2006 Drug Trend Report

April 2007
2006 Drug Trend Report
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.
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 safer and 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 been such 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 timely messaging. 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%, largely due to higher costs per prescription, increased utilization and the introduction of new medications. Increasingly, plan sponsors are choosing specialty-drug formularies to manage costs, successfully applying principles from traditional drug-formulary development. Even more importantly, they are using 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 prescription drugs safer and more affordable. Sincerely,
Preface
George Paz Chairman & Chief Executive Officer
express scripts 2006 drug trend report
Contents
Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overall Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nonspecialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Therapeutic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand/Generic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Units per Prescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Specialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Therapy Class Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nonspecialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antihyperlipidemics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gastrointestinals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antidepressants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antidiabetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antiasthmatics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antihypertensives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Anticonvulsants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Narcotic Analgesics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antivirals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stimulants/Anti-Obesity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Antihistamines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hypnotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Specialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inflammatory Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multiple Sclerosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blood Cell Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growth Hormone Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hepatitis C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nonspecialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Specialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 5 7 8 9 10 11 12 13 15 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 35 38 41
Executive Summary
1
Express Scripts 2006 Drug Trend Report
Executive Summary
OVERVIEW In 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 including several 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 offer alternatives to other brands within their therapy classes. Therapeutic conversion opportunities from a brand to a generic for a similar brand further increases cost savings for plan sponsors. EXPRESS SCRIPTS TAKES ACTION Express Scripts took advantage of these unprecedented cost-saving opportunities with GenericsToday SM, a program that combines state-of-the-art member communications, dedicated customer service and advanced technological features, such as automated refill reminders. Plan sponsors achieved previously unattainable trend reductions by using GenericsToday to augment more traditional plan-design features, such as 3-tier formularies, step therapy and copayment optimization. Exhibit 1 Ingredient-Cost Trend With and Without Generics Today 2005 to 2006
12% 10% 8% 6% Without GenericsToday 4% 2% 0% No Changes Added One Program Added Two+ Programs With GenericsToday
Executive Summary
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.
Executive Summary
TREND In 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 ingredient costs, a method that better reflects the value that Express Scripts brings to our clients. Exhibit 2 shows 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 seen in this decade. Both lower drug utilization for treating acute conditions and the introduction of new generics contributed to this decline. Despite smaller overall trend, however, some therapy classes continued their explosive growth. Hypnotics, for example, grew an astonishing 36.9%, fueled by the highest 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
16% 14% 12% 10% 8% New Methodology 6% 4% 2% 0% 2003 2004 2005 2006 Previous Methodology
At 20.9%, specialty drug costs within the pharmacy benefit increased more than three times faster than the nonspecialty rate. Specialty trend reflects the growing demand for specialty products, which are typically expensive and require significant individualized patient care. FORECAST Over 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 and a 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 nonspecialty drugs. Overall pharmacy and medical specialty spend is projected to grow by slightly more than 80% over the next four years, rising to 26% of total drug spend. Specialty drug cost under the pharmacy benefit is expected to grow even faster by more than double as specialty costs transfer from the medical benefit.
Overall Drug Trend
2
Overall Drug Trend

For 2006, trends have been measured in terms of per member per year (PMPY) ingredient costs for Express Scripts group members with funded, integrated benefits. This year marks the first time that trends 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 costs rose 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 trend was analyzed in terms of the following major dimensions: Changes in the ingredient cost per prescription of common drugs (medications that were dispensed 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
Overall Drug Trend
NONSPECIALTY DRUG TREND

