is for Common Illnesses

0 10 20 30 40 50 60 70 80

Oncology

Rheumatoid Arthritis

Crohn's Disease

Hepatitis C

Multiple Sclerosis

PsoriasisPhase 2

Phase 3

Applications Submitted

Number of Drugs


New Indications Are Expanding Utilization

1 1

2

1

2

1

Alferon Campath Humira Rebif Rituxan Xolair

Number of Current FDA Indications


New Indications Are Expanding Utilization

1 1

2

1

2

1

4

3

4

5

4

2

Alferon Campath Humira Rebif Rituxan Xolair

Number of Current FDA Indications Number of Indications Under Investigation


The Routes of Administration Are

Growing More Complex

0

10

20

30

RA MS Hep C Crohn's Psoriasis

Unknown

IM

Sub Q

Intravenous

Injectable

Oral(Route

unknown)

ESI Pipeline Tracking database, Phase 2 or later


What Do You Want?


What Do You Want?

• Improved clinical outcomes

• Improved compliance

• Improved patient satisfaction

• Increased reliability of distribution channel

• Decreased acquisition costs

• Consultation on benefit design


Superb Care Makes a Difference

82%

83%

86%

74%

72%

75%

65% 70% 75% 80% 85% 90%

More Satisfied

Rate staff asextremely skillful

Better Educated

Rheumatoid Arthritis Data

CuraScriptRetail0%

10%

20%

30%

40%

50%

42%42%33%33%

Self-ManagementSelf-Management


CuraScript Patients Are More Adherent With Therapy

79%82%

84%87%

92% 92%

70%

75%

80%

85%

90%

95%

Rheumatoid Arthritis Multiple Sclerosis Hepatitis C

Retail CuraScript


Natural History of HCV Infection High Level of Individual Variation

Reprinted with permission from Lauer GM, et al. N Engl JMed. 2001; 345:41-52. Copyright © 2001 Massachusetts Medical Society. All rights reserved.

NormalNormalliverliver

Acute Acute infectioninfection

Chronic Chronic infection infection develops develops in 80%in 80%

Chronic Chronic hepatitishepatitis

Cirrhosis Cirrhosis developdevelops in 20%s in 20%

Risk of Risk of carcinoma, carcinoma,

1-4% per 1-4% per yearyear

~20 years~20 yearsAlcohol use, co-infectionAlcohol use, co-infection

~30 years~30 yearsFemale sex, younger age at infectionFemale sex, younger age at infection


Hepatitis C Impact On the Health System Today

Example: Liver Transplantation

• 1,000 per year in US

• $300,000-$900,000 each

Annual spend for HCV transplants in US is over $500,000,000


Future Burden of HCV$830 Billion between 2010-

2019

190,000 additional deaths


Compliance Is Critical To Clearing Hepatitis Virus

0%

20%

40%

60%

80%

Non-Compliant Compliant

% o

f Pat

ient

s wi

th S

usta

ined

Vira

l Res

pons

e

10%10%

75%75%

Hepatitis C Type 1


Value of Specialty Pharmacy

• More convenient

• Higher satisfaction

• Better educated

• More compliant

• Greater savings

• Safer


Optimal Recommendations

Comprehensive Communications

for all programs

Clinical ProgramsClinical Programs•Prior AuthorizationPrior Authorization•Drug Quantity ManagementDrug Quantity Management

Co-PaymentsCo-Payments• $25 more for non-formulary$25 more for non-formulary• $30 more for Retail$30 more for Retail

CuraScript Exclusive•CuraScript for all fills•Courtesy fills for “stats” only

CuraScript Exclusive•CuraScript for all fills•Courtesy fills for “stats” only


Specialty Growth Continues to Outpace Traditional Drug Market

Source: Express Scripts analysis of IMS data.


Access to Lifesaving Medications Act

•Introduced in 2007

•Bicameral, bipartisan

•Express Scripts supporting with research and analysis


ESI Estimate of Biogeneric Savings

Opportunity•Studied four classes of medications

•Very conservative assumptions

Disease Category Drug Group

Patent Expiration

Multiple Sclerosis

Interferons 2003/2007

Anemia Erythropoietin 2004

Growth Failure Growth Hormone

2003

Diabetes Insulin 2004


$3.5 Billion SavingsIn 1st Year Alone

$2,004

$797

$678

$28

$0 $500 $1,000 $1,500 $2,000 $2,500

Erythropoietins

Insulin

MultipleSclerosis

GrowthHormone

$ Millions


In the first ten years:

$71 Billion Savings

$3.5 $4.0$4.6

$5.3$6.1

$7.0$8.1

$9.3$10.7

$12.3

$0

$2

$4

$6

$8

$10

$12

$14

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

$Bill

ions

Inflation and prevalence driving trend in this model


An

nu

al S

ale

s $

Bill

ion

Biologic Drugs Losing Patent Protection

0

10

20

30

40

$11 $11.2 $11.4 $11.7 $12.1

$15.6

$20.1

$29.8

$33.5$35.4

$37.5

Residual New

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


Contact Your Elected Officials



www.therightprescription.org






It’s Easy.

Just visit the ESI Outcomes Website: http://www.express-scripts.com/

ourcompany/news/

outcomesconference

Follow the link to: http://www.therightprescription.org


Conclusions

• Specialty spend is increasing

• It is just not about covering the medication but assuring appropriate use

– Right drug, dose, route and care

• There is much you can do now

– Put in plan designs that support goals

– Support biogeneric legislation

Documents

Specialty Pharmacy: Today’s Prescription for a Better Tomorrow Steve Miller, MD Chief Medical Officer