2006 drug trend report

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April 2007

2006 Drug Trend Report


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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.


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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 saferand 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 beensuch 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 timelymessaging. 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%, largelydue to higher costs per prescription, increased utilization and the introduction of new medications.

Increasingly, plan sponsors are choosing specialty-drug formularies to manage costs, successfullyapplying principles from traditional drug-formulary development. Even more importantly, they areusing 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 prescriptiondrugs safer and more affordable.

Sincerely,

George Paz

Chairman & Chief Executive Officer

Preface

express scripts 2006 drug trend report 1


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Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Overall Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Nonspecialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Therapeutic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Brand/Generic Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Units per Prescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11New Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Specialty Drug Trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Therapy Class Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Nonspecialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Antihyperlipidemics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Gastrointestinals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Antidepressants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Antidiabetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Antiasthmatics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Antihypertensives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Anticonvulsants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Narcotic Analgesics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Antivirals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Stimulants/Anti-Obesity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Antihistamines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Hypnotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Specialty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Inflammatory Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Multiple Sclerosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Cancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Blood Cell Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Growth Hormone Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Hepatitis C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Nonspecialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Specialty Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Contents

2 express scripts 2006 drug trend report


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Executive Summary 1Express Scripts 2006 Drug Trend Report


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Executive Summary

OVERVIEWIn 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 includingseveral 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 offeralternatives to other brands within their therapy classes.Therapeutic conversion opportunities from abrand to a generic for a similar brand further increases cost savings for plan sponsors.

EXPRESS SCRIPTS TAKES ACTIONExpress Scripts took advantage of these unprecedented cost-saving opportunities with GenericsTodaySM,a program that combines state-of-the-art member communications, dedicated customer service andadvanced technological features, such as automated refill reminders. Plan sponsors achieved previouslyunattainable trend reductions by using GenericsTodayto augment more traditional plan-design features,such as 3-tier formularies, step therapy and copayment optimization.

Exhibit 1

Ingredient-Cost Trend With and Without GenericsToday 2005 to 2006

ExecutiveSummary


1 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.

Without GenericsToday

12%

10%

8%

6%

4%

2%

0%

With GenericsToday

No Changes Added One Program Added Two+ Programs


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TRENDIn 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 ingredientcosts, a method that better reflects the value that Express Scripts brings to our clients. Exhibit 2shows 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 seenin this decade. Both lower drug utilization for treating acute conditions and the introduction of newgenerics contributed to this decline. Despite smaller overall trend, however, some therapy classescontinued their explosive growth. Hypnotics, for example, grew an astonishing 36.9%, fueled by thehighest 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

At 20.9%, specialty drug costs within the pharmacy benefit increased more than three times fasterthan the nonspecialty rate. Specialty trend reflects the growing demand for specialty products, whichare typically expensive and require significant individualized patient care.

FORECASTOver 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 anda 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 nonspecialtydrugs. Overall pharmacy and medical specialty spend is projected to grow by slightly more than80% over the next four years, rising to 26% of total drug spend. Specialty drug cost under thepharmacy benefit is expected to grow even faster by more than double as specialty coststransfer from the medical benefit.

Execu

tiveSummary


16%

14%

12%

10%

8%

6%

4%

2%

0%

New Methodology

Previous Methodology

2003 2004 2005 2006


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Overall Drug Trend 2Express Scripts 2006 Drug Trend Report


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Overall Drug Trend

For 2006, trends have been measured in terms of per member per year (PMPY) ingredient costs forExpress Scripts group members with funded, integrated benefits. This year marks the first time thattrends 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 costsrose 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 trendwas analyzed in terms of the following major dimensions:

Changes in the ingredient cost per prescription of common drugs (medications that weredispensed 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

NONSPECIALTY DRUG TREND

Exhibit 3

Components of PMPY Nonspecialty Cost Trend 2002 to 2006*

AWP Less Discount AWP Less Discount AWP Less Discount Ingredient Cost

2002 v 2003 2003 v 2004 2004 v 2005 2005 v 2006

Nonspecialty Nonspecialty Nonspecialty Nonspecialty

Price 6.6% 6.0% 5.3% 4.3%X Units per Prescription 0.3% 0.2% 0.1% 0.4%X Brand/Generic Mix -2.6% -2.6% -2.7% -2.9%X Therapeutic Mix 2.6% 3.7% 0.8% 1.7%= Cost per Prescription 6.8% 7.2% 3.3% 3.5%X Utilization 6.8% 2.9% 4.0% 2.2%= Common Drugs 14.0% 10.4% 7.5% 5.8%

+ New Drugs 0.5% 0.3% 0.4% 0.2%= All Drugs 14.5% 10.6% 7.9% 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.

