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April 2007
2006 Drug Trend Report
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Lead Authors
Julayna Meyer, MBA, RPh
Andy Parker, MBA
Aimee Tharaldson, PharmD
Chris Peterson, PharmD
Contributors
Andy Behm, PharmD
Jonah Houts
Jane Miller
Brenda Motheral, PhD, MBA, RPh
Jann Rigell, RPh
Brian Seiz, PharmD
Ed Weisbart, MD, CPE
Editor
Ruth Martinez, RPh
The authors and editor would like to acknowledge the valuable support of the analysts, reviewers,
researchers and sponsors who contributed to the 2006 Drug Trend Report. We greatly appreciate
the time and expertise of numerous individuals throughout the Express Scripts organization
particularly members of the Clinical, Decision Support, Marketing & Corporate Communications,
Modeling & Analysis, Product Management, and Research teams.
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Preface
Dear Reader:
2006 truly was an historic year. With this 11th edition of the Express Scripts Drug Trend Report,
we recap the years opportunities and challenges in making the use of prescription drugs saferand more affordable.
Last year, more than $13 billion in 2005 brand-drug spend went generic, with the blockbuster,cholesterol-lowering drug Zocor (simvastatin) topping the list. Never before had there beensuch a tremendous opportunity to save money without a negative impact on health outcomes.
Clients and patients saved more than $125 million following the introduction of simvastatin alone,using a combination of financial incentives, targeted information, customized assistance and timelymessaging. This patient-education model, coupled with heightened PBM and plan-sponsor collaboration,will certainly be important going forward. It is the power of us in action.
Also, during 2006, trend for expensive, but critically important specialty drugs rose 20.9%, largelydue to higher costs per prescription, increased utilization and the introduction of new medications.
Increasingly, plan sponsors are choosing specialty-drug formularies to manage costs, successfullyapplying principles from traditional drug-formulary development. Even more importantly, they areusing specialty clinical programs to improve patient outcomes through enhanced overall care.
Thank you for your interest in this report, and in our mission of making the use of prescriptiondrugs safer and more affordable.
Sincerely,
George Paz
Chairman & Chief Executive Officer
Preface
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Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overall Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Nonspecialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Therapeutic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Brand/Generic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Units per Prescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11New Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Specialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Therapy Class Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Nonspecialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Antihyperlipidemics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Gastrointestinals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Antidepressants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Antidiabetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Antiasthmatics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Antihypertensives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Anticonvulsants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Narcotic Analgesics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Antivirals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Stimulants/Anti-Obesity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Antihistamines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Hypnotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Specialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Inflammatory Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Multiple Sclerosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Blood Cell Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Growth Hormone Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Hepatitis C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Nonspecialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Specialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Contents
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Executive Summary 1Express Scripts 2006 Drug Trend Report
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Executive Summary
OVERVIEWIn historical terms, 2006 was a landmark year for patent expirations. Drugs representing more than
$13 billion in 2005 national drug spend1
went generic. Many of these new generics includingseveral for blockbuster brand-name drugs are in high-growth, high-volume therapy classes.Generics provide safe, effective options to their corresponding brands. In many cases, they also offeralternatives to other brands within their therapy classes.Therapeutic conversion opportunities from abrand to a generic for a similar brand further increases cost savings for plan sponsors.
EXPRESS SCRIPTS TAKES ACTIONExpress Scripts took advantage of these unprecedented cost-saving opportunities with GenericsTodaySM,a program that combines state-of-the-art member communications, dedicated customer service andadvanced technological features, such as automated refill reminders. Plan sponsors achieved previouslyunattainable trend reductions by using GenericsTodayto augment more traditional plan-design features,such as 3-tier formularies, step therapy and copayment optimization.
Exhibit 1
Ingredient-Cost Trend With and Without GenericsToday 2005 to 2006
ExecutiveSummary
express scripts 2006 drug trend report 3
1 Express Scripts analysis of information from: Top 200 brand-name drugs by retail dollars in 2005. Drug Topics. March 6, 2006.
Available at: http://www.drugtopics.com/drugtopics/data/articlestandard/drugtopics/082006/309440/article.pdf. Accessed
March 6, 2006;JP Morgan Securities Prescription Pad. February 2006; and manufacturer press releases.
Without GenericsToday
12%
10%
8%
6%
4%
2%
0%
With GenericsToday
No Changes Added One Program Added Two+ Programs
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TRENDIn anticipation of the withdrawal of average wholesale price (AWP) as a drug-pricing benchmark,we revised our methodology for calculating trend. This year, our trends are based on actual ingredientcosts, a method that better reflects the value that Express Scripts brings to our clients. Exhibit 2shows nonspecialty drug trends over the past four years, with the 2005 to 2006 trend measured
by both methods. The difference in 2006 represents the value of discounts we provide to our clients.With ingredient costs rising only 5.9%, trend for nonspecialty drugs fell to the lowest levels seenin this decade. Both lower drug utilization for treating acute conditions and the introduction of newgenerics contributed to this decline. Despite smaller overall trend, however, some therapy classescontinued their explosive growth. Hypnotics, for example, grew an astonishing 36.9%, fueled by thehighest levels of direct-to-consumer (DTC) advertising for any class in 2006.
Exhibit 2
Overall Nonspecialty Drug Trend Express Scripts Plan Sponsors 2003 to 2006
At 20.9%, specialty drug costs within the pharmacy benefit increased more than three times fasterthan the nonspecialty rate. Specialty trend reflects the growing demand for specialty products, whichare typically expensive and require significant individualized patient care.
FORECASTOver the next four years, nonspecialty drugs are expected to grow at rates slightly higher than they
have over the past two years. Higher utilization from cyclical patterns of use for acute drugs anda slowdown in the generic pipeline are major factors in the rebound.
During the same period, growth of specialty drugs will continue to outpace the growth of nonspecialtydrugs. Overall pharmacy and medical specialty spend is projected to grow by slightly more than80% over the next four years, rising to 26% of total drug spend. Specialty drug cost under thepharmacy benefit is expected to grow even faster by more than double as specialty coststransfer from the medical benefit.
Execu
tiveSummary
4 express scripts 2006 drug trend report
16%
14%
12%
10%
8%
6%
4%
2%
0%
New Methodology
Previous Methodology
2003 2004 2005 2006
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Overall Drug Trend 2Express Scripts 2006 Drug Trend Report
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Overall Drug Trend
For 2006, trends have been measured in terms of per member per year (PMPY) ingredient costs forExpress Scripts group members with funded, integrated benefits. This year marks the first time thattrends for both nonspecialty and specialty medications are reported from the same data samples.
Overall trends were low from 2005 to 2006, rising only 7.2%. Nonspecialty medication PMPY costsrose only 5.9%, while specialty medication PMPY costs rose a significant 20.9%.
As in past editions of the Drug Trend Report, the 2005 to 2006 PMPY ingredient-cost trendwas analyzed in terms of the following major dimensions:
Changes in the ingredient cost per prescription of common drugs (medications that weredispensed in both 2005 and 2006)
Changes in the utilization of common medications Introduction of new products (prescription medications dispensed in 2006 but not in 2005)
Of the 5.9% nonspecialty increase: 58.9% was due to an increase in the cost per prescription of common prescription drugs 38.5% was due to increases in the utilization of common prescription drugs 2.6% was due to the introduction of new medications in 2006
Of the 20.9% specialty increase: 42.9% was due to an increase in the cost per prescription of common prescription drugs 40.2% was due to increases in the utilization of common prescription drugs 16.9% was due to the introduction of new medications in 2006
NONSPECIALTY DRUG TREND
Exhibit 3
Components of PMPY Nonspecialty Cost Trend 2002 to 2006*
AWP Less Discount AWP Less Discount AWP Less Discount Ingredient Cost
2002 v 2003 2003 v 2004 2004 v 2005 2005 v 2006
Nonspecialty Nonspecialty Nonspecialty Nonspecialty
Price 6.6% 6.0% 5.3% 4.3%X Units per Prescription 0.3% 0.2% 0.1% 0.4%X Brand/Generic Mix -2.6% -2.6% -2.7% -2.9%X Therapeutic Mix 2.6% 3.7% 0.8% 1.7%= Cost per Prescription 6.8% 7.2% 3.3% 3.5%X Utilization 6.8% 2.9% 4.0% 2.2%= Common Drugs 14.0% 10.4% 7.5% 5.8%
+ New Drugs 0.5% 0.3% 0.4% 0.2%= All Drugs 14.5% 10.6% 7.9% 5.9%
* The percentage contribution of each factor does not total to the All Drug percentage increase. The calculation takes the base cost for a given
year and multiplies it by one plus the percentage contributed by the first factor (price). The resulting total is then multiplied by the percentage
contributed by the second factor (number of units dispensed), and so on for each Common Drug factor. The percentage contribution of the New
Drugs is then added to the total Common Drug percentage to yield an All Drug percentage increase. Final results may differ due to rounding.
OverallDrug
Trend
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Over
allDrugTrend
6 express scripts 2006 drug trend report
Trends for nonspecialty medications are further broken down into utilization, cost perprescription and new drugs.
Utilization of common medications was further divided into two components:1. Prevalence the proportion of members who fill one or more prescriptions from one
year to the next (i.e., users)
2. Intensity the number of prescriptions filled by users from one year to the next
Per-prescription costs were separated into the relative effects of four factors:1. Price2. Therapeutic Mix3. Brand/Generic Mix4. Units per Prescription
The remainder of this section presents general information for the 25 nonspecialty therapyclasses with the highest PMPY cost according to each of the trend components: utilization,price, therapeutic mix, brand/generic mix, units per prescription and new drugs. A brief
discussion of specialty trends is also included. Detailed reviews for selected top therapyclasses both nonspecialty and specialty are in the Therapy Class Review section.