Exhibit 3 Components of PMPY Nonspecialty Cost Trend 2002 to 2006 *
AWP Less Discount 2002 v 2003 Nonspecialty AWP Less Discount 2003 v 2004 Nonspecialty AWP Less Discount 2004 v 2005 Nonspecialty Ingredient Cost 2005 v 2006 Nonspecialty
Price X Units per Prescription X Brand/Generic Mix X Therapeutic Mix = Cost per Prescription X Utilization = Common Drugs + New Drugs = All Drugs
6.6% 0.3% -2.6% 2.6% 6.8% 6.8% 14.0% 0.5% 14.5%
6.0% 0.2% -2.6% 3.7% 7.2% 2.9% 10.4% 0.3% 10.6%
5.3% 0.1% -2.7% 0.8% 3.3% 4.0% 7.5% 0.4% 7.9%
4.3% 0.4% -2.9% 1.7% 3.5% 2.2% 5.8% 0.2% 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.
Overall Drug Trend
Trends for nonspecialty medications are further broken down into utilization, cost per prescription 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. Price 2. Therapeutic Mix 3. Brand/Generic Mix 4. Units per Prescription The remainder of this section presents general information for the 25 nonspecialty therapy classes 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 therapy classes both nonspecialty and specialty are in the Therapy Class Review section.
UTILIZATION Across the Express Scripts book of business, utilization of common nonspecialty prescription drugs 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 changes of 2.1% and 1.9%, respectively, in 2005. Growth slowed in several classes that had previous double-digit increases. Some classes even had negative growth. This reversal contributed to the decline from a 4% growth rate seen between 2004 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 utilization changes of -2% and 2.4, respectively, both dropped out of the top 25. Similarly, utilization of 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 new products: Ambien CR, Lunesta and Rozerem. The class of diagnostic products, which includes blood-sugar test strips, is new to the top 25 this year. It also showed double-digit growth 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 Therapy Class 2005 2006 Prevalence % Change Intensity Total
Overall Drug Trend
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Hypnotics Diagnostic Products Anticonvulsants Stimulants/Anti-Obesity Misc. GI Agents Antidiabetics Decongestants Antidepressants Antihyperlipidemics Narcotic Analgesics Migraine Products Gastrointestinals Antivirals Antiasthmatics Antihypertensives Antihistamines Beta Blockers Contraceptives Misc. Hematologicals Ophthalmic Products Antipsychotics Dermatologicals NSAIDs Misc. Endocrines Calcium Blockers Top 25 Other Total
0.14 0.08 0.23 0.14 0.06 0.57 0.18 0.86 0.99 0.56 0.07 0.55 0.08 0.45 1.10 0.28 0.57 0.48 0.10 0.18 0.08 0.31 0.33 0.22 0.34 8.92 4.14 13.06
0.16 0.09 0.25 0.15 0.06 0.60 0.19 0.90 1.04 0.59 0.07 0.58 0.09 0.46 1.12 0.29 0.58 0.49 0.10 0.18 0.08 0.30 0.32 0.21 0.31 9.20 4.15 13.34
10.6% 9.8% 9.2% 6.1% 9.3% 5.4% 7.0% 4.2% 3.9% 4.7% 4.9% 2.8% -0.1% 0.7% 2.7% 1.3% 1.4% 1.9% -0.8% 4.1% 1.0% 1.4% 0.3% -3.0% -7.1% -0.1% -0.8% 1.0%
5.3% 0.2% -1.2% 0.6% -2.3% 0.7% -1.2% 1.3% 1.3% 0.6% 0.1% 2.1% 4.2% 1.6% -0.6% 0.8% 0.4% -0.9% 1.9% -4.0% -1.8% -2.6% -2.6% -2.8% -0.3% 3.2% 1.2% 1.2%
16.5% 10.0% 7.9% 6.7% 6.7% 6.2% 5.7% 5.5% 5.3% 5.3% 5.0% 4.9% 4.1% 2.2% 2.1% 2.1% 1.8% 1.1% 1.1% -0.1% -0.9% -1.3% -2.4% -5.7% -7.4% 3.1% 0.3% 2.2%
PRICE Price represents the cost-per-prescription impact of manufacturers unit price changes (inflation) and changes in contractual rates negotiated with Express Scripts clients. These rates may be influenced by client mix, channel mix or market dynamics. Price does not include retrospective manufacturer 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 reported in previous years.The overall price rate included 6.9% for common brands and -5.7% for common generics. Common drugs were available in both years. The brand increase was driven by price changes in classes with consistently above-average cost increases. For example, major brand-name hypnotics and stimulants/anti-obesity drugs are nearing patent expirations. Historically, anticipated generic introductions have signaled high inflation. In several nonspecialty classes, market dynamics changed generics more than brands. As additional manufacturers begin selling the same generic, the price declines, and the lower price is passed on to 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
Rank Therapy Class Brand Price % Change Generic Total
Overall Drug Trend
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Hypnotics Stimulants/Anti-Obesity Antiasthmatics Antipsychotics Decongestants Antihistamines Misc. GI Agents Migraine Products Antivirals Antihyperlipidemics Antidiabetics Ophthalmic Products Contraceptives Misc. Endocrines Dermatologicals NSAIDs Diagnostic Products Antihypertensives Calcium Blockers Misc. Hematologicals Beta Blockers Antidepressants Gastrointestinals Narcotic Analgesics Anticonvulsants Top 25 Other Total
14.2% 11.9% 8.1% 7.5% 6.9% 8.2% 7.8% 6.4% 6.3% 5.9% 7.9% 6.1% 11.0% 5.1% 9.7% 7.4% 4.3% 6.4% 4.8% 3.6% 4.9% 5.5% 4.1% 14.5% 9.2% 6.8% 7.1% 6.9%
-2.7% -2.5% 10.0% 0.2% -7.2% -4.0% -3.3% -3.3% -1.7% -6.0% -5.7% -4.0% -0.9% 0.1% -4.5% -2.2% 26.5% -4.5% 0.1% -16.5% -4.2% -8.8% -12.1% -7.2% -22.0% -6.3% -4.4% -5.7%
13.8% 10.5% 8.2% 7.2% 6.7% 6.7% 6.5% 6.3% 5.9% 5.5% 5.2% 5.1% 5.0% 5.0% 5.0% 4.7% 4.3% 3.6% 3.3% 2.7% 2.5% 1.9% 1.8% 1.3% 0.6% 4.6% 3.3% 4.3%
THERAPEUTIC MIX Therapeutic mix reflects changes in market shares within therapy classes, new strengths of existing medications, and changes in overall market shares for each class. In 2006, therapeutic mix rose to 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, miscellaneous GI agents and antivirals. In each case, increases were due to new, more expensive brands. New to the top 25, the miscellaneous GI class includes several different types of drugs. Safety issues caused one of them, Zelnorm, to be withdrawn in March 2007. New dosages had significant effects on antivirals and contraceptives. Atripla, a new, once-daily combination medication for HIV, impacted antivirals; and a new contraceptive, Yaz , accounted for most new dosage impact in its class. One class had no appreciable change, but eight decreased due to therapeutic mix. NSAIDs continued to 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 Therapy Class General Therapeutic Mix New Dosages Overall Therapeutic Mix
Overall Drug Trend
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Anticonvulsants Misc. GI Agents Antivirals Beta Blockers Hypnotics Antidiabetics Antipsychotics Ophthalmic Products Antidepressants Narcotic Analgesics Misc. Endocrines Misc. Hematologicals Antiasthmatics Contraceptives Stimulants/Anti-Obesity Migraine Products Diagnostic Products Decongestants Antihypertensives Antihyperlipidemics Antihistamines Gastrointestinals Calcium Blockers Dermatologicals NSAIDs Top 25 Other Total
6.8% 4.1% 1.8% 3.3% 3.1% 2.9% 0... 1.3% 1.7% 0.2% 1.3% 1.2% 0.8% -1.4% -0.5% 0.2% 0... -0.1% -1.0% -1.1% -1.2% -1.4% -2.0% -2.6% -4.6% 0.8% 2.0% 1.4%
0.1% 0.6% 2.5% 0... 0... 0.1% 1.9% 0.6% 0... 1.3% 0... 0... 0... 2.2% 0.9% 0.1% 0... 0... 0.6% 0... 0... 0.2% 0... 0.2% 0... 0.3% 0.4% 0.4%
6.9% 4.7% 4.3% 3.3% 3.1% 2.9% 1.9% 1.9% 1.7% 1.5% 1.3% 1.2% 0.8% 0.8% 0.3% 0.3% 0... -0.1% -0.4% -1.1% -1.2% -1.3% -2.0% -2.4% -4.6% 1.2% 2.4% 1.7%
Overall Drug Trend
BRAND/GENERIC MIX Major new generic introductions continued in 2006, resulting in a 2.9% fall in nonspecialty trend due 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 their full 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 generics to Allegra resulted in a double-digit brand/generic mix trend for antihistamines, which led all classes 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 reversal in brand/generic-mix trend because generics for OxyContin and Plavix will be forced off the market by 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. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Antihistamines NSAIDs Decongestants Narcotic Analgesics Misc. Hematologicals Antihyperlipidemics Antidepressants Misc. Endocrines Antidiabetics Contraceptives Anticonvulsants Dermatologicals Calcium Blockers Beta Blockers Antihypertensives Stimulants/Anti-Obesity Antipsychotics Migraine Products Antivirals Misc. GI Agents Gastrointestinals Hypnotics Ophthalmic Products Diagnostic Products Antiasthmatics Top 25 Other Total
Allegra (2005) Mobic (2006) Flonase (2006) OxyContin (2005), Duragesic (2005), Actiq (2006) Plavix (2006) Pravachol (2006), Zocor (2006) Zoloft (2006) DDAVP (2005) Amaryl (2005) Ortho Tri-Cyclen (2004) Zonegran (2005) Elocon (2006) Plendil (2004) Toprol-XL (2006) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
-11.8% -10.7% -10.5% -9.1% -8.3% -5.6% -2.5% -2.0% -1.8% -1.6% -1.6% -1.3% -0.5% -0.4% -0.3% -0.3% -0.2% -0.2% -0.2% -0.1% -0.1% -0.1% -0.1% 0... 0... -2.8% -3.4% -2.9%
10
UNITS PER PRESCRIPTION Within the top 25 nonspecialty classes, changes in the number of units per prescription increased overall nonspecialty 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 analgesics class 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 for glaucoma 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
Overall Drug Trend
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
Narcotic Analgesics Dermatologicals Diagnostic Products Migraine Products Gastrointestinals Antidiabetics Misc. Endocrines Antipsychotics Antidepressants Beta Blockers Hypnotics Antihistamines Stimulants/Anti-Obesity Misc. Hematologicals Decongestants Antiasthmatics Contraceptives Antihypertensives Antihyperlipidemics Anticonvulsants Calcium Blockers Antivirals NSAIDs Misc. GI Agents Ophthalmic Products Top 25 Other Total
4.0% 1.8% 1.7% 1.5% 1.2% 1.1% 0.8% 0.7% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% -0.1% -0.1% -0.3% -0.3% -0.4% -0.5% -0.6% -0.6% 0.5% 0.4% 0.4%
11
Overall Drug Trend
NEW DRUGS In 2006, new drugs contributed only about 0.2% toward overall nonspecialty trend one of the lowest new drug impacts in the 11 years that the Drug Trend Report has been published. In 2006, the U.S. Food and Drug Administration (FDA) approved 18 new molecular entities (active drugs that are 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 nonspecialty class 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 ) were approved in 2006. Exhibit 9 Number of New Drug Approvals by the FDA 2002 to 2006
35 30 25 20 15 10 5 0 2002 2003 2004 2005 2006 New Molecular Entitites Therapeutic Biologicals
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