OverallDrug

Trend



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Over

allDrugTrend


Trends for nonspecialty medications are further broken down into utilization, cost perprescription 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. Price2. Therapeutic Mix3. Brand/Generic Mix4. Units per Prescription

The remainder of this section presents general information for the 25 nonspecialty therapyclasses 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 therapyclasses both nonspecialty and specialty are in the Therapy Class Review section.


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OverallDrug

Trend


UTILIZATIONAcross the Express Scripts book of business, utilization of common nonspecialty prescriptiondrugs 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 changesof 2.1% and 1.9%, respectively, in 2005.

Growth slowed in several classes that had previous double-digit increases. Some classes evenhad negative growth. This reversal contributed to the decline from a 4% growth rate seen between2004 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 utilizationchanges of -2% and 2.4, respectively, both dropped out of the top 25. Similarly, utilizationof 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 newproducts: Ambien CR, Lunesta and Rozerem. The class of diagnostic products, whichincludes blood-sugar test strips, is new to the top 25 this year. It also showed double-digitgrowth 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 % Change

Therapy Class 2005 2006 Prevalence Intensity Total

1. Hypnotics 0.14 0.16 10.6% 5.3% 16.5%2. Diagnostic Products 0.08 0.09 9.8% 0.2% 10.0%3. Anticonvulsants 0.23 0.25 9.2% -1.2% 7.9%

4. Stimulants/Anti-Obesity 0.14 0.15 6.1% 0.6% 6.7%5. Misc. GI Agents 0.06 0.06 9.3% -2.3% 6.7%6. Antidiabetics 0.57 0.60 5.4% 0.7% 6.2%7. Decongestants 0.18 0.19 7.0% -1.2% 5.7%8. Antidepressants 0.86 0.90 4.2% 1.3% 5.5%9. Antihyperlipidemics 0.99 1.04 3.9% 1.3% 5.3%

10. Narcotic Analgesics 0.56 0.59 4.7% 0.6% 5.3%11. Migraine Products 0.07 0.07 4.9% 0.1% 5.0%12. Gastrointestinals 0.55 0.58 2.8% 2.1% 4.9%13. Antivirals 0.08 0.09 -0.1% 4.2% 4.1%14. Antiasthmatics 0.45 0.46 0.7% 1.6% 2.2%

15. Antihypertensives 1.10 1.12 2.7% -0.6% 2.1%16. Antihistamines 0.28 0.29 1.3% 0.8% 2.1%17. Beta Blockers 0.57 0.58 1.4% 0.4% 1.8%18. Contraceptives 0.48 0.49 1.9% -0.9% 1.1%19. Misc. Hematologicals 0.10 0.10 -0.8% 1.9% 1.1%20. Ophthalmic Products 0.18 0.18 4.1% -4.0% -0.1%21. Antipsychotics 0.08 0.08 1.0% -1.8% -0.9%22. Dermatologicals 0.31 0.30 1.4% -2.6% -1.3%23. NSAIDs 0.33 0.32 0.3% -2.6% -2.4%24. Misc. Endocrines 0.22 0.21 -3.0% -2.8% -5.7%25. Calcium Blockers 0.34 0.31 -7.1% -0.3% -7.4%

Top 25 8.92 9.20 -0.1% 3.2% 3.1%

Other 4.14 4.15 -0.8% 1.2% 0.3%Total 13.06 13.34 1.0% 1.2% 2.2%


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Over

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PRICEPrice represents the cost-per-prescription impact of manufacturers unit price changes (inflation)and changes in contractual rates negotiated with Express Scripts clients. These rates maybe influenced by client mix, channel mix or market dynamics. Price does not include retrospectivemanufacturer 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 reportedin previous years.The overall price rate included 6.9% for common brands and -5.7% for commongenerics. Common drugs were available in both years.