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OverallDrug
Trend
express scripts 2006 drug trend report 7
UTILIZATIONAcross the Express Scripts book of business, utilization of common nonspecialty prescriptiondrugs grew by 2.2% from 2005 to 2006. Prevalence, the measure of new users, increased by 1%;and intensity, the measure of treatment duration, increased by 1.2% compared with changesof 2.1% and 1.9%, respectively, in 2005.
Growth slowed in several classes that had previous double-digit increases. Some classes evenhad negative growth. This reversal contributed to the decline from a 4% growth rate seen between2004 and 2005. A mild cold and flu season in 2006 reduced the use of two antibiotic classes,macrolides and quinolones the 24th and 25th nonspecialty classes in 2005. With utilizationchanges of -2% and 2.4, respectively, both dropped out of the top 25. Similarly, utilizationof antivirals, often used for flu, grew only 4.1% in 2006 versus 16.5% in 2005.
Hypnotics saw explosive growth, primarily due to increased use of three relatively newproducts: Ambien CR, Lunesta and Rozerem. The class of diagnostic products, whichincludes blood-sugar test strips, is new to the top 25 this year. It also showed double-digitgrowth due to increased prevalence of diabetes.
Exhibit 4
Utilization of Common Drugs for the Top 25 Nonspecialty Therapy Classes 2005 to 2006
Ranked by Total Percent Change
Rxs PMPY % Change
Therapy Class 2005 2006 Prevalence Intensity Total
1. Hypnotics 0.14 0.16 10.6% 5.3% 16.5%2. Diagnostic Products 0.08 0.09 9.8% 0.2% 10.0%3. Anticonvulsants 0.23 0.25 9.2% -1.2% 7.9%
4. Stimulants/Anti-Obesity 0.14 0.15 6.1% 0.6% 6.7%5. Misc. GI Agents 0.06 0.06 9.3% -2.3% 6.7%6. Antidiabetics 0.57 0.60 5.4% 0.7% 6.2%7. Decongestants 0.18 0.19 7.0% -1.2% 5.7%8. Antidepressants 0.86 0.90 4.2% 1.3% 5.5%9. Antihyperlipidemics 0.99 1.04 3.9% 1.3% 5.3%
10. Narcotic Analgesics 0.56 0.59 4.7% 0.6% 5.3%11. Migraine Products 0.07 0.07 4.9% 0.1% 5.0%12. Gastrointestinals 0.55 0.58 2.8% 2.1% 4.9%13. Antivirals 0.08 0.09 -0.1% 4.2% 4.1%14. Antiasthmatics 0.45 0.46 0.7% 1.6% 2.2%
15. Antihypertensives 1.10 1.12 2.7% -0.6% 2.1%16. Antihistamines 0.28 0.29 1.3% 0.8% 2.1%17. Beta Blockers 0.57 0.58 1.4% 0.4% 1.8%18. Contraceptives 0.48 0.49 1.9% -0.9% 1.1%19. Misc. Hematologicals 0.10 0.10 -0.8% 1.9% 1.1%20. Ophthalmic Products 0.18 0.18 4.1% -4.0% -0.1%21. Antipsychotics 0.08 0.08 1.0% -1.8% -0.9%22. Dermatologicals 0.31 0.30 1.4% -2.6% -1.3%23. NSAIDs 0.33 0.32 0.3% -2.6% -2.4%24. Misc. Endocrines 0.22 0.21 -3.0% -2.8% -5.7%25. Calcium Blockers 0.34 0.31 -7.1% -0.3% -7.4%
Top 25 8.92 9.20 -0.1% 3.2% 3.1%
Other 4.14 4.15 -0.8% 1.2% 0.3%Total 13.06 13.34 1.0% 1.2% 2.2%
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Over
allDrugTrend
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PRICEPrice represents the cost-per-prescription impact of manufacturers unit price changes (inflation)and changes in contractual rates negotiated with Express Scripts clients. These rates maybe influenced by client mix, channel mix or market dynamics. Price does not include retrospectivemanufacturer rebates, but it does reflect the value of discounted rates. Not surprisingly, the
4.3% overall nonspecialty price increase in 2006 was lower than inflation-only measures reportedin previous years.The overall price rate included 6.9% for common brands and -5.7% for commongenerics. Common drugs were available in both years.
The brand increase was driven by price changes in classes with consistently above-average costincreases. For example, major brand-name hypnotics and stimulants/anti-obesity drugs are nearingpatent expirations. Historically, anticipated generic introductions have signaled high inflation.
In several nonspecialty classes, market dynamics changed generics more than brands. As additionalmanufacturers begin selling the same generic, the price declines, and the lower price is passed onto clients.The price impact from multiple generics is evident in gastrointestinals and anticonvulsants.
Exhibit 5
Price Changes for the Top 25 Nonspecialty Therapy Classes 2005 to 2006
Ranked by Total Percent Change
Price % Change
Rank Therapy Class Brand Generic Total
1. Hypnotics 14.2% -2.7% 13.8%2. Stimulants/Anti-Obesity 11.9% -2.5% 10.5%3. Antiasthmatics 8.1% 10.0% 8.2%4. Antipsychotics 7.5% 0.2% 7.2%
5. Decongestants 6.9% -7.2% 6.7%6. Antihistamines 8.2% -4.0% 6.7%7. Misc. GI Agents 7.8% -3.3% 6.5%8. Migraine Products 6.4% -3.3% 6.3%9. Antivirals 6.3% -1.7% 5.9%
10. Antihyperlipidemics 5.9% -6.0% 5.5%11. Antidiabetics 7.9% -5.7% 5.2%12. Ophthalmic Products 6.1% -4.0% 5.1%13. Contraceptives 11.0% -0.9% 5.0%14. Misc. Endocrines 5.1% 0.1% 5.0%15. Dermatologicals 9.7% -4.5% 5.0%16. NSAIDs 7.4% -2.2% 4.7%17. Diagnostic Products 4.3% 26.5% 4.3%18. Antihypertensives 6.4% -4.5% 3.6%19. Calcium Blockers 4.8% 0.1% 3.3%20. Misc. Hematologicals 3.6% -16.5% 2.7%21. Beta Blockers 4.9% -4.2% 2.5%22. Antidepressants 5.5% -8.8% 1.9%23. Gastrointestinals 4.1% -12.1% 1.8%24. Narcotic Analgesics 14.5% -7.2% 1.3%25. Anticonvulsants 9.2% -22.0% 0.6%
Top 25 6.8% -6.3% 4.6%Other 7.1% -4.4% 3.3%
Total 6.9% -5.7% 4.3%
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OverallDrug
Trend
express scripts 2006 drug trend report 9
THERAPEUTIC MIXTherapeutic mix reflects changes in market shares within therapy classes, new strengths of existingmedications, and changes in overall market shares for each class. In 2006, therapeutic mix roseto 1.7% after bottoming out in 2005 at 0.8%.
Across the top 25 nonspecialty classes,16 classes experienced increases in cost due to therapeutic
mix. The nonspecialty classes with the biggest increases were anticonvulsants, miscellaneousGI agents and antivirals. In each case, increases were due to new, more expensive brands. Newto the top 25, the miscellaneous GI class includes several different types of drugs. Safety issuescaused one of them, Zelnorm, to be withdrawn in March 2007.
New dosages had significant effects on antivirals and contraceptives. Atripla, a new, once-dailycombination medication for HIV, impacted antivirals; and a new contraceptive, Yaz, accountedfor most new dosage impact in its class.
One class had no appreciable change, but eight decreased due to therapeutic mix. NSAIDs continuedto slide after the market withdrawal of Bextra in 2005. Dermatologicals fell due to safety concerns
with acne and eczema products.
Exhibit 6
Price Changes Due to Therapeutic Mix for the Top 25 Nonspecialty Therapy Classes 2005 to 2006
Ranked by Overall Percent Change
% Change
General Overall
Therapy Class Therapeutic Mix New Dosages Therapeutic Mix
1. Anticonvulsants 6.8% 0.1% 6.9%2. Misc. GI Agents 4.1% 0.6% 4.7%3. Antivirals 1.8% 2.5% 4.3%4. Beta Blockers 3.3% 0... 3.3%5. Hypnotics 3.1% 0... 3.1%6. Antidiabetics 2.9% 0.1% 2.9%7. Antipsychotics 0... 1.9% 1.9%8. Ophthalmic Products 1.3% 0.6% 1.9%9. Antidepressants 1.7% 0... 1.7%
10. Narcotic Analgesics 0.2% 1.3% 1.5%11. Misc. Endocrines 1.3% 0... 1.3%12. Misc. Hematologicals 1.2% 0... 1.2%13. Antiasthmatics 0.8% 0... 0.8%
14. Contraceptives -1.4% 2.2% 0.8%15. Stimulants/Anti-Obesity -0.5% 0.9% 0.3%16. Migraine Products 0.2% 0.1% 0.3%17. Diagnostic Products 0... 0... 0...18. Decongestants -0.1% 0... -0.1%19. Antihypertensives -1.0% 0.6% -0.4%20. Antihyperlipidemics -1.1% 0... -1.1%21. Antihistamines -1.2% 0... -1.2%22. Gastrointestinals -1.4% 0.2% -1.3%23. Calcium Blockers -2.0% 0... -2.0%24. Dermatologicals -2.6% 0.2% -2.4%
25. NSAIDs -4.6% 0... -4.6%Top 25 0.8% 0.3% 1.2%Other 2.0% 0.4% 2.4%Total 1.4% 0.4% 1.7%
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Over
allDrugTrend
10 express scripts 2006 drug trend report
BRAND/GENERIC MIXMajor new generic introductions continued in 2006, resulting in a 2.9% fall in nonspecialty trenddue to movement from brands to generics slightly better than the 2.7% decline seen in 2005.
The antihyperlipidemics class saw the introduction of two major generics in 2006. Although theirfull impact will not be realized until 2007, they still contributed to a 5.6% drop in brand/generic mix
for the class during 2006. As we forecasted last year, the September 2005 introduction of genericsto Allegra resulted in a double-digit brand/generic mix trend for antihistamines, which led allclasses in the top 25. However, the macrolides class, which dropped out of the top 25 this year,actually had a huge 28.8% drop in cost caused by the impact of generics for Zithromax .