Brand Name Generic Name Therapy Class PMPY Cost % New Drug
1. Avandaryl 2. Chantix 3. Levemir 4. Januvia 5. Amitiza 6. Apidra 7. Oracea 8. Azilect 9. Ranexa 10. Prezista
rosiglitazone and glimepiride varenicline insulin detemir sitagliptin lubiprostone insulin glulisine doxycycline rasagiline ranolazine darunavir Top 10 Other Total
Antidiabetics Misc. CNS Agents* Antidiabetics Antidiabetics Misc. GI Agents Antidiabetics Dermatologicals Antiparkinsons Agents* Antianginals* Antivirals
$0.21 $0.21 $0.14 $0.07 $0.06 $0.04 $0.04 $0.04 $0.03 $0.02 $0.88 $0.16 $1.03
20.4% 20.3% 13.9% 6.9% 6.1% 4.3% 4.3% 3.4% 3.3% 2.0% 84.8% 15.2% 100.0%
* Not in the top 25 classes
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.
12
SPECIALTY DRUG TREND

The 20.9% trend for specialty drugs resulted mainly from just a few drug categories, with the top six accounting for more than 77% of specialty prescriptions filled through the pharmacy benefit. Steady and significant cost increases, especially in the multiple sclerosis (MS) and growth deficiency classes, 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 and Humira, were primary contributors because 2006 was the first full year that both had expanded indications for psoriatic arthritis. Additionally, Humira was approved as a first-line treatment for moderate-to-severe rheumatoid 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
2005 PMPY 2006 % Change Utilization % Change Cost/Rx New Drugs
Overall Drug Trend
1. Inflammatory Conditions 2. Multiple Sclerosis 3. Cancer 4. Blood Cell Deficiency 5. Growth Hormone Deficiency 6. Hepatitis C 7. Anticoagulants 8. Infertility 9. Respiratory Conditions 10. Hemophilia Top 10 Classes Other Total
$15.52 $11.43 $ 7.49 $ 4.81 $ 3.74 $ $ $ $ 3.76 2.63 2.62 2.17
$19.04 $13.60 $10.44 $ 5.01 $ 4.59 $ $ $ $ 3.45 3.34 2.58 2.54
22.7% 19.0% 39.5% 4.0% 22.8% -8.3% 26.7% -1.6% 17.1% 69.9% 20.1% 29.8% 20.9%
15.8% 3.4% 6.5% -2.6% 2.9% -5.9% 20.6% -0.2% 3.2% 36.1% 7.0% 15.8% 7.7%
5.8% 15.1% 6.2% 6.8% 19.1% -2.5% 5.0% -1.4% 13.5% 24.8% 8.9% 10.0% 9.0%
0.1% 0... 26.4% 0... 0.3% 0... 0... 0... 0... 0... 3.6% 2.4% 3.5%
$ 1.01 $55.19 $ 4.83 $60.02
$ 1.72 $66.31 $ 6.27 $72.58
Although new drugs made only a minor impact on nonspecialty cost, new specialty therapies accounted for a hefty 16.9% of overall specialty trend. In 2006, most new specialty medicines were introduced to treat various types of cancer, causing an historical impact of over 26% in the class. New cancer drugs 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)
13
14
Overall Drug Trend
NOTES:
Therapy Class Review
3

