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'Specialty Drug' Spending Climbs 26 Percent in 2003

Proportion of Overall Spending on Expensive Treatments Highest Among Children

May 18, 2004
Source: Medco Health Solutions, Inc.

Fueled by a biotech surge, spending on high-cost "specialty" medications for people with complex, chronic conditions -- ranging from rheumatoid arthritis to infertility -- grew 26.6 percent in 2003.  This represents a growth rate that is approximately double the national average increase in drug spend (13.4 percent), according to new data released today by Medco Health Solutions, Inc. (NYSE: MHS).

Medco's 2004 Drug Trend Report, which reviewed the company's top 150 clients, revealed data that points toward two therapeutic categories - rheumatoid arthritis and multiple sclerosis - which combined contributed to nearly 50 percent of pharmaceutical spending in the specialty drug category in 2003.  Rheumatoid arthritis drugs alone made up 50 percent of drug trend (the year-over-year growth in spending) under the pharmacy benefit.  Current spending on specialty drugs is approximately $25 billion and is expected to reach $40 billion by the end of 2006.  The annual cost of specialty drug therapy can range from $6,000 to more than $350,000 per patient.

"The pipeline for biotechnology drugs has become the fastest growing segment of drug trend in America," said Dr. Alan Lotvin, president, Specialty Pharmacy Services, Medco.  "To aggressively manage costs associated with specialty pharmaceuticals, Medco focuses on addressing the spend that is often buried within major medical claims.  Through a proprietary integrated data management system, we can help health plans and employers manage the rising costs of these expensive medications, while also delivering a high standard of personalized patient care."

The specialty drug trend analysis, highlighted in the Drug Trend Report, uncovers growth in spending and use of particular high-cost medications, including:

"As specialty medication use grows, health plans would be well advised to consider developing specific strategies to deal with the potentially destabilizing cost implications," said Lotvin.  "By considering options, such as the integration of major medical and pharmacy claims for specialty medications, tiered co-pays geared specifically for specialty medications, and coordinated clinical support services, plans can better equip themselves to address the challenges brought by this continually emerging category of treatment."

The specialty drug category is one of a number of pharmacy benefit issues reviewed in Medco's 2004 Drug Trend Report, one of the nation's most comprehensive examinations into the trends affecting prescription healthcare costs and strategies for managing them.  Other emerging trends reviewed in the report include:

Drug Trend & Spend

Cost Containment Strategies About Medco

Medco Health Solutions, Inc., a leading pharmacy benefit manager with the nation's largest mail order pharmacy operations, assists its customers to moderate the cost and enhance the quality of prescription drug benefits provided to members nationwide. Its customers include private- and public- sector employers and healthcare organizations. Medco is traded on the New York Stock Exchange under the symbol MHS. On the Net:

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this presentation should be evaluated together with the risks and uncertainties that affect our business, particularly those mentioned in the Risk Factors section of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.

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