In fact, the top seven nonspecialty classes all had significant generic rollouts in 2006. However,two of them narcotic analgesics and miscellaneous hematologicals are likely to see a reversalin brand/generic-mix trend because generics for OxyContin and Plavix will be forced off the marketby ongoing patent disputes.
Exhibit 7
Changes in Brand/Generic Mix for the Top 25 Nonspecialty Therapy Classes 2005 to 2006
Ranked by Percent Change
Rank Therapy Class Key Generic Introduction % Change
1. Antihistamines Allegra (2005) -11.8%2. NSAIDs Mobic (2006) -10.7%3. Decongestants Flonase (2006) -10.5%4. Narcotic Analgesics OxyContin (2005), -9.1%
Duragesic (2005), Actiq (2006)5. Misc. Hematologicals Plavix (2006) -8.3%
6. Antihyperlipidemics Pravachol
(2006), Zocor
(2006) -5.6%7. Antidepressants Zoloft (2006) -2.5%8. Misc. Endocrines DDAVP (2005) -2.0%9. Antidiabetics Amaryl (2005) -1.8%
10. Contraceptives Ortho Tri-Cyclen (2004) -1.6%11. Anticonvulsants Zonegran (2005) -1.6%12. Dermatologicals Elocon (2006) -1.3%13. Calcium Blockers Plendil (2004) -0.5%14. Beta Blockers Toprol-XL (2006) -0.4%15. Antihypertensives N/A -0.3%16. Stimulants/Anti-Obesity N/A -0.3%17. Antipsychotics N/A -0.2%
18. Migraine Products N/A -0.2%19. Antivirals N/A -0.2%20. Misc. GI Agents N/A -0.1%21. Gastrointestinals N/A -0.1%22. Hypnotics N/A -0.1%23. Ophthalmic Products N/A -0.1%24. Diagnostic Products N/A 0...25. Antiasthmatics N/A 0...
Top 25 -2.8%Other -3.4%Total -2.9%
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UNITS PER PRESCRIPTIONWithin the top 25 nonspecialty classes, changes in the number of units per prescription increased overallnonspecialty trend by only 0.4%. However, this change was one of the largest seen in several years.
Leading the way with a 4% change due to units per prescription was the narcotic analgesicsclass due mostly to increased dosing of OxyContin and its generic, oxycodone extended release.
At the other end of the spectrum, ophthalmic products dropped by 0.6%, due to fewer units per day forglaucoma treatments Lumigan and Xalatan. A 0.6% decline was also seen for miscellaneous GI agents,which are used to treat a number of conditions with symptoms that may fluctuate in severity.
Exhibit 8
Changes in Units per Prescription for the Top 25 Nonspecialty Therapy Classes 2005 to 2006
Ranked by Percent Change
Rank Therapy Class % Change
1. Narcotic Analgesics 4.0%2. Dermatologicals 1.8%3. Diagnostic Products 1.7%4. Migraine Products 1.5%5. Gastrointestinals 1.2%6. Antidiabetics 1.1%7. Misc. Endocrines 0.8%8. Antipsychotics 0.7%9. Antidepressants 0.3%
10. Beta Blockers 0.3%11. Hypnotics 0.2%12. Antihistamines 0.2%
13. Stimulants/Anti-Obesity 0.2%14. Misc. Hematologicals 0.2%15. Decongestants 0.1%16. Antiasthmatics 0.1%17. Contraceptives 0.1%18. Antihypertensives -0.1%19. Antihyperlipidemics -0.1%20. Anticonvulsants -0.3%21. Calcium Blockers -0.3%22. Antivirals -0.4%23. NSAIDs -0.5%
24. Misc. GI Agents -0.6%25. Ophthalmic Products -0.6%
Top 25 0.5%Other 0.4%Total 0.4%
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NEW DRUGSIn 2006, new drugs contributed only about 0.2% toward overall nonspecialty trend one of thelowest new drug impacts in the 11 years that the Drug Trend Reporthas been published. In 2006,the U.S. Food and Drug Administration (FDA) approved 18 new molecular entities (active drugs thatare new to the U.S. market) and four new therapeutic biologics.2 These low numbers confirm that
new brands are not having the largest impact on drug trend.Despite the generally low new drug trend, antidiabetics has emerged as the one nonspecialtyclass likely to have a significant impact on future trends. Following the introduction of Byetta
in 2005, four additional new antidiabetics (Apidra, Avandaryl, Januvia and Levemir) wereapproved in 2006.
Exhibit 9
Number of New Drug Approvals by the FDA 2002 to 2006
Adapted from: Owens J. 2006 drug approvals: finding the niche. Nature Reviews Drug Discovery. 2007; 6(2): 99-101. Available at
http://www.nature.com/nrd/journal/V6/n2/foll/nrd2247.html#f1. Accessed February 7, 2007.
Exhibit 10
Top 10 New Nonspecialty Prescription Drugs of 2006
Cost
Brand Name Generic Name Therapy Class PMPY % New Drug
1. Avandaryl rosiglitazone and glimepiride Antidiabetics $0.21 20.4%2. Chantix varenicline Misc. CNS Agents* $0.21 20.3%3. Levemir insulin detemir Antidiabetics $0.14 13.9%4. Januvia sitagliptin Antidiabetics $0.07 6.9%5. Amitiza lubiprostone Misc. GI Agents $0.06 6.1%6. Apidra insulin glulisine Antidiabetics $0.04 4.3%7. Oracea doxycycline Dermatologicals $0.04 4.3%8. Azilect rasagiline Antiparkinsons Agents* $0.04 3.4%9. Ranexa ranolazine Antianginals* $0.03 3.3%
10. Prezista darunavir Antivirals $0.02 2.0%Top 10 $0.88 84.8%Other $0.16 15.2%Total $1.03 100.0%
* Not in the top 25 classes
New Molecular Entitites
0
Therapeutic Biologicals
35
30
25
20
15
10
5
2002 2003 2004 20062005
2 Owens J. 2006 drug approvals: finding the niche. Nature Reviews Drug Discovery. 2007; 6(2): 99-101. Available at
http://www.nature.com/nrd/journal/V6/n2/foll/nrd2247.html#f1. Accessed February 7, 2007.
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SPECIALTY DRUG TRENDThe 20.9% trend for specialty drugs resulted mainly from just a few drug categories, with the top sixaccounting for more than 77% of specialty prescriptions filled through the pharmacy benefit. Steadyand significant cost increases, especially in the multiple sclerosis (MS) and growth deficiencyclasses, were responsible for a large part of the trend.
A jump in the use of therapies that treat inflammatory conditions drove an overall increase of nearly 8%in specialty-drug utilization. Additional indications for two previously approved therapies, Enbrel andHumira, were primary contributors because 2006 was the first full year that both had expanded indicationsfor psoriatic arthritis. Additionally, Humira was approved as a first-line treatment for moderate-to-severerheumatoid arthritis (RA) in November 2005 and for ankylosing spondylitis in July 2006.
Exhibit 11
PMPY Cost, Utilization, Cost per Prescription and New Drug Trends for the Top 10 Specialty
Categories 2005 to 2006
Ranked by 2006 PMPY Cost
PMPY % Change
2005 2006 % Change Utilization Cost/Rx New Drugs
1. Inflammatory $15.52 $19.04 22.7% 15.8% 5.8% 0.1%Conditions
2. Multiple Sclerosis $11.43 $13.60 19.0% 3.4% 15.1% 0...3. Cancer $ 7.49 $10.44 39.5% 6.5% 6.2% 26.4%4. Blood Cell $ 4.81 $ 5.01 4.0% -2.6% 6.8% 0...
Deficiency5. Growth Hormone $ 3.74 $ 4.59 22.8% 2.9% 19.1% 0.3%
Deficiency
6. Hepatitis C $ 3.76 $ 3.45 -8.3% -5.9% -2.5% 0...7. Anticoagulants $ 2.63 $ 3.34 26.7% 20.6% 5.0% 0...8. Infertility $ 2.62 $ 2.58 -1.6% -0.2% -1.4% 0...9. Respiratory $ 2.17 $ 2.54 17.1% 3.2% 13.5% 0...
Conditions10. Hemophilia $ 1.01 $ 1.72 69.9% 36.1% 24.8% 0...
Top 10 Classes $55.19 $66.31 20.1% 7.0% 8.9% 3.6%Other $ 4.83 $ 6.27 29.8% 15.8% 10.0% 2.4%Total $60.02 $72.58 20.9% 7.7% 9.0% 3.5%
Although new drugs made only a minor impact on nonspecialty cost, new specialty therapies accountedfor a hefty 16.9% of overall specialty trend. In 2006, most new specialty medicines were introducedto treat various types of cancer, causing an historical impact of over 26% in the class. New cancerdrugs that will continue to affect specialty trend include:
Nexavar advanced renal cell carcinoma (RCC) Revlimid myelodysplastic syndromes and multiple myeloma Sutent advanced RCC and gastrointestinal stromal tumor (GIST)
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Therapy Class Review 3Express Scripts 2006 Drug Trend Report
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Therapy Class Review
This section includes detailed information on selected therapy classes that have had a notableimpact on drug trend. For 2006, we focused on 12 high-impact nonspecialty therapy classes and thetop six specialty classes. For each class that was selected, components of utilization and cost havebeen analyzed. This year, the inflation component has been replaced with a new measure price,which better reflects changes in both unit prices charged by manufacturers and contractual ratescharged to Express Scripts clients. Additionally, market-share trends have been charted, pointsof interest have been noted, and new drugs and generics that are expected in the immediatefuture have been listed for each of the featured classes.