This section includes detailed information on selected therapy classes that have had a notable impact on drug trend. For 2006, we focused on 12 high-impact nonspecialty therapy classes and the top six specialty classes. For each class that was selected, components of utilization and cost have been 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 rates charged to Express Scripts clients. Additionally, market-share trends have been charted, points of interest have been noted, and new drugs and generics that are expected in the immediate future 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 2006
Ranked by 2006 PMPY Cost
PMPY Cost 2005 2006 % Change 2005 Cost per Prescription 2006 % Change
Antihyperlipidemics Gastrointestinals Antidepressants Antidiabetics Antiasthmatics Antihypertensives Anticonvulsants Narcotic Analgesics Antivirals Stimulants/Anti-Obesity Antihistamines Hypnotics Other Total
$ 80.75 $ 55.06 $ 53.25 $ 34.87 $ 34.30 $ 36.32 $ 21.60 $ 21.77 $ 15.99 $ 14.15 $ 15.10 $ 8.78 $284.11 $676.05
$ 83.68 $ 58.74 $ 57.01 $ 40.25 $ 38.28 $ 38.13 $ 24.60 $ 22.31 $ 18.31 $ 16.72 $ 14.36 $ 12.02 $291.84 $716.26
3.6% 6.7% 7.1% 15.5% 11.6% 5.0% 13.8% 2.5% 14.5% 18.2% -4.9% 36.9% 2.7% 5.9%
$ 81.59 $100.34 $ 62.11 $ 61.27 $ 76.35 $ 33.16 $ 92.72 $ 39.02 $195.44 $102.47 $ 53.95 $ 64.34 $ 39.91 $ 51.78
$ 80.30 $102.04 $ 63.00 $ 66.24 $ 83.35 $ 34.10 $ 97.80 $ 37.99 $214.89 $113.46 $ 50.27 $ 75.60 $ 40.93 $ 53.64
-1.6% 1.7% 1.4% 7.5% 9.2% 2.8% 5.5% -2.7% 9.9% 10.7% -6.8% 17.5% 2.6% 3.6%
15
ANTIHYPERLIPIDEMICS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL -1.6% 5.5% -0.1% -5.6% -1.1% 5.3% 3.9% 1.3% 0... 3.6% KEY FACTS 2006
NONSPECIALTY RANK 1
Cost PMPY: $83.68 # Rx PMPY: 1.04 Prevalence of Use: 11.1% Average Cost/Rx: $80.30 # Rx/User/Year: 9.40
Antihyperlipidemics Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Lipitor $85.68 Generics $54.32 Vytorin $77.74 Crestor $78.31 Zocor $120.09 Zetia $74.75 TriCor $84.43
The most significant event during 2006 was the availability of first-time generics to the lower strengths of Pravachol and all strengths of Zocor . As a result, overall trend for the class decreased 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 the next 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 achieve both 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 cholesterol goals. Torcetrapib was being developed to raise HDL cholesterol.
Drug Indication Pipeline or Patent Expiration Anticipated Availability
Simcor
(simvastatin/Niaspan)
Dyslipidemia Dyslipidemia
Pipeline Pipeline
2008 2008
MK-0524A
16
GASTROINTESTINALS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 1.7% 1.8% 1.2% -0.1% -1.3% 4.9% 2.8% 2.1% 0... 6.7% KEY FACTS 2006
NONSPECIALTY RANK 2
Gastrointestinals Market-Share Trend

40% 35% Percent of Prescriptions 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006 Generics $43.15 Nexium $139.88 Prevacid $140.42 Protonix $111.35 AcipHex $143.18
Proton pump inhibitors (PPIs) are expected to continue dominating the class into the next decade since 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 competition could be delayed until 2008. Other nonprescription PPIs are expected to become available near the end of the decade.
TAK-390MR
(eslansoprazole)
Acid-related GI disease Frequent heartburn
Pipeline Patent Expiration
2008 2008*
Prilosec OTC
(omeprazole) *Litigation
17
ANTIDEPRESSANTS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 1.4% 1.9% 0.3% -2.5% 1.7% 5.5% 4.2% 1.3% 0.1% 7.1% KEY FACTS 2006
NONSPECIALTY RANK 3
Antidepressants Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Generics $32.62 Lexapro $73.11 Effexor XR $122.36 Zoloft $85.70 Wellbutrin XL $128.86 Cymbalta $121.05
First generics to Zoloft , Parnate and Effexor became available in 2006. Additional generics for Zoloft were approved in February 2007. The availability of generics to Wellbutrin XL still depends upon 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 concerns over the use of antidepressants. The pipeline drug Pristiq the active metabolite and follow-on product to Effexor is being studied for treating both depression and vasomotor symptoms associated with menopause.
Pristiq
(desvenlafaxine)
Depression Depression Depression Depression Depression
Pipeline Pipeline Pipeline Patent Expiration Patent Expiration
2007 2008 2008 Pending In litigation
saredutant SR 58611 Wellbutrin XL

(bupropion extended release)
Paxil CR
(paroxetine controlled release)
18
ANTIDIABETICS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 7.5% 5.2% 1.1% -1.8% 2.9% 6.2% 5.4% 0.7% 1.4% 15.5% KEY FACTS 2006
NONSPECIALTY RANK 4
Antidiabetics Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Generics $21.79 Avandia $128.87 Actos $146.73 Lantus $102.38 Humalog $141.51
The overall 2005 to 2006 trend of 15.5% in the antidiabetics category was similar to the 13.4% seen from 2004 to 2005. The cost component of antidiabetics trend is expected to increase as new branded products with novel mechanisms of action enter the market. In addition, a lack of first-time generics will 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, which should become available in 2008, will compete with Januvia. After a significant delay, the FDA approved the first inhaled insulin product, Exubera, in 2006.
Januvia /metformin saxagliptin Galvus (vildagliptin)
Type 2 diabetes Type 2 diabetes Type 2 diabetes
Pipeline Pipeline Pipeline
2007 2008 2008
19
ANTIASTHMATICS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 9.2% 8.2% 0.1% 0 0.8% 2.2% 0.7% 1.6% 0... 11.6% KEY FACTS 2006
NONSPECIALTY RANK 5
Antiasthmatics Market-Share Trend

40% 35% Percent of Prescriptions 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006 Generics $17.13 Singulair $88.03 Advair Diskus $154.28 Flovent HFA $96.55 Combivent $92.31
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 direct competitor 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 the body and patents on hydrofluoroalkane (HFA) propellants.
Alvesco
(ciclesonide)
Asthma/COPD* Asthma/COPD Asthma/COPD Asthma/COPD Asthma/COPD
2007 2007 2008 8/12/2008 2008 or 2010
Symbicort
(budesonide/formoterol)
Flutiform
(fluticasone/formoterol)
Serevent (salmeterol) Advair Diskus