The brand increase was driven by price changes in classes with consistently above-average costincreases. For example, major brand-name hypnotics and stimulants/anti-obesity drugs are nearingpatent expirations. Historically, anticipated generic introductions have signaled high inflation.

In several nonspecialty classes, market dynamics changed generics more than brands. As additionalmanufacturers begin selling the same generic, the price declines, and the lower price is passed onto 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

Price % Change

Rank Therapy Class Brand Generic Total

1. Hypnotics 14.2% -2.7% 13.8%2. Stimulants/Anti-Obesity 11.9% -2.5% 10.5%3. Antiasthmatics 8.1% 10.0% 8.2%4. Antipsychotics 7.5% 0.2% 7.2%

5. Decongestants 6.9% -7.2% 6.7%6. Antihistamines 8.2% -4.0% 6.7%7. Misc. GI Agents 7.8% -3.3% 6.5%8. Migraine Products 6.4% -3.3% 6.3%9. Antivirals 6.3% -1.7% 5.9%

10. Antihyperlipidemics 5.9% -6.0% 5.5%11. Antidiabetics 7.9% -5.7% 5.2%12. Ophthalmic Products 6.1% -4.0% 5.1%13. Contraceptives 11.0% -0.9% 5.0%14. Misc. Endocrines 5.1% 0.1% 5.0%15. Dermatologicals 9.7% -4.5% 5.0%16. NSAIDs 7.4% -2.2% 4.7%17. Diagnostic Products 4.3% 26.5% 4.3%18. Antihypertensives 6.4% -4.5% 3.6%19. Calcium Blockers 4.8% 0.1% 3.3%20. Misc. Hematologicals 3.6% -16.5% 2.7%21. Beta Blockers 4.9% -4.2% 2.5%22. Antidepressants 5.5% -8.8% 1.9%23. Gastrointestinals 4.1% -12.1% 1.8%24. Narcotic Analgesics 14.5% -7.2% 1.3%25. Anticonvulsants 9.2% -22.0% 0.6%

Top 25 6.8% -6.3% 4.6%Other 7.1% -4.4% 3.3%

Total 6.9% -5.7% 4.3%


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OverallDrug

Trend


THERAPEUTIC MIXTherapeutic mix reflects changes in market shares within therapy classes, new strengths of existingmedications, and changes in overall market shares for each class. In 2006, therapeutic mix roseto 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, miscellaneousGI agents and antivirals. In each case, increases were due to new, more expensive brands. Newto the top 25, the miscellaneous GI class includes several different types of drugs. Safety issuescaused one of them, Zelnorm, to be withdrawn in March 2007.

New dosages had significant effects on antivirals and contraceptives. Atripla, a new, once-dailycombination medication for HIV, impacted antivirals; and a new contraceptive, Yaz, accountedfor most new dosage impact in its class.

One class had no appreciable change, but eight decreased due to therapeutic mix. NSAIDs continuedto 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

General Overall

Therapy Class Therapeutic Mix New Dosages Therapeutic Mix

1. Anticonvulsants 6.8% 0.1% 6.9%2. Misc. GI Agents 4.1% 0.6% 4.7%3. Antivirals 1.8% 2.5% 4.3%4. Beta Blockers 3.3% 0... 3.3%5. Hypnotics 3.1% 0... 3.1%6. Antidiabetics 2.9% 0.1% 2.9%7. Antipsychotics 0... 1.9% 1.9%8. Ophthalmic Products 1.3% 0.6% 1.9%9. Antidepressants 1.7% 0... 1.7%

10. Narcotic Analgesics 0.2% 1.3% 1.5%11. Misc. Endocrines 1.3% 0... 1.3%12. Misc. Hematologicals 1.2% 0... 1.2%13. Antiasthmatics 0.8% 0... 0.8%