NONSPECIALTY
Exhibit 12
PMPY Cost and Cost per Prescription for Selected Nonspecialty Therapy Classes 2005 to 2006Ranked by 2006 PMPY Cost
PMPY Cost Cost per Prescription
2005 2006 % Change 2005 2006 % Change
Antihyperlipidemics $ 80.75 $ 83.68 3.6% $ 81.59 $ 80.30 -1.6%Gastrointestinals $ 55.06 $ 58.74 6.7% $100.34 $102.04 1.7%Antidepressants $ 53.25 $ 57.01 7.1% $ 62.11 $ 63.00 1.4%Antidiabetics $ 34.87 $ 40.25 15.5% $ 61.27 $ 66.24 7.5%Antiasthmatics $ 34.30 $ 38.28 11.6% $ 76.35 $ 83.35 9.2%Antihypertensives $ 36.32 $ 38.13 5.0% $ 33.16 $ 34.10 2.8%Anticonvulsants $ 21.60 $ 24.60 13.8% $ 92.72 $ 97.80 5.5%Narcotic Analgesics $ 21.77 $ 22.31 2.5% $ 39.02 $ 37.99 -2.7%Antivirals $ 15.99 $ 18.31 14.5% $195.44 $214.89 9.9%Stimulants/Anti-Obesity $ 14.15 $ 16.72 18.2% $102.47 $ 113.46 10.7%Antihistamines $ 15.10 $ 14.36 -4.9% $ 53.95 $ 50.27 -6.8%Hypnotics $ 8.78 $ 12.02 36.9% $ 64.34 $ 75.60 17.5%Other $284.11 $291.84 2.7% $ 39.91 $ 40.93 2.6%Total $676.05 $716.26 5.9% $ 51.78 $ 53.64 3.6%
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ANTIHYPERLIPIDEMICS NONSPECIALTY RANK 1
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription -1.6% Cost PMPY: $83.68
Price 5.5% # Rx PMPY: 1.04Units per Prescription -0.1% Prevalence of Use: 11.1%Brand/Generic Mix -5.6% Average Cost/Rx: $80.30Therapeutic Mix -1.1% # Rx/User/Year: 9.40Utilization 5.3%Prevalence 3.9%Intensity 1.3%New Drugs 0...
TOTAL 3.6%
Antihyperlipidemics Market-Share Trend
The most significant event during 2006 was the availability of first-time generics to the lowerstrengths of Pravachol and all strengths of Zocor . As a result, overall trend for the classdecreased significantly to 3.6%, down from the 15.1% observed in 2005.
Statin drugs will remain the standard for the treatment of high cholesterol as we move into thenext decade. While no significant new classes of cholesterol medications are expected to reach
the market within the next couple of years, combination products will be used to help achieveboth HDL and LDL cholesterol goals. Cholesterol agents were the second most promoted class of drugs, behind hypnotics. The discontinuation
of the pipeline drug, torcetrapib, will refocus the market toward achieving lower LDL cholesterolgoals. Torcetrapib was being developed to raise HDL cholesterol.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Simcor Dyslipidemia Pipeline 2008(simvastatin/Niaspan)
MK-0524A Dyslipidemia Pipeline 2008
60%
50%
40%
30%
20%
10%
0%
Lipitor $85.68
2002
PercentofPrescriptions
2003 20052004 2006
Generics $54.32
Vytorin $77.74
Crestor $78.31
Zocor $120.09
Zetia $74.75
TriCor $84.43
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GASTROINTESTINALS NONSPECIALTY RANK 2
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 1.7% Cost PMPY: $58.74
Price 1.8% # Rx PMPY: 0.58Units per Prescription 1.2% Prevalence of Use: 8.7%Brand/Generic Mix -0.1% Average Cost/Rx: $102.04Therapeutic Mix -1.3% # Rx/User/Year: 6.61Utilization 4.9%Prevalence 2.8%Intensity 2.1%New Drugs 0...
TOTAL 6.7%
Gastrointestinals Market-Share Trend
Proton pump inhibitors (PPIs) are expected to continue dominating the class into the next decadesince no competing therapies are in development.
The overall 2006 gastrointestinals trend increase of 6.7% is similar to its 5.7% increase in 2005. TAK-390, the follow-on to Prevacid, is expected to reach the market by the end of 2008 in advance
of Prevacids generics, which are due in late 2009.
Despite the expiration of the three-year marketing exclusivity for Prilosec OTC
, generic competitioncould be delayed until 2008. Other nonprescription PPIs are expected to become available near theend of the decade.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
TAK-390MR Acid-related Pipeline 2008(eslansoprazole) GI disease
Prilosec OTC Frequent Patent Expiration 2008*(omeprazole) heartburn
*Litigation
40%
35%
30%
25%
20%
15%
10%
5%
0%
Generics $43.15
2002
PercentofPrescriptions
2003 20052004 2006
Nexium $139.88
Prevacid $140.42
Protonix $111.35
AcipHex $143.18
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ANTIDEPRESSANTS NONSPECIALTY RANK 3
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 1.4% Cost PMPY: $57.01
Price 1.9% # Rx PMPY: 0.90Units per Prescription 0.3% Prevalence of Use: 11.0%Brand/Generic Mix -2.5% Average Cost/Rx: $63.00Therapeutic Mix 1.7% # Rx/User/Year: 8.21Utilization 5.5%Prevalence 4.2%Intensity 1.3%New Drugs 0.1%
TOTAL 7.1%
Antidepressants Market-Share Trend
First generics to Zoloft, Parnate and Effexor became available in 2006. Additional generics forZoloft were approved in February 2007. The availability of generics to Wellbutrin XL still dependsupon the outcome of litigation and resolution of an outstanding Citizens Petition.
Driven by both cost and utilization, antidepressants trend increased significantly in 2006 to 7.1%,up from 1.9% the previous year. The increase in utilization may be due to subsiding clinical concernsover the use of antidepressants.
The pipeline drug Pristiq the active metabolite and follow-on product to Effexor is beingstudied for treating both depression and vasomotor symptoms associated with menopause.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Pristiq (desvenlafaxine) Depression Pipeline 2007
saredutant Depression Pipeline 2008
SR 58611 Depression Pipeline 2008
Wellbutrin XL Depression Patent Expiration Pending(bupropion extended release)
Paxil CR
Depression Patent Expiration In litigation(paroxetine controlled release)
60%
50%
40%
30%
20%
10%
0%
Generics $32.62
2002
PercentofPrescriptions
2003 20052004 2006
Lexapro $73.11
Effexor XR $122.36
Zoloft $85.70
Wellbutrin XL $128.86
Cymbalta $121.05
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ANTIDIABETICS NONSPECIALTY RANK 4
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 7.5% Cost PMPY: $40.25
Price 5.2% # Rx PMPY: 0.61Units per Prescription 1.1% Prevalence of Use: 4.3%Brand/Generic Mix -1.8% Average Cost/Rx: $66.24Therapeutic Mix 2.9% # Rx/User/Year: 13.94Utilization 6.2%Prevalence 5.4%Intensity 0.7%New Drugs 1.4%
TOTAL 15.5%
Antidiabetics Market-Share Trend
The overall 2005 to 2006 trend of 15.5% in the antidiabetics category was similar to the13.4% seen from 2004 to 2005.
The cost component of antidiabetics trend is expected to increase as new branded productswith novel mechanisms of action enter the market. In addition, a lack of first-time genericswill also increase cost trend.
Utilization is also expected to increase as the incidence of obesity, a significant risk factor for
type 2 diabetes, continues to rise in U.S. adults and children.Januvia, the first in a novel class of diabetes medications known as dipeptidyl peptidase IV(DPP-4) inhibitors, was introduced to the market in late 2006. The next DDP-4, Galvus , whichshould become available in 2008, will compete with Januvia.
After a significant delay, the FDA approved the first inhaled insulin product, Exubera, in 2006.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Januvia/metformin Type 2 diabetes Pipeline 2007
saxagliptin Type 2 diabetes Pipeline 2008
Galvus (vildagliptin) Type 2 diabetes Pipeline 2008
60%
50%
40%
30%
20%
10%
0%
Generics $21.79
2002
PercentofPrescriptions
2003 20052004 2006
Avandia $128.87
Actos $146.73
Lantus $102.38
Humalog $141.51
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ANTIASTHMATICS NONSPECIALTY RANK 5
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 9.2% Cost PMPY: $38.28
Price 8.2% # Rx PMPY: 0.46Units per Prescription 0.1% Prevalence of Use: 8.5%Brand/Generic Mix 0 Average Cost/Rx: $83.35Therapeutic Mix 0.8% # Rx/User/Year: 5.39Utilization 2.2%Prevalence 0.7%Intensity 1.6%New Drugs 0...
TOTAL 11.6%
Antiasthmatics Market-Share Trend
Overall trend in this class increased 11.6%, down from 16% observed in 2005. The continued phase out of albuterol inhalers that contain chlorofluorocarbons (CFCs) is likely
to be completed in 2007, well in advance of the FDA-imposed deadline of Dec. 31, 2008. Approved in 2006, the combination long-acting beta-2 agonist and corticosteroid product,
Symbicort, is expected to become available by mid-2007. Symbicort will be the first directcompetitor to Advair. Additional combination inhalers currently in development are expected
to reach the market near the end of the decade. Although patents on some of the inhaled products have expired, generics are delayed from entering
the market by barriers that include complex delivery devices, the drug-delivery profile within thebody and patents on hydrofluoroalkane (HFA) propellants.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Alvesco (ciclesonide) Asthma/COPD* Pipeline 2007
Symbicort Asthma/COPD Pipeline 2007(budesonide/formoterol)
Flutiform Asthma/COPD Pipeline 2008(fluticasone/formoterol)
Serevent (salmeterol) Asthma/COPD Patent Expiration 8/12/2008
Advair Diskus Asthma/COPD Patent Expiration 2008 or 2010(fluticasone/salmeterol)
*COPD = chronic obstructive pulmonary disease
40%
35%
30%
25%
20%
15%
10%
5%
0%
Generics $17.13
2002
PercentofPrescriptions
2003 20052004 2006
Singulair $88.03
Advair Diskus $154.28
Flovent HFA $96.55
Combivent $92.31
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ANTIHYPERTENSIVES NONSPECIALTY RANK 6
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 2.8% Cost PMPY: $38.13
Price 3.6% # Rx PMPY: 1.12Units per Prescription -0.1% Prevalence of Use: 11.3%Brand/Generic Mix -0.3% Average Cost/Rx: $34.10Therapeutic Mix -0.4% # Rx/User/Year: 9.90Utilization 2.1%Prevalence 2.7%Intensity -0.6%New Drugs 0...