(fluticasone/salmeterol)
20
*COPD = chronic obstructive pulmonary disease
ANTIHYPERTENSIVES
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 2.8% 3.6% -0.1% -0.3% -0.4% 2.1% 2.7% -0.6% 0... 5.0% KEY FACTS 2006
NONSPECIALTY RANK 6
Antihypertensives Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Generics $14.24 Diovan/Diovan HCT $58.98 Lotrel $79.98 Cozaar/Hyzaar $58.45 Altace $52.38
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 converting enzyme inhibitors (ACEIs) and angiotensin receptor blockers (ARBs). Although challenges to the Lotrel patents continue, both components found in Lotrel will be available as 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.
Rasilez
(aliskiren)
Hypertension Hypertension Hypertension Hypertension Hypertension
Pipeline Pipeline Patent Expiration Patent Expiration Patent Expiration
2007 2007 02/21/2007 09/25/2007* 10/10/2008*
Exforge
(amlodipine/valsartan)
Aceon (perindopril) Lotrel

(amlodipine/benazepril)
Altace (ramipril)
*Litigation/Settlement
21
ANTICONVULSANTS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 5.5% 0.6% -0.3% -1.6% 6.9% 7.9% 9.2% -1.2% 0... 13.8% KEY FACTS 2006
NONSPECIALTY RANK 7
Anticonvulsants Market-Share Trend

70% 60% Percent of Prescriptions 50% 40% 30% 20% Trileptal $181.91 10% 0% 2002 2003 2004 2005 2006 Generics $36.00 Topamax $206.17 Lamictal $224.12 Lyrica $121.55 Depakote $130.13
Trend in this category increased from 3.4% in 2005 to 13.8% in 2006. While utilization trend for anticonvulsants is not much higher than the previous years trend, the cost component rebounded in 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 treatment of nerve pain associated with diabetes. Off-label use continues to expand this market because anticonvulsants are often used for conditions such as bipolar disorder, neuropathic pain and migraine prophylaxis.
Xilep (rufinamide) Trileptal
Epilepsy Epilepsy Epilepsy/ Migraine
Pipeline Patent Expiration Patent Expiration
2008 2007 07/29/2008*
(oxcarbazepine)
Depakote/Depakote ER
(divalproex/divalproex extended release) *Litigation
22
NARCOTIC ANALGESICS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL -2.7% 1.3% 4.0% -9.1% 1.5% 5.3% 4.7% 0.6% 0.1% 2.5% KEY FACTS 2006
NONSPECIALTY RANK 8
Narcotic Analgesics Market-Share Trend

100% 95% Percent of Prescriptions 90% 85% 80% 75% 70% 2002 2003 2004 2005 2006 Generics $27.96
Overall narcotic analgesics trend of 2.5% in 2006 was similar to 2005s 1.9% because the cost 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 brand products 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 following a series of patent litigation settlements. When generics to Actiq were launched in late 2006, the follow-on brand product, Fentora, also became available.
tramadol extended release CIP-tramadol extended release BEMA fentanyl Rapinyl

(fentanyl transmucosal)
Pain Pain Pain Pain
Pipeline Pipeline Pipeline Pipeline
2007 2007 2008 2008
23
ANTIVIRALS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL Antivirals Market-Share Trend
50% 45% 40% Percent of Prescriptions 35% 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006
NONSPECIALTY RANK 10
KEY FACTS 2006 9.9% 5.9% -0.4% -0.2% 4.3% 4.1% -0.1% 4.2% 0.1% 14.5% Cost PMPY: $18.31 # Rx PMPY: 0.09 Prevalence of Use: 2.7% Average Cost/Rx: $214.89 # Rx/User/Year: 3.12
Valtrex $151.01 Generics $33.75 Tamiflu $64.08 Famvir $177.77 Sustiva $418.58 Truvada $737.64
Overall trend in the antivirals class was 14.5% in 2006, down from 23% in 2005. Much of the higher trend in 2005 was driven by concerns surrounding avian influenza. Increased utilization and stockpiling of the influenza drug, Tamiflu, also contributed. As with the antibiotics classes, the antivirals class is affected by seasonality and the severity 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 expected to 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. CCR5 receptor antagonists, such as maraviroc and vicriviroc, will help keep HIV from entering and infecting healthy T-cells. MK-0518, an integrase inhibitor, prevents the DNA of HIV from entering the DNA of healthy cells. If approved, these new medications likely will be used in combination with other therapies for the treatment of HIV.
maraviroc MK-0518 vicriviroc Zerit (stavudine)
HIV HIV HIV HIV
Pipeline Pipeline Pipeline Patent Expiration
2007 2008 2008 12/24/2008
24
STIMULANTS/ANTI-OBESITY
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 10.7% 10.5% 0.2% -0.3% 0.3% 6.7% 6.1% 0.6% 0... 18.2% KEY FACTS 2006
Stimulants/Anti-Obesity Market-Share Trend

35% 30% Percent of Prescriptions 25% 20% 15% 10% Focalin XR $119.48 5% 0% 2002 2003 2004 2005 2006 Generics $40.06 Adderall XR $122.14 Concerta $112.08 Strattera $146.58 Provigil $294.95
Trend in this category is primarily driven by stimulants for the treatment of attention-deficit hyperactive disorder (ADHD). Overall trend of 18.2% in 2006 was similar to the 20.7% increase in 2005. The cost component continues to drive trend in this class as the branded, once-daily products remain the standard of 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 FDA approved Vyvanse in February 2007.
Connexyn (guanfacine) Nuvigil (armodafinil) rimonabant SPD465 Concerta

(methylphenidate, extended release)
*Litigation/Citizens Petition
ADHD Excessive sleepiness Obesity ADHD ADHD
Pipeline Pipeline Pipeline Pipeline Patent Expiration
2007 2007 2007 2007 Pending*
25
ANTIHISTAMINES
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL -6.8% 9.7% 0.2% -11.8% -1.2% 2.1% 1.3% 0.8% 0... -4.9% KEY FACTS 2006
Antihistamines Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Generics $40.77 Zyrtec $56.77 Clarinex $72.62 Allegra $71.43
Even though utilization increased, overall trend in the antihistamines class was once again negative 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 competitors to 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 probably will be converted to nonprescription status after brand Xyzal becomes available but before the Zyrtec patent expires in December 2007.
Xyzal (levocetirizine) Clarinex (desloratadine) Zyrtec (cetirizine)

