More MS news articles for May 2004
Drug' Spending Climbs 26 Percent in 2003
Proportion of Overall Spending on Expensive Treatments Highest Among
May 18, 2004
Source: Medco Health Solutions, Inc.
Fueled by a biotech surge,
spending on high-cost "specialty" medications for people with complex,
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),
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
nearly 50 percent of pharmaceutical spending in the specialty drug
2003. Rheumatoid arthritis drugs alone made up 50 percent of
drug trend (the
year-over-year growth in spending) under the pharmacy benefit.
spending on specialty drugs is approximately $25 billion and is expected
reach $40 billion by the end of 2006. The annual cost of specialty
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,
Pharmacy Services, Medco. "To aggressively manage costs associated
specialty pharmaceuticals, Medco focuses on addressing the spend that
buried within major medical claims. Through a proprietary integrated
management system, we can help health plans and employers manage the
costs of these expensive medications, while also delivering a high
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,
Rapid rise in rheumatologics: Spending on treatments for rheumatoid
arthritis increased 80.6 percent, and utilization increased 71.2 percent.
Drug trend for rheumatologic conditions overall rose 64.5 percent last
year, driven by a 28.8 percent increase in unit costs and new drug introductions.
Growth among children: In 2003, specialty medications comprised
the largest proportion of the total prescription drug spend among children
under 19 years of age -- 8 percent. The 35-49 age group had the second
largest proportion of specialty spend at 5 percent. Specialty drugs
in seniors 65+ made up only 1 percent of their drug spend.
Specialty Drivers: Besides the dramatic increase in trend for rheumatologics,
cancer and hemophilia drugs drove trend in 2003 with jumps of more than
33 percent and 28 percent respectively.
"As specialty medication use grows, health plans would be well advised
consider developing specific strategies to deal with the potentially
destabilizing cost implications," said Lotvin. "By considering
as the integration of major medical and pharmacy claims for specialty
medications, tiered co-pays geared specifically for specialty medications,
coordinated clinical support services, plans can better equip themselves
address the challenges brought by this continually emerging category
Overflowing Pipeline: More than 195 biotech drugs are in Phase
II or Phase III clinical development. Currently, 178 biotech drugs
are in development for cancer therapies; 47 for infectious diseases; 26
for autoimmune diseases; and 21 for AIDS/HIV.
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
Drug Trend & Spend
Drug Trend Falls for Third Straight Year: While drug trend
sits at a national average of 13.4 percent, Medco reported that its clients
saw a drug trend rate significantly lower (10.2 percent); more than 50
percent of Medco's clients recorded trend rates below 10 percent.
CNS Drugs Take the Top Spot: In 2003, central nervous system
medications, including treatments for attention deficit/hyperactivity disorder
(ADHD), overtook cardiovascular drugs as the largest single category of
spending, accounting for 24.8 percent of overall plan spending.
Pediatric Spending Continues to Rise: Spending on prescription
drugs for children under age 19 grew at a higher rate last year (9.5 percent)
than for any other age group; this is the third straight year the pediatric
category has been the No. 1 age group driving drug trend.
Cost Containment Strategies
Overall Pipeline Slows but Blockbusters Expected: During 2003, the
Food and Drug Administration (FDA) approved only 21 new molecular entities,
just four more than 2002, and only 72 new drug applications, well below
the high of 131 in 1996. Despite this decline, several blockbuster drugs
are expected to come to market in 2005, including Exanta(R) (ximelagatran)
for the prevention of blood clots and stroke; Alvesco(TM) (ciclesonide)
for asthma; Arcoxia(TM) (etoricoxib) for the treatment of chronic pain
often associated with osteo- and rheumatoid arthritis; Cymbalta(R) (duloxetine)
for depression; Genasense(TM) (oblimersen) for cancer treatment; a Zocor(R)/Zetia(R)
(simvastatin/exetimibe) combination for treating high cholesterol; and
pregabalin, a CNS pain medication. Each new drug has the potential to exceed
$1 billion in annual sales.
Mail Order for Maintenance Meds: The average mail order pharmacy
service prices for maintenance medications are significantly lower than
those provided through retail, and can provide up to 10 percent savings
for health plans. Drug trend for the 50 largest Medco clients enrolled
in a mail order program averaged 6.9 percent, significantly lower than
the national average of 13.4 percent.
Generics: Drugs with total U.S. sales of almost $30 billion
per year could lose patent protection over the next three years. Generic
drugs could comprise as much as 57 percent of the prescription drug market
by the end of 2005, up from 47 percent in 2002. Generic medications
contain the same active ingredients, strength and dose as their brand-name
medications and may lower the overall cost of providing a prescription
drug plan by 4 percent.
Health Plan Changes: Prudent changes to co-payment incentives,
capitalizing on over-the-counter (OTC) drugs, and implementing coverage
rules that require prior authorization can lead to a dramatic reduction
in drug trend.
Integrated Data: Using integrated patient medical and health
plan information can identify potential drug interactions -- averting potential
hospitalizations and resulting in significant health plan savings.
Medco Health Solutions, Inc., a leading pharmacy benefit manager with
nation's largest mail order pharmacy operations, assists its customers
moderate the cost and enhance the quality of prescription drug benefits
provided to members nationwide. Its customers include private- and
sector employers and healthcare organizations. Medco is traded on the
Stock Exchange under the symbol MHS. On the Net: http://www.medco.com.
This press release contains "forward-looking statements" as that term
defined in the Private Securities Litigation Reform Act of 1995. These
statements involve risks and uncertainties that may cause results to
materially from those set forth in the statements. No forward-looking
statement can be guaranteed, and actual results may differ materially
those projected. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
events, or otherwise. Forward-looking statements in this presentation
be evaluated together with the risks and uncertainties that affect
business, particularly those mentioned in the Risk Factors section
Company's Annual Report on Form 10-K filed with the Securities and
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