2006 drug trend julayna meyer, r.ph, mba vice president trend management

2006 Drug Trend

Julayna Meyer, R.Ph, MBAVice President Trend Management

2 2007 Express Scripts, Inc. All Rights Reserved.

2006 Drug Trend

I. Overall trend and spend

II. Future Drug Trend Projections

III. Key Therapy Classes

IV. The Results of Active Management

V. Ongoing opportunities to maximize the benefit


2006 Top DTC Advertised Classes

$100 Million

$200 Million

$300 Million

$400 Million

$500 Million

Source: JP Morgan March 19, 2007 Prescription Pad

$179Erectile Dysfunctio

n

$498Hypnotics

$446Cholesterol

$357Asthma

$221Osteoporosis

Hypnotics trend: 36.9%Hypnotics trend: 36.9%


What Do We 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– Plan specific results available through your

Account Management team

• We track specialty separately

More detailed information can be found in our Drug Trend Report


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price

Units per Rx

Brand/Generic Mix

Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend

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.


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx

Brand/Generic Mix

Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Brand Drug Prices UpGeneric Drug Prices Down

-8%

-4%

0%

4%

8%

Brand Prices Brand Prices Up 6.9%Up 6.9%

Brand Price Leaders:Brand Price Leaders:• Hypnotics up 13.8%Hypnotics up 13.8%• Stimulants/obesity up 10.5%Stimulants/obesity up 10.5%



-8%

-4%

0%

4%

8%




-8%

-4%

0%

4%

8%


Generic Prices Generic Prices Down 5.7%Down 5.7%


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%

Brand/Generic Mix

Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%

Brand/Generic Mix

Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend



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

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


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%

Brand/Generic Mix -2.3% -2.6% -2.6% -2.7% -2.9%

Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Top Brand/Generic Mix Changes

Rank Therapy Class

Key Generic Introduction

Therapy Class

Impact1 Antihistamines Allegra® (2005) -11.8%

2 NSAIDs Mobic® (2006) -10.7%

3 Decongestants Flonase® (2006) -10.5%

4 Narcotic Analgesics

OxyContin® (2005)Duragesic® (2005)Actiq® (2006)

-9.1%

5 Misc. Hematologics Plavix® (2006) -8.3%

6 AntihyperlipidemicsPravachol® (2006)Zocor® (2006)

-5.6%

7 Antidepressants Zoloft® (2006) -2.5%Ranked by Percent Change


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend



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.


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Top Therapeutic Mix Changes

-6% -4% -2% 0% 2% 4% 6% 8%

AnticonvulsantsAnticonvulsants• LyricaLyrica®® 6.9%6.9%

AntiviralsAntivirals• AtriplaAtripla®® 4.3%4.3%

Beta BlockersBeta Blockers• Coreg CR Coreg CR TMTM, Toprol XL, Toprol XL®® 3.3%3.3%

DermatologicsDermatologics•ElidelElidel®®-2.4%-2.4% •ProtopicProtopic®®

NSAIDsNSAIDs•COX-IIsCOX-IIs

-4.6%-4.6%

Ranked by Percent Change


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization

= Common Drugs

+ New Drugs

Overall Rx Trend




Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization 6.3% 6.8% 2.9% 4.0% 2.2%

= Common Drugs

+ New Drugs

Overall Rx Trend




Utilization

Prevalence

• Proportion of members utilizing drugs

• Impacted by diagnosis and therapy plan

2006 Prevalence Trend: 1%

Intensity

• Number of Rxs filled among utilizers

• Impacted by length of therapy

2006 Intensity Trend: 1.2%


Lowest Utilization Increase in 5 Years

-5%

0%

5%

10%

15%

20%

Antivirals Macrolides Quinolones Hypnotics Depression

2005 2006

% C

han

ge in

U

tiliza

tion


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization 6.3% 6.8% 2.9% 4.0% 2.2%

= Common Drugs 17.5% 14.0% 10.4% 7.5% 5.8%

+ New Drugs

Overall Rx Trend




Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization 6.3% 6.8% 2.9% 4.0% 2.2%

= Common Drugs 17.5% 14.0% 10.4% 7.5% 5.8%

+ New Drugs 1.0% 0.5% 0.3% 0.4% 0.2%

Overall Rx Trend




~Three-fold Drop in New DrugsCompared to 1996

Nature Reviews Drug Discovery 6, 99-101 (February 2007)

0

10

20

30

40

50

60

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

New Molecular Entities


Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization 6.3% 6.8% 2.9% 4.0% 2.2%

