Express Scripts 1999 Drug Trend Report: 

Seniors Hit Hardest By Record 17.4-Percent Prescription Drug Spending Increase

ST. LOUIS, June 27  -- Spending on prescription drugs increased a record 17.4 percent last year, with senior citizens 70 years or older seeing the biggest cost increases per prescription. Higher prescription costs and greater drug utilization drove the spending increase, which was less for plan sponsors that actively managed their pharmacy benefits.

These are among the findings included in the 1999 Drug Trend Report, released today by Express Scripts Inc. at its annual Outcomes Conference. The company is the nation's largest independent pharmacy benefit manager, serving more than 38 million Americans.

According to the report, the average cost of a prescription rose 9.6 percent in 1999, reflecting the effect of higher prices and other factors (see note to editor). Greater prescription drug utilization and, to a lesser extent, new drugs were responsible for the remainder of the spending increase. The result was a per-member-per-year (PMPY) average wholesale price (AWP) ingredient cost of $387.09 in 1999, up from $329.83 in 1998 (AWP does not reflect retail network discounts, mail discounts, dispensing fees and member contributions).

Analysis of a sample of the Express Scripts drug trend database showed the average cost of a prescription rising most rapidly for seniors 70 and above -- by 14.0 percent in the 70 to 79-year bracket and by 16.4 percent for those 80 and above.

At the Express Scripts Outcomes Conference, researchers reported on a study of prescription utilization patterns among seniors. Included in the study were more than 52,000 continuously enrolled seniors covered under commercial plans and over 20,000 enrollees of a Medicare + Choice plan. The Medicare + Choice plan portion of this study was funded by the Robert Wood Johnson Foundation's Changes in Health Care Organization and Financing Program.

Plan participants aged 65 or older enrolled in commercial health plans used an average of 29 prescriptions per year, more than four times the average seven prescriptions per year consumed by those younger than 65. The per-member-per-year cost difference between the two age groups was even greater: $1,185 vs. $267.

Also reported were findings, some of the first using pharmacy claims data, on how seniors responded to caps placed on their pharmacy benefit. Researchers found that, compared to seniors who did not exceed their prescription caps, seniors who had exceeded their plan's spending cap were significantly more likely to have stopped taking medicines across the 11 therapy categories most utilized by seniors. These categories were predominantly represented by therapies used to treat chronic conditions such as cardiovascular disease, diabetes, and hypothyroidism.

The risk of discontinuation was greatest among therapy categories used to treat cardiovascular disease, such as calcium channel blockers, antihyperlipidemics, and beta-blockers. Additionally, researchers found that, for a majority of therapy classes, less than half of those who stopped therapy resumed therapy once the benefit became available again the following year.

``Because seniors depend so heavily on prescription drugs, bear some of the highest costs and have such complex utilization patterns, providing them with prescription drug coverage is one of the biggest challenges currently on the pharmacy landscape,'' said Barrett Toan, chief executive officer of Express Scripts.

``Express Scripts believes there should be a prescription benefit for seniors, either through Medicare or some other initiative, but it should be understandable and simple to administer, and it should encourage cost-effective behavior by the beneficiary,'' he added.

Release of the Express Scripts 1999 Drug Trend Report and the senior prescription utilization study findings came during the company's annual Outcomes Conference, where more than 700 employer, managed care, medical and pharmacy benefit participants are reviewing the latest developments in the pharmaceutical landscape. Conference attendees are also learning how cost increases can be significantly lowered by proactively managing the pharmacy benefit; some Express Scripts clients that actively manage their pharmacy benefit program have actually cut their trend in half.

The Express Scripts 1999 Drug Trend Report showed that price increases were a major factor, accounting for nearly a third of the hike in drug spending. The top 50 common branded drugs, ranked by prescriptions filled, had price increases from zero to 15.6 percent between 1998 and 1999.

New drugs played a small but significant role last year, due to the unprecedented rapid adoption of the COX-II anti-rheumatic medications -- Searle's Celebrex(TM) and Merck's Vioxx®. ``Typically, the cost impact of new drugs is initially felt in the second or third years after their introduction, but these drugs clearly were exceptions last year,'' explained Toan.

``As we look to the future, new drugs are expected to play an even greater role in future cost acceleration as the Human Genome Project draws toward completion,'' said Toan, noting that the genome project already is contributing to a remarkable acceleration of drug discovery. According to the Express Scripts 1999 Drug Trend Report, ``The number and therapeutic promise of such innovations are exciting. However, the cost of these technological advances will likely be high.''

Common drug utilization, which most closely reflects the impact of direct-to-consumer advertising, once again played a major role in the overall cost increase, nearly doubling in its impact on the total spending increase to 6.2 percent in 1999 from 3.8 percent in 1998.

``Unlike price increases, which seemed to affect all drug classes broadly, the impact of increased utilization was concentrated in the most popular therapy classes. Americans are using more of the drugs they already use the most,'' said Toan. The biggest cost-increase impact due to greater utilization came from antihyperlipidemics, used to treat high cholesterol. Other leaders were antidepressants, gastrointestinals, and antihistamines.

Looking to the future, Express Scripts projects nearly a doubling of per-member-per-year costs over the next five years, from $387.10 in 1999 to $758.81 in 2004. This will occur despite an expected moderation in the annual rate of cost growth, beginning with a 2001 projected-growth rate of 16.5 percent. By 2004, the growth rate is projected at 12.1 percent.

``Although we believe the drug companies will moderate price increases due to increased public scrutiny, we also expect changes in plan designs like three-tier co-payment structures will encourage cost-effective behavior by plan participants. In addition, new technology, such as online prescription writing by physicians, can also help lower drug trend,'' observed Toan.

``We produce this comprehensive report on drug trend and conduct our annual Outcomes Conference to help plan sponsors provide a cost-effective pharmacy benefit that enhances health,'' explained Toan. The Express Scripts 1999 Drug Trend Report is one of the most thorough publicly available analyses of U.S. drug usage patterns and costs, including extensive detail for the top drug therapy classes. Electronic copies of the Express Scripts 1999 Drug Trend Report and synopses of Outcomes Conference presentations will be available at http://www.express-scripts.com .

Express Scripts is the nation's largest independent full-service pharmacy benefit manager (PBM). Express Scripts provides fully-integrated PBM services, mail-order pharmacy services; benefit design consultation; disease management; medical and drug data analysis services; medical information management services, including provider profiling and outcome assessments, through its subsidiary, Practice Patterns Science, Inc.; and informed decision counseling services through the Express Health Line(SM) division. The company also provides non-PBM services, including infusion therapy, through its subsidiary, Express Scripts Infusion Services and distribution services through its subsidiary, Express Scripts Specialty Distribution Services, Inc. Express Scripts is headquartered in St. Louis, Mo. More information about the company can be found at http://www.express-scripts.com .