*Litigation
Allergies Allergies Allergies
Pipeline Patent Expiration Patent Expiration
2007 10/01/2007* 12/25/2007 (Rx to OTC)
26
HYPNOTICS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL Hypnotics Market-Share Trend
80% 70% Percent of Prescriptions 60% 50% 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006
KEY FACTS 2006 17.5% 13.8% 0.2% -0.1% 3.1% 16.5% 10.6% 5.3% 0... 36.9% Cost PMPY: $12.02 # Rx PMPY: 0.16 Prevalence of Use: 3.5% Average Cost/Rx: $75.60 # Rx/User/Year: 4.58
Ambien $86.13 Generics $8.64 Ambien CR $86.75 Lunesta $95.28 Sonata $90.70 Rozerem $72.53
The hypnotics class experienced another significant growth year in 2006, with an overall increase of 36.9%, compared with 31.6% in 2005. The 2006 increase was driven about equally by cost and utilization. Following its debut as the number 23 class in the 2005 Drug Trend Report, hypnotics jumped to 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.
gaboxadol indiplon, immediate release Silenor (doxepin) Ambien (zolpidem) Sonata (zaleplon)
*Litigation
Insomnia Insomnia Insomnia Insomnia Insomnia
2008 2008 2008 04/21/2007 10/06/2008*
27
SPECIALTY
Components of utilization and cost have been analyzed for the top six specialty classes, similar to our analyses for the top nonspecialty classes. Noteworthy trends in price, market share and new drugs have been reviewed for each featured specialty class. Pipelines are discussed for each class 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 resolved before 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 2005 2006 % Change Cost per Prescription 2005 2006 % Change
1. 2. 3. 4. 5.
6.
Inflammatory Conditions Multiple Sclerosis Cancer Blood Cell Deficiency Growth Hormone Deficiency Hepatitis C Other Total
$15.52 $11.43 $ 7.49 $ 4.81 $ 3.74
$19.04 $13.60 $10.44 $ 5.01 $ 4.59
22.7% 19.0% 39.5% 4.0% 22.8%
$1,397.48 $1,277.27 $1,271.21 $1,602.80 $2,143.28
$1,479.11 $1,469.93 $1,592.69 $1,682.69 $2,552.01
5.8% 15.1% 7.2% 5.0% 19.1%
$ 3.76 $13.26 $60.02
$ 3.45 $16.44 $72.58
-8.3% 24.0% 20.9%
$1,161.81 $1,107.32 $1,307.30
$1,132.78 $1,226.45 $1,454.14
-2.5% 10.8% 11.2%
Expanding therapeutic indications drove utilization trend for specialty therapies, chiefly in the inflammatory conditions class. Already approved for certain inflammatory conditions such as rheumatoid arthritis (RA), tumor necrosis factor (TNF) blockers Enbrel, Humira and Remicade continue to be studied for treating other autoimmune inflammatory conditions. Some existing specialty drugs are also used for multiple conditions. For example, several cancer therapies are also used to treat multiple sclerosis (MS) or hepatitis C. As additional indications are discovered and approved, both utilization and spend will continue to grow.
28
INFLAMMATORY CONDITIONS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 5.8% 6.0% -1.5% 0 1.4% 15.8% 17.9% -1.8% 0.1% 22.7% KEY FACTS 2006
SPECIALTY RANK 1
Cost PMPY: $19.04 # Rx PMPY: 0.0129 Prevalence of Use: 0.2% Average Cost/Rx: $1,479.11 # Rx/User/Year: 8.30
Inflammatory Conditions Market-Share Trend

100% 90% 80% Percent of Prescriptions 70% 60% 50% 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Kineret $1,209.44 Enbrel $1,436.32 Humira $1,534.59 Raptiva $1,514.96 Remicade $2,705.47
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 spondylitis and Crohns disease. The FDA approved Soliris, a monoclonal antibody, in March 2007. Approved initially for the treatment of a rare genetic blood disorder, paroxysmal nocturnal hemoglobinuria (PNH), Soliris is 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, adverse reactions (increased infections and elevated cholesterol levels) have been associated with its use. Inflammatory Conditions Pipeline
Brand Generic
Route of Administration
Proposed Use
Anticipated Availability
Cimzia Actemra
certolizumab tocilizumab
SQ IV infusion
Crohns disease, RA RA
2007* 2008
*May be approved earlier for an indication other than RA
29
MULTIPLE SCLEROSIS
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 15.1% 14.4% 0.4% 0 0.2% 3.4% 2.7% 0.6% 0 19.0% KEY FACTS 2006
SPECIALTY RANK 2
Multiple Sclerosis Market-Share Trend

70% 60% Percent of Prescriptions 50% 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Avonex $1,413.29 Copaxone $1,455.67 Rebif $1,568.42 Betaseron $1,518.42
Inflation continues to be the key driver of trend for drugs that treat multiple sclerosis (MS), with the 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 tolerable than 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 treatment of 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 Rituxan*
cladribine MBP-8298 rituximab teriflunomide
Oral IV infusion IV infusion Oral
MS MS MS, Lupus MS
2008 2008 2008 2008
*Already on the market for another indication

3
30
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.
CANCER
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL Cancer Market-Share Trend
45% 40% Percent of Prescriptions 35% 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006
SPECIALTY RANK 3
KEY FACTS 2006 7.2% 13.1% 0.2% -0.3% -5.1% 5.5% 8.3% -2.6% 26.4% 39.5% Cost PMPY: $10.44 # Rx PMPY: 0.0066 Prevalence of Use: 0.2% Average Cost/Rx: $1,592.69 # Rx/User/Year: 3.92
Lupron Depot $714.19 Xeloda $1,018.54 Temodar $1,841.17 Gleevec $2,958.07 Thalomid $3,728.36 Tarceva $2,640.27
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 platinum chemotherapy agent; all current platinum compounds are administered by IV. Tasigna is a targeted tyrosine kinase inhibitor in development for the treatment of chronic myeloid leukemia (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 role in the treatment of patients with advanced breast cancer. Cancer Pipeline
Onconase Provenge Tasigna Torisel
ranpirnase sipuleucel-T satraplatin nilotinib temsirolimus
IV infusion IV infusion Oral Oral IV infusion
Mesothelioma Prostate cancer Prostate cancer CML Renal cell carcinoma
2007 2007 2007 2007 2007
31
BLOOD CELL DEFICIENCY

COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 5.0% 1.8% 0.7% 0... 2.4% -0.9% 5.3% -5.9% 0... 4.0% KEY FACTS 2006
SPECIALTY RANK 4
Blood Cell Deficiency Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 Procrit $1,208.86 Aranesp $1,386.66 Neupogen $2,427.12 Neulasta $3,855.75 Epogen $1,213.17
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 elevated too 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 anemia associated with chronic kidney disease. Mircera is dosed once-monthly compared to more frequent dosing regimens 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 approved in 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 thrombocytopenia purpura (ITP), a bleeding disorder related to low platelet counts. Blood Cell Deficiency Pipeline
Mircera Leukine * Promacta Macrotac Mozobil
32
continuous erythropoietin receptor activator sargramostim AMG 531 eltrombopag ferumoxytol lanimostim plerixafor
IV and SQ IV and SQ IV and SQ Oral IV SQ SQ
Anemia Crohns disease ITP ITP Anemia AIDS, Osteoporosis, Burns Stem cell mobilization
2007 2007 2008 2008 2008 2008 2008
*Already on the market for another indication
GROWTH HORMONE DEFICIENCY

COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL 19.1% 5.6% 10.7% 0... 1.9% 2.9% 6.3% -3.2% 0.3% 22.8% KEY FACTS 2006
SPECIALTY RANK 5
Cost PMPY: $4.59 # Rx PMPY: 0.0018 Prevalence of Use: 0 Average Cost/Rx: $2,552.01 # Rx/User/Year: 8.47
Growth Hormone Deficiency Market-Share Trend

40% 35% Percent of Prescriptions 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006 Nutropin AQ $2,541.00 Humatrope $2,271.77 Genotropin $2,409.64 Norditropin $2,780.75 Saizen $2,233.21
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 accumulations of fat around the neck and abdomen. Growth Hormone Deficiency Pipeline
Accretropin
recombinant human growth hormone TH-9507
SQ
Growth hormone deficiency
2007
SQ
HIV-related lipodystrophy
2007
33
HEPATITIS C
COMPONENTS OF TREND 2005 TO 2006 Cost per Prescription Price Units per Prescription Brand/Generic Mix Therapeutic Mix Utilization Prevalence Intensity New Drugs TOTAL -2.5% 6.7% -0.1% -10.1% 1.7 -5.9% -11.0% 5.7% 0... -8.3% KEY FACTS 2006
SPECIALTY RANK 6
Cost PMPY: $3.45 # Rx PMPY: 0.0030 Prevalence of Use: 0 Average Cost/Rx: $1,132.78 # Rx/User/Year: 10.17
Hepatitis C Market-Share Trend

60% 50% Percent of Prescriptions 40% 30% 20% 10% 0% 2002 2003 2004 2005 2006 ribavirin $633.52 Pegasys $1,542.49 Peg-Intron Redipen $1,519.97 Ribasphere $545.84 Rebetol $1,000.30
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. Viramidines approval 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 when added to ribavirin and pegylated interferon in patients with difficult-to-treat genotype 1 hepatitis C. Hepatitis C Pipeline
Viramidine
Zadaxin
taribavirin merimepodib telaprevir thymosin alpha 1

(thymalfasin)
Oral Oral Oral SQ
Hepatitis C Hepatitis C Hepatitis C Hepatitis C
2007 2008 2008 2008
34
Forecast
4
Forecast
Nonspecialty Drugs
Our 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)
10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 2010 Cost Rxs
Forecast
In 2007, look for slightly higher growth in the number of prescriptions for acute conditions. The cyclical 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-management programs become more prevalent. We anticipate that use of cardiovascular drugs primarily antihypertensives, beta blockers and calcium blockers will grow slightly faster in 2007 than in 2006. The expected release of several new brand-name antihypertensives will be a main factor in the increase. In a departure from previous forecasts, we no longer expect the use of prescription nonsedating antihistamines to drop off precipitously in 2008 following additional movement of products to over-the-counter status. Most plan sponsors 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 overall utilization 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 felt as the first generic manufacturers lose exclusivity, additional manufacturers enter the market and competition drives down prices. These declines will be balanced by increases in cost due to two major factors: the loss of generics for OxyContin and Plavix, and the market removal of generic albuterol inhalers that contain chlorofluorocarbons (CFCs). As CFC inhalers are phased out, look for albuterol inhalers to be in short supply and their costs to rise. Cost trend in hypnotics and stimulants, two classes with high 2006 cost trend, should moderate because generics are expected for 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.
35
Forecast
Exhibit 15 2007 to 2010 Forecast for Selected Nonspecialty Therapy Classes

2006 Rank Trend 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. 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. 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. 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. HFA inhalers will replace CFC-containing products and drive up cost dramatically in 2007 and 2008. Symbicort, expected to be more expensive than existing antiasthmatics, 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.
2.
Gastrointestinals
7.1%
9.2%
10.2%
-1.2%
3.
Antidepressants
3.9%
9.2%
10.2%
8.1%
4.
Antidiabetics
18.8%
21.0%
23.2%
23.2%
5.
Antiasthmatics
15.4%
11.2%
9.2%
7.1%
36
Forecast
2006 Rank
Trend 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. 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. 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. 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. Health concerns about ADHD drugs are 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. 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. Utilization growth rates are expected to decline 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.
7.
Anticonvulsants
15.6%
13.4%
8.1%
10.2%
8.
Narcotic Analgesics 20.8%
11.3%
12.4%
13.4%
10.
Antivirals
12.3%
12.3%
12.3%
1.9%
11.
Stimulants/ Anti-Obesity
17.6%
11.3%
5.0%
9.2%
14.
Antihistamines
5.0%
-14.5%
-7.3%
-7.3%
19.
Hypnotics
9.8%
13.3%
0.4%
13.4%
Other Total
7.1% 7.6%
7.1% 8.6%
8.2% 9.2%
8.2% 7.5%
37
Forecast
SPECIALTY DRUGS
The data sample in the 2006 Drug Trend Report includes only specialty drugs that were adjudicated through the pharmacy benefit. By this measure, specialty drugs account for only 9.2% of the total pharmacy-benefit ingredient cost. Since a large portion of specialty-drug spend is paid through the medical 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 as reported by IMS Health estimates that total specialty trend was only 16.6% in 2006, compared with the 20.9% trend shown in this report. This disparity may be explained, in part, by the much lower growth rate (4% to 6%) in hospital-drug expenditures4 because many specialty medications are administered in the hospital and are billed under the medical benefit. Exhibit 16 2006 and Projected 2010 Spend for Specialty Medications
Specialty Rx Spend $54 Billion Specialty Rx Spend $99 Billion
20%
26%
2006
2010
Nonspecialty Rx Spend $221 Billion
Nonspecialty Rx Spend $284 Billion
Source: Express Scripts analysis of IMS Health data.
In this section of the Drug Trend Report, we have not simply extrapolated the overall specialty trend between 2005 and 2006 over the next few years. Instead, we have attempted to forecast growth in the top six specialty categories based on expected utilization and cost dynamics of the drugs in each class. Then, class-specific estimates were combined with trend estimates for the remaining specialty drugs. This final specialty forecast supplements our nonspecialty forecast to produce an overall view of expected changes in the pharmacy benefit for the next four years.
Hoffman JM, Shah ND, Vermeulen LC, et al. Projecting future drug expenditures--2007. Am J Health Syst Pharm. 2007;64(3):298-314.
38
Forecast
Specialty drug utilization is expected to slow in the next couple of years due to lower than historical growth in a few categories. In the inflammatory conditions class, market expansion beyond the treatment of rheumatoid arthritis (RA) has leveled off leading to a slowdown in the explosive growth seen since 1998. That deceleration is expected to continue even as new products, such as Cimzia, 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 several recent studies have reported safety issues with the use of erythropoietin (EPO).5, 6 Toward the end of the decade, utilization growth will be fueled by new products that are expected in 2008 and 2009 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 products expected in 2007 and by true generic anticoagulants that should enter the market within the next few years. Additional downward pressure may be exerted by new oral medications for conditions such as MS, currently treated only by injectables. Movement toward new, more expensive products will 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)
30% 25% 20% 15% Cost 10% Rxs 5% 0% 2005 2006 2007 2008 2009 2010
Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, Reddan D; CHOIR Investigators. Correction of anemia with epoetin alfa in chronic kidney disease. N Engl J Med. 2006;355(20):2085-2098. 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.
39
Forecast
Exhibit 18 2007 to 2010 Forecast for Selected Specialty Therapy Classes