= Common Drugs 17.5% 14.0% 10.4% 7.5% 5.8%

+ New Drugs 1.0% 0.5% 0.3% 0.4% 0.2%

Overall Rx Trend




Component 2001:02

2002:03

2003:04

2004:05

2005:06

Price 7.5% 6.6% 6.0% 5.3% 4.3%

Units per Rx -0.1% 0.3% 0.2% 0.1% 0.4%


Therapeutic Mix 5.3% 2.6% 3.7% 0.8% 1.7%

= Cost per Rx 10.5% 6.8% 7.2% 3.3% 3.5%

X Utilization 6.3% 6.8% 2.9% 4.0% 2.2%

= Common Drugs 17.5% 14.0% 10.4% 7.5% 5.8%

+ New Drugs 1.0% 0.5% 0.3% 0.4% 0.2%

Overall Rx Trend 18.5% 14.5% 10.6% 7.9% 5.9%



?


12.9%

16.1% 16.8%

17.4%16.2%

16.7%

18.5%

14.5%

10.6% 7.9%

5.9%

0%

5%

10%

15%

20%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Lowest Drug Trend In a Decade

Express Scripts Internal Data, 2006

Note: Specialty tracked separately as of 2003

Dru

g T

rend


12.9%

16.1% 16.8%

17.4%16.2%

16.7%

18.5%

14.5%

10.6% 7.9%

5.9%

0%

5%

10%

15%

20%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Lowest Drug Trend In a Decade

Express Scripts Internal Data, 2006

Note: Specialty tracked separately as of 2003

80%

60%

40%

20%

0%

Generic F

ill RateD

rug

Tre

nd


Forecasted Single Digit Trends Through 2010

Projected non-specialty trends for ESI commercial plan sponsors. 2005-6 actual, 2007-10 estimated

0%

2%

4%

6%

8%

10%

2005 2006 2007 2008 2009 2010Rxs Cost

7.9% 5.9% 7.5% 8.5% 9.1% 7.5%


Brand Drugs Going Generic Soon

More than $50 billion within the next five years

An

nua

l Sa

les

$ B

illio

n

2007 2008 2009 2010 20110

3

6

9

12

15$11.2$11.2 $10.2$10.2 $8.6$8.6 $12.8$12.8 $8.5$8.5


Brand Drugs Going Generic Soon

More than $50 billion within the next five years

0

3

6

9

12

15

An

nua

l Sa

les

$ B

illio

n

ZyrtecZyrtecWellbutrin XLWellbutrin XL

ImitrexImitrex

AmbienAmbien

NorvascNorvasc

OtherOther

LamictalLamictalRisperdalRisperdal

FosamaxFosamax

Effexor XREffexor XR

Advair*Advair*

OtherOther

ValtrexValtrex

TopamaxTopamax

PrevacidPrevacid

OtherOther

CozaarCozaar

LipitorLipitor

OtherOther

LevaquinLevaquin

ZyprexaZyprexa

ActosActos

ProtonixProtonix

OtherOtherToprol XLToprol XL

Adderall XRAdderall XR

2007 2008 2009 2010 2011

$11.2$11.2 $10.2$10.2 $8.6$8.6 $12.8$12.8 $8.5$8.5


Top Five Therapy ClassesOverall Total Ingredient Costs, 2005:2006 PMPY

$0

$20

$40

$60

$80

$100

Lipids GI Depression Diabetes Asthma

2005 2006

PM

PY

3.6%3.6% 6.7%6.7% 7.1%7.1% 15.5%15.5% 11.6%11.6%


0%

5%

10%

15%

20%

25%

30%

Generic Antidepressant Market Share Gaps

Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006

citalopram actual

paroxetine actual

fluoxetine actual

Without action, our Without action, our SSRI generic use fell SSRI generic use fell short by about short by about 30%30%

Without action, our Without action, our SSRI generic use fell SSRI generic use fell short by about short by about 30%30%

fluoxetine ideal

paroxetine ideal

citalopram ideal


0%

5%

10%

15%

20%

25%

30%

Generic Antidepressant Market Share Gaps

Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006

We didn’t want the same We didn’t want the same thing to happen in the thing to happen in the biggest class -- Lipidsbiggest class -- Lipids

