Biotech Drug Spending Increases 21 Percent Even as Growth in Rx Expenditure Slows

ST. LOUIS--(BUSINESS WIRE)--Apr 25, 2007 - Express Scripts (Nasdaq: ESRX), a leading pharmacy benefit manager, today announced spending on high-cost biotech drugs increased 21 percent in 2006. This increase excludes spending for biotech drugs within the medical benefit, such as those administered in physician offices or other therapies that traditionally fall into the medical benefit. Spending increased 25 percent in 2005. Released at the company's annual Outcomes Conference, the 2006 Drug Trend Report also estimates overall biotech drug costs will reach $99 billion by 2010 accounting for 26 percent of total drug spending.

The biotech spending increase reflects the growing demand for medications once prescribed to treat only rare genetic diseases. These drugs, which require special handling as well as close supervision and monitoring of the patient's medication therapy, have recently been proven effective to treat more common conditions such as cancer, hepatitis C, rheumatoid arthritis, HIV/AIDS and infertility.

"The average cost of a biotech drug can be 10, 15 or 20 times higher than the average cost of a traditional drug," notes Dr. Steve Miller, Express Scripts chief medical officer. "We must focus our efforts on properly managing the costs of biotech drugs to ensure the pharmacy benefit is protected and preserved for the future."

Of the six top biotech drug classes, five saw an increase in spending:

-- Cancer therapies had the largest increase in spending at 39.5 percent, which was driven by new treatments including three new drugs introduced in 2006 (Nexavar(R), Revlimid(R) and Sutent(R)).

-- Multiple sclerosis spending increased 19 percent as a result of higher drug prices.

-- Growth hormone deficiency spending rose 22.8 percent last year due to a 10.7 percent increase in the number of units per prescription and a rise in prescriptions for uses other than growth deficiencies in children. "Plan sponsors may want to take advantage of prior authorization programs to review the alternative uses for cost savings opportunities," adds Miller.

-- Drugs to treat inflammatory conditions experienced a 22.7 percent rise with additional treatment indications such as Humira(R) for psoriatic arthritis and an overall increased confidence in prescribing this class of drugs.

Hepatitis C was the only therapy class in the top six with a decrease in spending. This class saw an 8.3 percent drop as a result of lower cost per prescription and lower utilization. The increased use of generic ribavirin was the primary factor contributing to the lower cost per prescription for the class. Hepatitis C is treated with a combination therapy of interferons and ribavirin, a non-biologic, small molecule drug. Generic ribavirin was approved by the Food and Drug Administration (FDA) in 2004.

Unlike other specialty drug classes, Hepatitis C therapies benefit from the availability of generic drugs. The FDA does not currently have a process in place to approve generic biotech drugs.

"Generic versions of biotech drugs can be a vital tool in the future of managing costs," says Miller. An Express Scripts study estimates generic biotech medicines could save U.S. plan sponsors and patients $71 billion over 10 years, with $3.5 billion of the savings occurring the first year. Congress is currently debating legislation that would create a more streamlined FDA approval process for generic biotech drugs, allowing generics to enter the market more quickly, and potentially saving billions of dollars.

2006 Drug Trend Report - Other Findings

-- The study also revealed that spending for non-specialty drugs slowed to a record low level - from 7.9 percent in 2005 to 5.9 percent last year, including both plan and patient costs. Contributing to the decline were lower drug utilization for treating acute conditions due to a mild cold and flu season, as well as the introduction of new generic drugs.

-- Spending on sleep aids - known as hypnotics - expanded an astonishing 36.9 percent fueled by the highest level of direct-to-consumer (DTC) advertising for any class in 2006 at $498 million. The number of patients using hypnotic sleep aids increased by 10.6 percent and the amount used by each patient grew by 5.3 percent for a total utilization growth of 16.5 percent.

-- Drug spending on a plan-sponsor level varied depending on the programs implemented by each Express Scripts' client to control spending; those implementing two such programs, in addition to Express Scripts' initiative for changing consumer behavior called GenericsToday(R) , experienced drug trends below 2 percent on average. In 2006, GenericsToday saved plan sponsors and patients $126 million through greater use of generic cholesterol-fighting drugs alone.

2006 Drug Trend Report - Methodology

The analyses presented in the Express Scripts 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.

Express Scripts, Inc. (Nasdaq: ESRX) is one of the largest pharmacy benefit management (PBM) companies in North America, providing PBM services to over 55 million patients through facilities in 13 states and Canada. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com.

Contact

Express Scripts, Inc.
Rita Holmes-Bobo, 314-702-7584
rholmesbobo@express-scripts.com

Posted: April 2007


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