14. Contraceptives -1.4% 2.2% 0.8%15. Stimulants/Anti-Obesity -0.5% 0.9% 0.3%16. Migraine Products 0.2% 0.1% 0.3%17. Diagnostic Products 0... 0... 0...18. Decongestants -0.1% 0... -0.1%19. Antihypertensives -1.0% 0.6% -0.4%20. Antihyperlipidemics -1.1% 0... -1.1%21. Antihistamines -1.2% 0... -1.2%22. Gastrointestinals -1.4% 0.2% -1.3%23. Calcium Blockers -2.0% 0... -2.0%24. Dermatologicals -2.6% 0.2% -2.4%

25. NSAIDs -4.6% 0... -4.6%Top 25 0.8% 0.3% 1.2%Other 2.0% 0.4% 2.4%Total 1.4% 0.4% 1.7%


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Over

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BRAND/GENERIC MIXMajor new generic introductions continued in 2006, resulting in a 2.9% fall in nonspecialty trenddue 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 theirfull 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 genericsto Allegra resulted in a double-digit brand/generic mix trend for antihistamines, which led allclasses 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 reversalin brand/generic-mix trend because generics for OxyContin and Plavix will be forced off the marketby 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. Antihistamines Allegra (2005) -11.8%2. NSAIDs Mobic (2006) -10.7%3. Decongestants Flonase (2006) -10.5%4. Narcotic Analgesics OxyContin (2005), -9.1%

Duragesic (2005), Actiq (2006)5. Misc. Hematologicals Plavix (2006) -8.3%

6. Antihyperlipidemics Pravachol

(2006), Zocor

(2006) -5.6%7. Antidepressants Zoloft (2006) -2.5%8. Misc. Endocrines DDAVP (2005) -2.0%9. Antidiabetics Amaryl (2005) -1.8%

10. Contraceptives Ortho Tri-Cyclen (2004) -1.6%11. Anticonvulsants Zonegran (2005) -1.6%12. Dermatologicals Elocon (2006) -1.3%13. Calcium Blockers Plendil (2004) -0.5%14. Beta Blockers Toprol-XL (2006) -0.4%15. Antihypertensives N/A -0.3%16. Stimulants/Anti-Obesity N/A -0.3%17. Antipsychotics N/A -0.2%

18. Migraine Products N/A -0.2%19. Antivirals N/A -0.2%20. Misc. GI Agents N/A -0.1%21. Gastrointestinals N/A -0.1%22. Hypnotics N/A -0.1%23. Ophthalmic Products N/A -0.1%24. Diagnostic Products N/A 0...25. Antiasthmatics N/A 0...

Top 25 -2.8%Other -3.4%Total -2.9%


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OverallDrug

Trend


UNITS PER PRESCRIPTIONWithin the top 25 nonspecialty classes, changes in the number of units per prescription increased overallnonspecialty 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 analgesicsclass 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 forglaucoma 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

1. Narcotic Analgesics 4.0%2. Dermatologicals 1.8%3. Diagnostic Products 1.7%4. Migraine Products 1.5%5. Gastrointestinals 1.2%6. Antidiabetics 1.1%7. Misc. Endocrines 0.8%8. Antipsychotics 0.7%9. Antidepressants 0.3%

10. Beta Blockers 0.3%11. Hypnotics 0.2%12. Antihistamines 0.2%

13. Stimulants/Anti-Obesity 0.2%14. Misc. Hematologicals 0.2%15. Decongestants 0.1%16. Antiasthmatics 0.1%17. Contraceptives 0.1%18. Antihypertensives -0.1%19. Antihyperlipidemics -0.1%20. Anticonvulsants -0.3%21. Calcium Blockers -0.3%22. Antivirals -0.4%23. NSAIDs -0.5%

24. Misc. GI Agents -0.6%25. Ophthalmic Products -0.6%

Top 25 0.5%Other 0.4%Total 0.4%


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NEW DRUGSIn 2006, new drugs contributed only about 0.2% toward overall nonspecialty trend one of thelowest new drug impacts in the 11 years that the Drug Trend Reporthas been published. In 2006,the U.S. Food and Drug Administration (FDA) approved 18 new molecular entities (active drugs thatare 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 nonspecialtyclass 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) wereapproved in 2006.