We didn’t want the same We didn’t want the same thing to happen in the thing to happen in the biggest class -- Lipidsbiggest class -- Lipids

citalopram actual

paroxetine actual

fluoxetine actual

fluoxetine ideal

paroxetine ideal

citalopram ideal

2006A Large Opportunity for

Savings In the Statin Class


Statin Market Shares

Q1-2 2005 Q3-4 2005 Q1-2 2006 Q3-4 2006

70%

60%

50%

40%

30%

20%

10%

0% ZocorZocor

Zocor gained market share prior to patent expirationZocor gained market share prior to patent expiration



Q1-2 2005 Q3-4 2005 Q1-2 2006 Q3-4 2006

70%

60%

50%

40%

30%

20%

10%

0% ZocorZocor

SimvastatinSimvastatin

Simvastatin continued on Zocor’s market growth curveSimvastatin continued on Zocor’s market growth curve



Q1-2 2005 Q3-4 2005 Q1-2 2006 Q3-4 2006

70%

60%

50%

40%

30%

20%

10%

0% ZocorZocor

SimvastatinSimvastatin

Generic HMGsGeneric HMGs

Generic drugs now lead the statin market.Generic drugs now lead the statin market.


Express Scripts Outperformed The Nation

Q1-2 2005 Q3-4 2005 Q1-2 2006 Q3-4 2006

70%

60%

50%

40%

30%

20%

10%

0%

ESI Generic ESI Generic HMGsHMGs

NMS Generic NMS Generic HMGsHMGs


Statin Trend

Without GenericsToda

y

With GenericsToda

y

-2% -1% 0% 1% 2% 3%


Statin Trend


y

With GenericsToda

y

-2% -1% 0% 1% 2% 3%

+2.0%+2.0%


Statin Trend


y

With GenericsToda

y

-2% -1% 0% 1% 2% 3%

-1.1%-1.1%

+2.0%+2.0%


Therapy Class #1: Lipids Generic Drugs Drove Down Trend

Class Trend: 3.6%

5.5%

0.0%

3.9%

1.3%

-1.1%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

-5.6%


Tremendous Generic OpportunityClass Trend: 6.7%

1.8%

-1.3%

2.1%

2.8%

0.0%

0.0%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #2: Gastrointestinals


Tremendous Generic OpportunityClass Trend: 6.7%

1.8%

-1.3%

2.1%

2.8%

0.0%

0.0%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #2: Gastrointestinals

??


Step Therapy Can Drive PPI Savings

PPI GFR Ingredient PMPY

Without PPI Step With PPI Step

$44$44

$63$63

3838%%

1414%%


Prevalence Drove Antidepressants

Class Trend: 7.1%

1.9%

1.7%

1.3%

4.2%

0.0%

-2.5%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #3: Antidepressants


Trend Driven By Prevalence

Class Trend: 15.5%

5.2%

2.9%

0.7%

5.4%

1.4%

-1.8%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #4: Diabetes


Price Drove AsthmaClass Trend: 11.6%

8.2%

0.8%

1.6%

0.7%

0.0%

0.0%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #5: Asthma


Hypnotics Are Growing QuicklyClass Trend: 36.9%

13.8%

3.1%

5.3%

10.6%

0.0%

-0.1%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price

Therapy Class #19: Hypnotics



13.8%

3.1%

5.3%

10.6%

0.0%

-0.1%

New Drugs

Intensity

Prevalence

Therapeutic Mix

Brand/Generic Mix

Price



Hypnotics Need Your Focus

2002 2003 2004 2005 2006

80%

70%

60%

50%

40%

30%

20%

10%

0%

AmbienAmbien

Ambien Ambien CRCRLunestaLunesta

SonataSonata

RozeremRozerem


Adding Programs Drives Savings

0%

5%

10%

Without GT With GT

>2 new programs

1 new program

No new programs

ESI 2006 Non-Specialty ESI 2006 Non-Specialty Trend: 5.9%Trend: 5.9%



10.0%9.6%

0%

5%

10%

Without GT With GT

>2 new programs

1 new program

No new programs



7.2%

10.0%

5.5%

9.6%

0%

5%

10%

Without GT With GT

>2 new programs

1 new program

No new programs



3.0%

7.2%

10.0%

5.5%

9.6%

1.8%

0%

5%

10%

Without GT With GT

>2 new programs

1 new program

No new programs


2006 Trend At An Encouraging 5.9%

• The more you manage, the lower your trend.

• Opportunities abound for managing out waste.

– PPI class represents a significant opportunity

– Don’t be asleep with Hypnotics spend

2006 drug trend julayna meyer, r.ph, mba vice president trend management

Documents

components of rx cost

drug trend report

drug trendoverall trend

osteoporosi trend

drug strengths

generic prices

drug trendjulayna meyer

total ingredient cost