TOTAL 5.0%
Antihypertensives Market-Share Trend
Overall trend in the antihypertensives category slowed in 2006 to 5%, down from the 8.2% seen in 2005. Tekturna, an orally active renin inhibitor, is a novel therapy for the treatment of hypertension that
was approved early in 2007. It could take some market share away from the angiotensin convertingenzyme inhibitors (ACEIs) and angiotensin receptor blockers (ARBs).
Although challenges to the Lotrel patents continue, both components found in Lotrel will be availableas generics following the patent expiration of Norvasc in September 2007. Also following Norvascs
patent expiration, the new combination product Exforge
, which has been approved but not launched,is expected to become available.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Rasilez (aliskiren) Hypertension Pipeline 2007
Exforge Hypertension Pipeline 2007(amlodipine/valsartan)
Aceon (perindopril) Hypertension Patent Expiration 02/21/2007
Lotrel Hypertension Patent Expiration 09/25/2007*(amlodipine/benazepril)
Altace (ramipril) Hypertension Patent Expiration 10/10/2008*
*Litigation/Settlement
60%
50%
40%
30%
20%
10%
0%
Generics $14.24
2002
PercentofPrescriptions
2003 20052004 2006
Diovan/Diovan HCT $58.98
Lotrel $79.98
Cozaar/Hyzaar $58.45
Altace $52.38
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ANTICONVULSANTS NONSPECIALTY RANK 7
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 5.5% Cost PMPY: $24.60
Price 0.6% # Rx PMPY: 0.25Units per Prescription -0.3% Prevalence of Use: 3.4%Brand/Generic Mix -1.6% Average Cost/Rx: $97.80Therapeutic Mix 6.9% # Rx/User/Year: 7.31Utilization 7.9%Prevalence 9.2%Intensity -1.2%New Drugs 0...
TOTAL 13.8%
Anticonvulsants Market-Share Trend
Trend in this category increased from 3.4% in 2005 to 13.8% in 2006. While utilization trend foranticonvulsants is not much higher than the previous years trend, the cost component reboundedin 2006 as the impact of generics to gabapentin declined.
Utilization of Lyrica increased in 2006, mostly due to a new FDA-approved indication for the treatmentof nerve pain associated with diabetes.
Off-label use continues to expand this market because anticonvulsants are often used forconditions such as bipolar disorder, neuropathic pain and migraine prophylaxis.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Xilep (rufinamide) Epilepsy Pipeline 2008
Trileptal (oxcarbazepine) Epilepsy Patent Expiration 2007
Depakote/Depakote ER Epilepsy/ Patent Expiration 07/29/2008*(divalproex/divalproex Migraineextended release)
*Litigation
70%
60%
50%
40%
30%
20%
10%
Generics $36.00
2002
PercentofPrescriptions
2003 20052004 2006
0%
Topamax $206.17
Lamictal $224.12
Lyrica $121.55
Depakote $130.13
Trileptal $181.91
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NARCOTIC ANALGESICS NONSPECIALTY RANK 8
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription -2.7% Cost PMPY: $22.31
Price 1.3% # Rx PMPY: 0.59Units per Prescription 4.0% Prevalence of Use: 17.6%Brand/Generic Mix -9.1% Average Cost/Rx: $37.99Therapeutic Mix 1.5% # Rx/User/Year: 3.33Utilization 5.3%Prevalence 4.7%Intensity 0.6%New Drugs 0.1%
TOTAL 2.5%
Narcotic Analgesics Market-Share Trend
Overall narcotic analgesics trend of 2.5% in 2006 was similar to 2005s 1.9% because thecost component continues to be controlled by the use of generics.
While the majority of prescriptions in this therapy class (for generics to Percocet , Vicodin
and Tylenol with Codeine #3) average less than $30 per prescription, the cost for the brandproducts can be considerably higher. For example, the average 2006 cost for Fentanyl was$250, while the cost for OxyContin averaged over $450 per prescription.
Looking forward, a brand-only OxyContin market may be re-established in 2008 followinga series of patent litigation settlements.
When generics to Actiq were launched in late 2006, the follow-on brand product, Fentora,also became available.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
tramadol Pain Pipeline 2007extended release
CIP-tramadol Pain Pipeline 2007extended release
BEMA fentanyl Pain Pipeline 2008
Rapinyl Pain Pipeline 2008(fentanyl transmucosal)
100%
95%
90%
85%
80%
75%
70%
Generics $27.96
2002
PercentofPrescriptions
2003 20052004 2006
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ANTIVIRALS NONSPECIALTY RANK 10
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 9.9% Cost PMPY: $18.31
Price 5.9% # Rx PMPY: 0.09Units per Prescription -0.4% Prevalence of Use: 2.7%Brand/Generic Mix -0.2% Average Cost/Rx: $214.89Therapeutic Mix 4.3% # Rx/User/Year: 3.12Utilization 4.1%Prevalence -0.1%Intensity 4.2%New Drugs 0.1%
TOTAL 14.5%
Antivirals Market-Share Trend
Overall trend in the antivirals class was 14.5% in 2006, down from 23% in 2005. Muchof the higher trend in 2005 was driven by concerns surrounding avian influenza. Increasedutilization and stockpiling of the influenza drug, Tamiflu, also contributed.
As with the antibiotics classes, the antivirals class is affected by seasonality and theseverity of the flu season.
A single product, Valtrex, accounts for nearly 45% of antiviral prescriptions. In February 2007,the FDA approved the first generic to Valtrex. However, supplies of the generic are not expectedto become available until an additional Valtrex patent expires in 2009.
Two new classes of HIV medications are expected to be marketed over the next two years. CCR5receptor antagonists, such as maraviroc and vicriviroc, will help keep HIV from entering andinfecting healthy T-cells. MK-0518, an integrase inhibitor, prevents the DNA of HIV from enteringthe DNA of healthy cells. If approved, these new medications likely will be used in combinationwith other therapies for the treatment of HIV.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
maraviroc HIV Pipeline 2007
MK-0518 HIV Pipeline 2008
vicriviroc HIV Pipeline 2008
Zerit (stavudine) HIV Patent Expiration 12/24/2008
50%
45%
35%
25%
40%
30%
20%
15%
10%
5%
Valtrex $151.01
2002
PercentofPrescriptions
2003 20052004 2006
0%
Generics $33.75
Tamiflu $64.08
Famvir $177.77
Sustiva $418.58
Truvada $737.64
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STIMULANTS/ANTI-OBESITY NONSPECIALTY RANK 11
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 10.7% Cost PMPY: $16.72
Price 10.5% # Rx PMPY: 0.15Units per Prescription 0.2% Prevalence of Use: 2.1%Brand/Generic Mix -0.3% Average Cost/Rx: $113.46Therapeutic Mix 0.3% # Rx/User/Year: 6.91Utilization 6.7%Prevalence 6.1%Intensity 0.6%New Drugs 0...
TOTAL 18.2%
Stimulants/Anti-Obesity Market-Share Trend
Trend in this category is primarily driven by stimulants for the treatment of attention-deficithyperactive disorder (ADHD).
Overall trend of 18.2% in 2006 was similar to the 20.7% increase in 2005. The cost componentcontinues to drive trend in this class as the branded, once-daily products remain the standardof therapy for ADHD.
Generics have been delayed for some significant products in this category including Concerta
(by litigation and a Citizens Petition) and Adderall XR (by a patent litigation settlement). A new drug, Vyvanse, which may offer comparable efficacy to available stimulants for ADHD,
may also provide a safety advantage due to less potential for overdosing and abuse. The FDAapproved Vyvanse in February 2007.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Connexyn (guanfacine) ADHD Pipeline 2007
Nuvigil (armodafinil) Excessive sleepiness Pipeline 2007
rimonabant Obesity Pipeline 2007
SPD465 ADHD Pipeline 2007Concerta ADHD Patent Expiration Pending*
(methylphenidate,
extended release)
*Litigation/Citizens Petition
35%
30%
25%
20%
15%
10%
5%
Generics $40.06
2002
PercentofPrescriptions
2003 20052004 2006
0%
Adderall XR $122.14
Concerta $112.08
Strattera $146.58
Provigil $294.95
Focalin XR $119.48
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ANTIHISTAMINES NONSPECIALTY RANK 14
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription -6.8% Cost PMPY: $14.36
Price 9.7% # Rx PMPY: 0.29Units per Prescription 0.2% Prevalence of Use: 7.8%Brand/Generic Mix -11.8% Average Cost/Rx: $50.27Therapeutic Mix -1.2% # Rx/User/Year: 3.65Utilization 2.1%Prevalence 1.3%Intensity 0.8%New Drugs 0...
TOTAL -4.9%
Antihistamines Market-Share Trend
Even though utilization increased, overall trend in the antihistamines class was once againnegative at -4.9%, similar to the -3.2% decline from 2004 to 2005.