Exhibit 9

Number of New Drug Approvals by the FDA 2002 to 2006

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

Cost

Brand Name Generic Name Therapy Class PMPY % New Drug

1. Avandaryl rosiglitazone and glimepiride Antidiabetics $0.21 20.4%2. Chantix varenicline Misc. CNS Agents* $0.21 20.3%3. Levemir insulin detemir Antidiabetics $0.14 13.9%4. Januvia sitagliptin Antidiabetics $0.07 6.9%5. Amitiza lubiprostone Misc. GI Agents $0.06 6.1%6. Apidra insulin glulisine Antidiabetics $0.04 4.3%7. Oracea doxycycline Dermatologicals $0.04 4.3%8. Azilect rasagiline Antiparkinsons Agents* $0.04 3.4%9. Ranexa ranolazine Antianginals* $0.03 3.3%

10. Prezista darunavir Antivirals $0.02 2.0%Top 10 $0.88 84.8%Other $0.16 15.2%Total $1.03 100.0%

* Not in the top 25 classes

New Molecular Entitites

0

Therapeutic Biologicals

35

30

25

20

15

10

5

2002 2003 2004 20062005

2 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.


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OverallDrug

Trend


SPECIALTY DRUG TRENDThe 20.9% trend for specialty drugs resulted mainly from just a few drug categories, with the top sixaccounting for more than 77% of specialty prescriptions filled through the pharmacy benefit. Steadyand significant cost increases, especially in the multiple sclerosis (MS) and growth deficiencyclasses, 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 andHumira, were primary contributors because 2006 was the first full year that both had expanded indicationsfor psoriatic arthritis. Additionally, Humira was approved as a first-line treatment for moderate-to-severerheumatoid 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

PMPY % Change

2005 2006 % Change Utilization Cost/Rx New Drugs

1. Inflammatory $15.52 $19.04 22.7% 15.8% 5.8% 0.1%Conditions

2. Multiple Sclerosis $11.43 $13.60 19.0% 3.4% 15.1% 0...3. Cancer $ 7.49 $10.44 39.5% 6.5% 6.2% 26.4%4. Blood Cell $ 4.81 $ 5.01 4.0% -2.6% 6.8% 0...

Deficiency5. Growth Hormone $ 3.74 $ 4.59 22.8% 2.9% 19.1% 0.3%

Deficiency

6. Hepatitis C $ 3.76 $ 3.45 -8.3% -5.9% -2.5% 0...7. Anticoagulants $ 2.63 $ 3.34 26.7% 20.6% 5.0% 0...8. Infertility $ 2.62 $ 2.58 -1.6% -0.2% -1.4% 0...9. Respiratory $ 2.17 $ 2.54 17.1% 3.2% 13.5% 0...

Conditions10. Hemophilia $ 1.01 $ 1.72 69.9% 36.1% 24.8% 0...

Top 10 Classes $55.19 $66.31 20.1% 7.0% 8.9% 3.6%Other $ 4.83 $ 6.27 29.8% 15.8% 10.0% 2.4%Total $60.02 $72.58 20.9% 7.7% 9.0% 3.5%

Although new drugs made only a minor impact on nonspecialty cost, new specialty therapies accountedfor a hefty 16.9% of overall specialty trend. In 2006, most new specialty medicines were introducedto treat various types of cancer, causing an historical impact of over 26% in the class. New cancerdrugs 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)


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NOTES:


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Therapy Class Review 3Express Scripts 2006 Drug Trend Report


20/49

Therapy Class Review

This section includes detailed information on selected therapy classes that have had a notableimpact on drug trend. For 2006, we focused on 12 high-impact nonspecialty therapy classes and thetop six specialty classes. For each class that was selected, components of utilization and cost havebeen 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 ratescharged to Express Scripts clients. Additionally, market-share trends have been charted, pointsof interest have been noted, and new drugs and generics that are expected in the immediatefuture 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 2006Ranked by 2006 PMPY Cost