2006 Rank Trend Therapy Class 2007 2008 2009 2010 COMMENTS
1.
Inflammatory Conditions
21.9%
21.9%
21.9%
21.9%
New products such as CimziaTM and 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. 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 use of existing MS drugs. New drugs and combination therapy will drive up utilization. Less growth is expected in utilization, primarily driven by recently publicized safety concerns associated with the use of EPO products for anemia. 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. 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 specialty categories are expected to 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.
2.
Multiple Sclerosis
16.2%
16.3%
16.4%
15.4%
3. 4.
Cancer Blood Cell Deficiency
43.8% 5.0%
38.0% 6.1%
38.0% 7.1%
38.0% 7.1%
5.
Growth Deficiency
5.0%
10.2%
9.2%
9.2%
6.
Hepatitis C
-0.3%
-0.3%
12.4%
14.5%
Other
24.2%
25.4%
26.5%
26.5%
Total
21.2%
22.0%
23.5%
24.0%
40
Methods
5
Methods
The analyses presented in the 2006 Drug Trend Report are based on prescription-drug use for 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 through Medicare Part D plans or Managed Medicare Prescription Drug Plans (PDPs) were excluded from this 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 the calculation of cost. As was the case in earlier Drug Trend Reports, prescription counts have been converted to equivalent quantities that would have been dispensed through participating pharmacies to adjust for differential Home-Delivery use rates and varying benefit structures. Medications sold over the counter and prescriptions dispensed in inpatient settings are not included in this analysis. Trends are reported and discussion presented for two separate groupings of drugs: nonspecialty drugs and usually expensive medications requiring special handling and patient care commonly referred to as specialty drugs. To establish variable utilization patterns across the spectrum of medications used by members sampled for the 2006 Drug Trend Report, medications were categorized into therapy classes, which are groups of pharmaceutical agents that are related, either chemically or therapeutically. For nonspecialty drugs, therapy classes were defined by the first two digits of the 14-digit Generic Product Identifier (GPI) code maintained by the MediSpan division of Wolters Kluwer Health, Inc. For specialty drugs, therapy classes were defined by the most common indication for which the drugs are prescribed.
Methods 41
2007 Express Scripts, Inc. All Rights Reserved PUB07-05423

2006 Drug Trend Report

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April 2007

2006 Drug Trend Report

George Paz Chairman & Chief Executive Officer

express scripts 2006 drug trend report

express scripts 2006 drug trend report

express scripts 2006 drug trend report

express scripts 2006 drug trend report

Overall Drug Trend

Overall Drug Trend

Overall Drug Trend

NONSPECIALTY DRUG TREND

6.6% 0.3% -2.6% 2.6% 6.8% 6.8% 14.0% 0.5% 14.5%

6.0% 0.2% -2.6% 3.7% 7.2% 2.9% 10.4% 0.3% 10.6%

5.3% 0.1% -2.7% 0.8% 3.3% 4.0% 7.5% 0.4% 7.9%

4.3% 0.4% -2.9% 1.7% 3.5% 2.2% 5.8% 0.2% 5.9%

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Overall Drug Trend

Exhibit 10 Top 10 New Nonspecialty Prescription Drugs of 2006

* Not in the top 25 classes

express scripts 2006 drug trend report

SPECIALTY DRUG TREND

Overall Drug Trend

$15.52 $11.43 $ 7.49 $ 4.81 $ 3.74 $ $ $ $ 3.76 2.63 2.62 2.17

$19.04 $13.60 $10.44 $ 5.01 $ 4.59 $ $ $ $ 3.45 3.34 2.58 2.54

$ 1.01 $55.19 $ 4.83 $60.02

$ 1.72 $66.31 $ 6.27 $72.58

express scripts 2006 drug trend report

Overall Drug Trend

express scripts 2006 drug trend report

Therapy Class Review

Therapy Class Review

Therapy Class Review

express scripts 2006 drug trend report

Therapy Class Review

Antihyperlipidemics Market-Share Trend

express scripts 2006 drug trend report

Therapy Class Review

Gastrointestinals Market-Share Trend

Acid-related GI disease Frequent heartburn

Pipeline Patent Expiration

express scripts 2006 drug trend report

Therapy Class Review

Antidepressants Market-Share Trend

Depression Depression Depression Depression Depression

Pipeline Pipeline Pipeline Patent Expiration Patent Expiration

2007 2008 2008 Pending In litigation

saredutant SR 58611 Wellbutrin XL

express scripts 2006 drug trend report

Therapy Class Review

Antidiabetics Market-Share Trend

Januvia /metformin saxagliptin Galvus (vildagliptin)