This class was influenced strongly in 2006 by both the availability of additional generic competitorsto Allegra and the continued transition from brand antihistamines to Allegras generic,fexofenadine. Generics to Allegra are on the market at risk, however, because patent litigation
has not been resolved. Looking forward, the market may see the introduction of Xyzal, a follow-on product to Zyrtec,
in the first half of 2007. Following the 2002 example set by Claritin and Clarinex, Zyrtec probablywill be converted to nonprescription status after brand Xyzal becomes available but before theZyrtec patent expires in December 2007.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Xyzal (levocetirizine) Allergies Pipeline 2007
Clarinex (desloratadine) Allergies Patent Expiration 10/01/2007*
Zyrtec (cetirizine) Allergies Patent Expiration 12/25/2007
(Rx to OTC)
*Litigation
60%
50%
40%
30%
20%
10%
0%
Generics $40.77
2002
PercentofPrescriptions
2003 20052004 2006
Zyrtec $56.77
Clarinex $72.62
Allegra $71.43
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HYPNOTICS NONSPECIALTY RANK 19
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 17.5% Cost PMPY: $12.02
Price 13.8% # Rx PMPY: 0.16Units per Prescription 0.2% Prevalence of Use: 3.5%Brand/Generic Mix -0.1% Average Cost/Rx: $75.60Therapeutic Mix 3.1% # Rx/User/Year: 4.58Utilization 16.5%Prevalence 10.6%Intensity 5.3%New Drugs 0...
TOTAL 36.9%
Hypnotics Market-Share Trend
The hypnotics class experienced another significant growth year in 2006, with an overallincrease of 36.9%, compared with 31.6% in 2005. The 2006 increase was driven about equallyby cost and utilization.
Following its debut as the number 23 class in the 2005 Drug Trend Report, hypnotics jumpedto the number 19 therapy class in 2006.
The hypnotics class was the most heavily advertised class in 2006. The most significant event for the class in 2007 will be the generic availability of Ambien ,
the current market-leading hypnotic.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
gaboxadol Insomnia Pipeline 2008
indiplon, Insomnia Pipeline 2008immediate release
Silenor (doxepin) Insomnia Pipeline 2008
Ambien (zolpidem) Insomnia Patent Expiration 04/21/2007
Sonata (zaleplon) Insomnia Patent Expiration 10/06/2008*
*Litigation
80%
70%
60%
50%
40%
30%
20%
10%
0%
Ambien $86.13
2002
PercentofPrescriptions
2003 20052004 2006
Generics $8.64
Ambien CR $86.75
Lunesta $95.28
Sonata $90.70
Rozerem $72.53
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SPECIALTYComponents of utilization and cost have been analyzed for the top six specialty classes, similarto our analyses for the top nonspecialty classes. Noteworthy trends in price, market share andnew drugs have been reviewed for each featured specialty class. Pipelines are discussed for eachclass because the potential for new specialty therapies remains high. Currently, no pathways exist
for approval of generic biologics. Many regulatory, scientific and legal issues must be resolvedbefore an approval process for these agents can be established.
Exhibit 13
PMPY Cost and Cost per Prescription for Selected Specialty Therapy Classes 2005 to 2006
Ranked by 2006 PMPY Cost
PMPY Cost Cost per Prescription
2005 2006 % Change 2005 2006 % Change
1. Inflammatory $15.52 $19.04 22.7% $1,397.48 $1,479.11 5.8%
Conditions2. Multiple $11.43 $13.60 19.0% $1,277.27 $1,469.93 15.1%
Sclerosis3. Cancer $ 7.49 $10.44 39.5% $1,271.21 $1,592.69 7.2%4. Blood Cell $ 4.81 $ 5.01 4.0% $1,602.80 $1,682.69 5.0%
Deficiency5. Growth $ 3.74 $ 4.59 22.8% $2,143.28 $2,552.01 19.1%
HormoneDeficiency
6. Hepatitis C $ 3.76 $ 3.45 -8.3% $1,161.81 $1,132.78 -2.5%Other $13.26 $16.44 24.0% $1,107.32 $1,226.45 10.8%
Total $60.02 $72.58 20.9% $1,307.30 $1,454.14 11.2%
Expanding therapeutic indications drove utilization trend for specialty therapies, chiefly in theinflammatory conditions class. Already approved for certain inflammatory conditions suchas rheumatoid arthritis (RA), tumor necrosis factor (TNF) blockers Enbrel, Humira andRemicade continue to be studied for treating other autoimmune inflammatory conditions.Some existing specialty drugs are also used for multiple conditions. For example, several cancertherapies are also used to treat multiple sclerosis (MS) or hepatitis C. As additional indicationsare discovered and approved, both utilization and spend will continue to grow.
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INFLAMMATORY CONDITIONS SPECIALTY RANK 1
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 5.8% Cost PMPY: $19.04
Price 6.0% # Rx PMPY: 0.0129Units per Prescription -1.5% Prevalence of Use: 0.2%Brand/Generic Mix 0 Average Cost/Rx: $1,479.11Therapeutic Mix 1.4% # Rx/User/Year: 8.30Utilization 15.8%Prevalence 17.9%Intensity -1.8%New Drugs 0.1%
TOTAL 22.7%
Inflammatory Conditions Market-Share Trend
Additional indications for biologic drugs used to treat inflammatory conditions drove trend for this class to 22.7%. In 2006, Humira received expanded indications for ankylosing spondylitis and psoriatic arthritis.
It continues to take market share away from Enbrel. Several new drugs that are being studied for RA may also be used to treat a variety of other
inflammatory conditions, including psoriasis, psoriatic arthritis, ankylosing spondylitisand Crohns disease.
The FDA approved Soliris, a monoclonal antibody, in March 2007. Approved initially for thetreatment of a rare genetic blood disorder, paroxysmal nocturnal hemoglobinuria (PNH), Solirisis also in development for the treatment of RA.
Cimzia, the next new drug likely to enter this class, will be dosed once monthly by subcutaneous(SQ) injection. Even though Cimzia may require administration by a healthcare professional,its convenience may give it an advantage over the other marketed tumor necrosis factor (TNF)inhibitors such as Enbrel, Humira and Remicade, which are used more often.
Actemra is an IV infusion therapy that has a novel mechanism for treating RA. However, adversereactions (increased infections and elevated cholesterol levels) have been associated with its use.
Inflammatory Conditions PipelineBrand Generic Route of Administration Proposed Use Anticipated Availability
Cimzia certolizumab SQ Crohns disease, RA 2007*
Actemra tocilizumab IV infusion RA 2008
*May be approved earlier for an indication other than RA
100%
90%
70%
50%
80%
60%
40%
30%
20%
10%
Enbrel $1,436.32
2002
PercentofPrescriptions
2003 20052004 2006
0%
Humira $1,534.59
Raptiva $1,514.96
Remicade $2,705.47
Kineret $1,209.44
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MULTIPLE SCLEROSIS SPECIALTY RANK 2
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 15.1% Cost PMPY: $13.60
Price 14.4% # Rx PMPY: 0.0093Units per Prescription 0.4% Prevalence of Use: 0.1%Brand/Generic Mix 0 Average Cost/Rx: $1,469.93Therapeutic Mix 0.2% # Rx/User/Year: 9.65Utilization 3.4%Prevalence 2.7%Intensity 0.6%New Drugs 0
TOTAL 19.0%
Multiple Sclerosis Market-Share Trend
Inflation continues to be the key driver of trend for drugs that treat multiple sclerosis (MS), withthe cost per prescription increasing 15.1% in 2006.
As they have since 2003, Copaxone and Rebif continue to take market share away from Avonex.Copaxone, which has a different mechanism than the other drugs in this class, may be more tolerablethan Avonex. Rebifs growth is driven by marketing of results from the EVIDENCE trial that showed
superior efficacy to Avonex.3 Several oral MS drugs are in development. Current MS therapies are all injected. In addition, several currently available drugs, which are administered by IV infusion, are being evaluated
for use in the treatment of MS. For example, Rituxan on the market since 1997 for the treatmentof non-Hodgkins lymphoma and approved for RA in February 2006 is in studies for MS and lupus.
Multiple Sclerosis Pipeline
Brand Generic Route of Administration Proposed Use Anticipated Availability
Mylinax cladribine Oral MS 2008
MBP-8298 IV infusion MS 2008
Rituxan* rituximab IV infusion MS, Lupus 2008teriflunomide Oral MS 2008
*Already on the market for another indication
3 Panitch H, Goodin DS, Francis G, et al; for the EVIDENCE (EVidence of Interferon Dose-response: European North American Comparative Efficacy)
Study Group and the University of British Columbia MS/MRI Research Group. Randomized, comparative study of interferon beta-1a treatment
regimens in MS: The EVIDENCE Trial. Neurology. 2002;59(10):1496-1506.
70%
60%
50%
40%
30%
20%
10%
Avonex $1,413.29
2002
PercentofPrescriptions
2003 20052004 2006
0%
Copaxone $1,455.67
Rebif $1,568.42
Betaseron $1,518.42
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CANCER SPECIALTY RANK 3
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 7.2% Cost PMPY: $10.44
Price 13.1% # Rx PMPY: 0.0066Units per Prescription 0.2% Prevalence of Use: 0.2%Brand/Generic Mix -0.3% Average Cost/Rx: $1,592.69Therapeutic Mix -5.1% # Rx/User/Year: 3.92Utilization 5.5%Prevalence 8.3%Intensity -2.6%New Drugs 26.4%
TOTAL 39.5%
Cancer Market-Share Trend
The extensive pipeline for cancer therapies includes many different drugs for a variety of cancers.In 2007 alone, the FDA may approve nearly 20 new cancer agents.
Targeted therapies will play an increasingly important role in the treatment of cancer. While several investigational cancer drugs are administered by IV infusion, several oral cancer
drugs are also in development.
If approved for treating hormone-refractory prostate cancer, satraplatin will be the only oral platinumchemotherapy agent; all current platinum compounds are administered by IV.
Tasigna is a targeted tyrosine kinase inhibitor in development for the treatment of chronic myeloidleukemia (CML) in patients with resistance or intolerance to prior therapy.
Tykerb, another targeted therapy, was approved in March 2007. It is expected to play a key rolein the treatment of patients with advanced breast cancer.
Cancer Pipeline
Brand Generic Route of Administration Proposed Use Anticipated Availability
Onconase ranpirnase IV infusion Mesothelioma 2007
Provenge
sipuleucel-T IV infusion Prostate cancer 2007satraplatin Oral Prostate cancer 2007
Tasigna nilotinib Oral CML 2007
Torisel temsirolimus IV infusion Renal cell carcinoma 2007
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Lupron Depot $714.19
2002
PercentofPrescriptions
2003 20052004 2006
Xeloda $1,018.54
Temodar $1,841.17
Gleevec $2,958.07
Thalomid $3,728.36
Tarceva $2,640.27
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BLOOD CELL DEFICIENCY SPECIALTY RANK 4
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 5.0% Cost PMPY: $5.01
Price 1.8% # Rx PMPY: 0.0030Units per Prescription 0.7% Prevalence of Use: 0.1%Brand/Generic Mix 0... Average Cost/Rx: $1,682.69Therapeutic Mix 2.4% # Rx/User/Year: 4.54Utilization -0.9%Prevalence 5.3%Intensity -5.9%New Drugs 0...
TOTAL 4.0%
Blood Cell Deficiency Market-Share Trend
A decrease in the intensity of use held trend to 4.0% for this class. The class is dominated by erythropoietin (EPO) products, which stimulate the production of red blood cells.
Late in 2006, results of a few studies suggested that hematocrit and hemoglobin levels were elevatedtoo much with EPO therapies. Additional awareness may have lead to the overall drop in intensity.
Mircera is a long-acting EPO expected to be approved in mid-2007 for the treatment of anemiaassociated with chronic kidney disease. Mircera is dosed once-monthly compared to more frequent dosingregimens for similar drugs Aranesp, Epogen and Procrit. If approved, Mircera is expected to compete
in the market even though a trial concerning the EPO patent is not scheduled until September 2007. Leukine, which is already on the market for the treatment of neutropenia (low white blood cells), may be approvedin late 2007 for treating Crohns disease. Clinical trials for this use, however, have not been promising.
AMG-531 (injection) and Promacta (oral) are novel agents for idiopathic thrombocytopeniapurpura (ITP), a bleeding disorder related to low platelet counts.
Blood Cell Deficiency Pipeline
Brand Generic Route of Administration Proposed Use Anticipated Availability
Mircera continuous IV and SQ Anemia 2007erythropoietinreceptor activator
Leukine
* sargramostim IV and SQ Crohns disease 2007AMG 531 IV and SQ ITP 2008
Promacta eltrombopag Oral ITP 2008
ferumoxytol IV Anemia 2008
Macrotac lanimostim SQ AIDS, Osteoporosis, Burns 2008
Mozobil plerixafor SQ Stem cell mobilization 2008
*Already on the market for another indication
60%
50%
40%
30%
20%
10%
0%
Procrit $1,208.86
2002
PercentofPrescriptions
2003 20052004 2006
Aranesp $1,386.66
Neupogen $2,427.12
Neulasta $3,855.75
Epogen $1,213.17
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GROWTH HORMONE DEFICIENCY SPECIALTY RANK 5
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription 19.1% Cost PMPY: $4.59
Price 5.6% # Rx PMPY: 0.0018Units per Prescription 10.7% Prevalence of Use: 0Brand/Generic Mix 0... Average Cost/Rx: $2,552.01Therapeutic Mix 1.9% # Rx/User/Year: 8.47Utilization 2.9%Prevalence 6.3%Intensity -3.2%New Drugs 0.3%
TOTAL 22.8%
Growth Hormone Deficiency Market-Share Trend
Trend for growth hormones was driven largely by the 10.7% increase in units per prescription. Omnitrope, a growth hormone approved by the FDA in May 2006, entered the U.S. market
in early 2007. The FDA has been careful to point out that Omnitrope is not a generic biologic,but rather a follow-on protein.
Accretropin is a recombinant human growth hormone being developed for treating short stature
in children with growth hormone deficiency and girls with Turner syndrome. TH-9507 is an analogue of the growth hormone-releasing factor that induces growth hormone.It is being studied for the treatment of HIV-related lipodystrophy, often associated with accumulationsof fat around the neck and abdomen.
Growth Hormone Deficiency Pipeline
Brand Generic Route of Administration Proposed Use Anticipated Availability
Accretropin recombinant SQ Growth hormone deficiency 2007human growthhormone
TH-9507 SQ HIV-related lipodystrophy 2007
40%
35%
30%
25%
20%
15%
10%
5%
0%
Nutropin AQ $2,541.00
2002
PercentofPrescriptions
2003 20052004 2006
Humatrope $2,271.77
Genotropin $2,409.64
Norditropin $2,780.75
Saizen $2,233.21
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HEPATITIS C SPECIALTY RANK 6
COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006
Cost per Prescription -2.5% Cost PMPY: $3.45
Price 6.7% # Rx PMPY: 0.0030Units per Prescription -0.1% Prevalence of Use: 0Brand/Generic Mix -10.1% Average Cost/Rx: $1,132.78Therapeutic Mix 1.7 # Rx/User/Year: 10.17Utilization -5.9%Prevalence -11.0%Intensity 5.7%New Drugs 0...
TOTAL -8.3%
Hepatitis C Market-Share Trend
Decreases in both cost per prescription and utilization contributed to an 8.3% drop in trend for 2006. The increased use of generic ribavirin was the primary factor contributing to the 2.5% decrease in
cost per prescription for the class. Utilization is also decreasing as physicians wait for new treatment options for patients who have
not responded to current therapies. Several oral products are among new treatment options in development for hepatitis C. At least
initially, many of the oral drugs will be combined with ribavirin or pegylated interferon. Viramidine is activated into ribavirin in the liver. Although studies have shown a decreased incidence
of hemolytic anemia for Viramidine compared to ribavirin, it may also be less effective. Viramidinesapproval may be delayed as additional weight-based dosing trials are conducted.
Merimepodib is an oral drug that increases the intracellular activity of ribavirin. The next big class of drugs that shows promise for hepatitis C is the oral protease inhibitors,
including telaprevir. A clinical trial showed that telaprevir produced high viral response rates whenadded to ribavirin and pegylated interferon in patients with difficult-to-treat genotype 1 hepatitis C.
Hepatitis C Pipeline
Brand Generic Route of Administration Proposed Use Anticipated Availability
Viramidine taribavirin Oral Hepatitis C 2007merimepodib Oral Hepatitis C 2008
telaprevir Oral Hepatitis C 2008
Zadaxin thymosin alpha 1 SQ Hepatitis C 2008(thymalfasin)
60%
50%
40%
30%
20%
10%
0%
ribavirin $633.52
2002
PercentofPrescriptions
2003 20052004 2006
Pegasys $1,542.49
Peg-Intron Redipen $1,519.97
Ribasphere $545.84
Rebetol $1,000.30
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Forecast 4Express Scripts 2006 Drug Trend Report
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Forecast
Nonspecialty DrugsOur projections for changes in overall nonspecialty prescription-drug trends are shown in Exhibit 14.
Exhibit 14
Changes in PMPY Nonspecialty Ingredient Cost for Express Scripts Commercial Business
2005 and 2006 (Actual) and 2007 to 2010 (Projected)
In 2007, look for slightly higher growth in the number of prescriptions for acute conditions. Thecyclical nature of growth in acute-care drug classes likely will offset slowing of the double-digit
growth of hypnotics as the market for sleep aids reaches saturation and utilization-managementprograms become more prevalent.
We anticipate that use of cardiovascular drugs primarily antihypertensives, beta blockers andcalcium blockers will grow slightly faster in 2007 than in 2006. The expected release of severalnew brand-name antihypertensives will be a main factor in the increase. In a departure from previousforecasts, we no longer expect the use of prescription nonsedating antihistamines to drop offprecipitously in 2008 following additional movement of products to over-the-counter status. Most plansponsors are not likely to deny coverage of a class with an established generic such as fexofenadine,even as a powerful cost-saving measure. From 2008 through the end of the decade, look for overallutilization growth to hover in the 4% to 5% range.
By the end of 2007, the full effect of new generics introduced in 2006 and early 2007 will be feltas the first generic manufacturers lose exclusivity, additional manufacturers enter the market andcompetition drives down prices. These declines will be balanced by increases in cost due to twomajor factors: the loss of generics for OxyContin and Plavix, and the market removal of genericalbuterol inhalers that contain chlorofluorocarbons (CFCs). As CFC inhalers are phased out, lookfor albuterol inhalers to be in short supply and their costs to rise. Cost trend in hypnotics andstimulants, two classes with high 2006 cost trend, should moderate because generics are expectedfor market-leading products in each class.
In 2008 and 2009, look for overall costs to rise because few significant new generics are expected.Then, after reaching about 5% in 2009, cost increases should slow again in 2010 as another wave
of new generics hits the market.
Forecast
express scripts 2006 drug trend report 35
Cost
Rxs
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
2005 2006 2007 2008 2009 2010
0%
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Exhibit 15
2007 to 2010 Forecast for Selected Nonspecialty Therapy Classes
2006Trend
Rank Therapy Class 2007 2008 2009 2010 COMMENTS
1. Antihyperlipidemics -5.5% 10.2% 12.3% 0.7% A significant price drop is expected
in 2007 after a full year of generics
to Pravachol and Zocor. In 2010,
generic Lipitor will be available,
further reducing costs.
2. Gastrointestinals 7.1% 9.2% 10.2% -1.2% Expect a drop in utilization as clients
adopt new 3-tier PPI structures. Cost/Rx
will increase through 2009 in anticipation
of generics to Prevacid; the price will
drop in 2010, due to Prevacid generics
in late 2009.
3. Antidepressants 3.9% 9.2% 10.2% 8.1% The decline prompted by suicidality warnings
has subsided, and historical utilization growth
should return. Low-cost prescriptions will
be seen in 2007 due to a full year of multiple
manufacturers for generic Zoloft and
the full rollout of generic Wellbutrin XL.
The impact of Effexor XRs generic in
2010 will be tempered by the introduction
of PristiqTM in 2007.
4. Antidiabetics 18.8% 21.0% 23.2% 23.2% Introduction of new add-on products(JanuviaTM, Galvus) with unique
mechanisms of action and favorable
side-effect profiles will drive up both
utilization and cost through 2008. The
potential impact of inhaled insulin
is unknown.
5. Antiasthmatics 15.4% 11.2% 9.2% 7.1% HFA inhalers will replace CFC-containing
products and drive up cost dramatically
in 2007 and 2008. Symbicort, expected
to be more expensive than existingantiasthmatics, will drive up cost due
to mix in 2007. Advair Diskus generics
in 2010 may not reduce costs as much as
other generics due to difficulty in making
generic inhalers.
Forecast
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2006 Trend
Rank Therapy Class 2007 2008 2009 2010 COMMENTS
6. Antihypertensives 7.1% 6.1% 6.1% 6.1% Tekturna may have an impact on brand/
generic mix in 2007. Due in 2007, generics
for Lotrel and Univasc will lower cost in
2008. Generic Altace will drive down cost
in 2009. Cozaar goes generic in 2010.
7. Anticonvulsants 15.6% 13.4% 8.1% 10.2% Utilization remains stable through the end
of the decade. In 2007 and 2008, cost/Rx
should be driven by increased use of more
expensive brands. In 2009, generics to
Lamictal and Topamax will lower cost.
8. Narcotic Analgesics 20.8% 11.3% 12.4% 13.4% In 2007, removal of generics to OxyContin
will have a large impact on cost, but not
much impact on utilization. Inflation will
continue unchecked through 2012.
10. Antivirals 12.3% 12.3% 12.3% 1.9% A mild 2006 flu season resulted in
higher utilization and cost trends for 2007.
Look for trends to be consistent but cyclical
between utilization and cost through 2009.
Valtrex generics (in 2009) will decrease
2010 costs dramatically.
11. Stimulants/ 17.6% 11.3% 5.0% 9.2% Health concerns about ADHD drugs areAnti-Obesity lower. Utilization increases are expected
to stay flat. Generics for Concerta
expected in late 2007 will affect 2008
costs. Adderall XR generics are due in 2009.
14. Antihistamines 5.0% -14.5% -7.3% -7.3% Zyrtecs going OTC will reduce overall
class utilization by about 10% annually
beginning in 2008. Cost/Rx will also
decline as prescriptions move to
generic Allegra.
19. Hypnotics 9.8% 13.3% 0.4% 13.4% Utilization growth rates are expected todecline slightly through 2012. Cost/Rx will
drop in early 2007 due to Ambien generics
and again in 2009 when generics are
approved for Ambien CRTM and Sonata.
Other 7.1% 7.1% 8.2% 8.2%
Total 7.6% 8.6% 9.2% 7.5%
Forecast
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SPECIALTY DRUGSThe data sample in the 2006 Drug Trend Reportincludes only specialty drugs that were adjudicatedthrough the pharmacy benefit. By this measure, specialty drugs account for only 9.2% of the totalpharmacy-benefit ingredient cost. Since a large portion of specialty-drug spend is paid through themedical benefit, national figures adapted from IMS Health data put specialty spend at closer to 20%
of total drug costs (Exhibit 16). Furthermore, our analysis of 2006 U.S. prescription drug sales asreported by IMS Health estimates that total specialty trend was only 16.6% in 2006, compared withthe 20.9% trend shown in this report. This disparity may be explained, in part, by the much lowergrowth rate (4% to 6%) in hospital-drug expenditures4 because many specialty medications areadministered in the hospital and are billed under the medical benefit.
Exhibit 16
2006 and Projected 2010 Spend for Specialty Medications
Source: Express Scripts analysis of IMS Health data.
In this section of the Drug Trend Report, we have not simply extrapolated the overall specialty trendbetween 2005 and 2006 over the next few years. Instead, we have attempted to forecast growthin the top six specialty categories based on expected utilization and cost dynamics of the drugs ineach class. Then, class-specific estimates were combined with trend estimates for the remainingspecialty drugs. This final specialty forecast supplements our nonspecialty forecast to produce anoverall view of expected changes in the pharmacy benefit for the next four years.
Forecast
38 express scripts 2006 drug trend report
4 Hoffman JM, Shah ND, Vermeulen LC, et al. Projecting future drug expenditures--2007. Am J Health Syst Pharm. 2007;64(3):298-314.
20% 26%
2006 2010
Specialty Rx Spend$54 Billion
Specialty Rx Spend$99 Billion
Nonspecialty Rx Spend$284 Billion
Nonspecialty Rx Spend$221 Billion
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Specialty drug utilization is expected to slow in the next couple of years due to lower than historicalgrowth in a few categories. In the inflammatory conditions class, market expansion beyond thetreatment of rheumatoid arthritis (RA) has leveled off leading to a slowdown in the explosivegrowth seen since 1998. That deceleration is expected to continue even as new products, such asCimzia, are released and new indications, such as the Crohns disease indication for Humira,
are approved. Slower growth is also expected in the blood cell deficiencies category because severalrecent studies have reported safety issues with the use of erythropoietin (EPO).5, 6 Toward the endof the decade, utilization growth will be fueled by new products that are expected in 2008 and2009 for multiple sclerosis (MS) and hepatitis C, as well as by combination cancer therapies.
Cost-per-prescription growth will be dampened slightly by less expensive growth hormone productsexpected in 2007 and by true generic anticoagulants that should enter the market within the nextfew years. Additional downward pressure may be exerted by new oral medications for conditionssuch as MS, currently treated only by injectables. Movement toward new, more expensive productswill be the primary driver of cost-per-prescription growth in most therapy categories.
Exhibit 17
Changes in PMPY Specialty Ingredient Cost for Express Scripts Commercial Business
2005 to 2006 (Actual) and 2007 to 2010 (Projected)
Forecast
express scripts 2006 drug trend report 39
Cost
Rxs
30%
25%
20%
15%
10%
5%
2005 2006 2007 2008 2009 2010
0%
5 Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, Reddan D; CHOIR Investigators. Correction of anemia with epoetin alfain chronic kidney disease. N Engl J Med. 2006;355(20):2085-2098.
6 Wright JR, Ung YC, Julian JA, et al. Randomized, double-blind, placebo-controlled trial of erythropoietin in non-small-cell lung cancer
with disease-related anemia.J Clin Oncol. Epublished ahead of print. February 20, 2007.
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Exhibit 18
2007 to 2010 Forecast for Selected Specialty Therapy Classes
2006Trend
Rank Therapy Class 2007 2008 2009 2010 COMMENTS
1. Inflammatory 21.9% 21.9% 21.9% 21.9% New products such as CimziaTM and
Conditions new indications for existing drugs will
continue to drive increases in utilization.
Inflation will drive cost due to no new
follow-on generics and little competition
among brands.
2. Multiple Sclerosis 16.2% 16.3% 16.4% 15.4% New oral brands, which are expected in
2008 and 2009, may increase utilization
but decrease cost/Rx. Drugs currently
used to treat cancer may be approved
for MS potentially reducing the useof existing MS drugs.
3. Cancer 43.8% 38.0% 38.0% 38.0% New drugs and combination therapy
will drive up utilization.
4. Blood Cell 5.0% 6.1% 7.1% 7.1% Less growth is expected in utilization,
Deficiency primarily driven by recently publicized
safety concerns associated with the use
of EPO products for anemia.
5. Growth Deficiency 5.0% 10.2% 9.2% 9.2% OmnitropeTM, a less expensive follow-on
protein launched in January 2007, will
reduce this years cost/Rx. After 2007,expect slightly slower growth in
utilization and a return to consistent
inflationary cost/Rx increases.
6. Hepatitis C -0.3% -0.3% 12.4% 14.5% Current medications are not effective for
all patients, and no new therapies have
been introduced. New products expected
in 2009 and beyond are likely to increase
utilization. The introduction of generic
ribavirin continues to impact cost/Rx.
Other 24.2% 25.4% 26.5% 26.5% Other specialty categories are expectedto experience slightly higher than historical
growth as new products are introduced
for previously untreated or undertreated
conditions. Biogenerics in some categories
should help to slow overall growth in cost.
Total 21.2% 22.0% 23.5% 24.0%
Forecast
40 express scripts 2006 drug trend report
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Methods 5Express Scripts 2006 Drug Trend Report
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Methods
The analyses presented in the 2006 Drug Trend Reportare based on prescription-drug usefor two samples of approximately 3 million unique individuals each, one for 2005 and one
for 2006. Plan sponsors included in the samples: Maintained eligibility data for individual members in both 2005 and 2006 Used Express Scripts for both participating pharmacy and Home-Delivery services Offered a funded benefit (the plan sponsor providing the pharmacy benefit paid at least some
portion of the cost for prescriptions dispensed to its members)
Medicaid recipients and Medicare beneficiaries receiving prescription-drug benefits throughMedicare Part D plans or Managed Medicare Prescription Drug Plans (PDPs) were excluded fromthis study because of their unique demographics and medication-coverage policies.
In a departure from previous Drug Trend Reports, cost data in this Report are expressed on an
ingredient-cost basis corresponding to the actual contracted rates Express Scripts charges its clients.Dispensing fees, administrative fees, member contributions and rebates are not included in thecalculation of cost.
As was the case in earlier Drug Trend Reports, prescription counts have been converted to equivalentquantities that would have been dispensed through participating pharmacies to adjust for differentialHome-Delivery use rates and varying benefit structures. Medications sold over the counter andprescriptions dispensed in inpatient settings are not included in this analysis. Trends are reportedand discussion presented for two separate groupings of drugs: nonspecialty drugs and usuallyexpensive medications requiring special handling and patient care com