PMPY Cost Cost per Prescription

2005 2006 % Change 2005 2006 % Change

Antihyperlipidemics $ 80.75 $ 83.68 3.6% $ 81.59 $ 80.30 -1.6%Gastrointestinals $ 55.06 $ 58.74 6.7% $100.34 $102.04 1.7%Antidepressants $ 53.25 $ 57.01 7.1% $ 62.11 $ 63.00 1.4%Antidiabetics $ 34.87 $ 40.25 15.5% $ 61.27 $ 66.24 7.5%Antiasthmatics $ 34.30 $ 38.28 11.6% $ 76.35 $ 83.35 9.2%Antihypertensives $ 36.32 $ 38.13 5.0% $ 33.16 $ 34.10 2.8%Anticonvulsants $ 21.60 $ 24.60 13.8% $ 92.72 $ 97.80 5.5%Narcotic Analgesics $ 21.77 $ 22.31 2.5% $ 39.02 $ 37.99 -2.7%Antivirals $ 15.99 $ 18.31 14.5% $195.44 $214.89 9.9%Stimulants/Anti-Obesity $ 14.15 $ 16.72 18.2% $102.47 $ 113.46 10.7%Antihistamines $ 15.10 $ 14.36 -4.9% $ 53.95 $ 50.27 -6.8%Hypnotics $ 8.78 $ 12.02 36.9% $ 64.34 $ 75.60 17.5%Other $284.11 $291.84 2.7% $ 39.91 $ 40.93 2.6%Total $676.05 $716.26 5.9% $ 51.78 $ 53.64 3.6%

TherapyClas

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ANTIHYPERLIPIDEMICS NONSPECIALTY RANK 1

COMPONENTS OF TREND 2005 TO 2006 KEY FACTS 2006

Cost per Prescription -1.6% Cost PMPY: $83.68

Price 5.5% # Rx PMPY: 1.04Units per Prescription -0.1% Prevalence of Use: 11.1%Brand/Generic Mix -5.6% Average Cost/Rx: $80.30Therapeutic Mix -1.1% # Rx/User/Year: 9.40Utilization 5.3%Prevalence 3.9%Intensity 1.3%New Drugs 0...

TOTAL 3.6%

Antihyperlipidemics Market-Share Trend

The most significant event during 2006 was the availability of first-time generics to the lowerstrengths of Pravachol and all strengths of Zocor . As a result, overall trend for the classdecreased 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 thenext 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 achieveboth 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 cholesterolgoals. Torcetrapib was being developed to raise HDL cholesterol.

Drug Indication Pipeline or Patent Expiration Anticipated Availability

Simcor Dyslipidemia Pipeline 2008(simvastatin/Niaspan)

MK-0524A Dyslipidemia Pipeline 2008

60%

50%

40%

30%

20%

10%

0%

Lipitor $85.68

2002

PercentofPrescriptions

2003 20052004 2006

Generics $54.32

Vytorin $77.74

Crestor $78.31

Zocor $120.09

Zetia $74.75

TriCor $84.43


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GASTROINTESTINALS NONSPECIALTY RANK 2


Cost per Prescription 1.7% Cost PMPY: $58.74

Price 1.8% # Rx PMPY: 0.58Units per Prescription 1.2% Prevalence of Use: 8.7%Brand/Generic Mix -0.1% Average Cost/Rx: $102.04Therapeutic Mix -1.3% # Rx/User/Year: 6.61Utilization 4.9%Prevalence 2.8%Intensity 2.1%New Drugs 0...

TOTAL 6.7%

Gastrointestinals Market-Share Trend

Proton pump inhibitors (PPIs) are expected to continue dominating the class into the next decadesince 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 competitioncould be delayed until 2008. Other nonprescription PPIs are expected to become available near theend of the decade.


TAK-390MR Acid-related Pipeline 2008(eslansoprazole) GI disease

Prilosec OTC Frequent Patent Expiration 2008*(omeprazole) heartburn

*Litigation

40%

35%

30%

25%

20%

15%

10%

5%

0%

Generics $43.15

2002


2003 20052004 2006

Nexium $139.88

Prevacid $140.42

Protonix $111.35

AcipHex $143.18


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ANTIDEPRESSANTS NONSPECIALTY RANK 3



Price 1.9% # Rx PMPY: 0.90Units per Prescription 0.3% Prevalence of Use: 11.0%Brand/Generic Mix -2.5% Average Cost/Rx: $63.00Therapeutic Mix 1.7% # Rx/User/Year: 8.21Utilization 5.5%Prevalence 4.2%Intensity 1.3%New Drugs 0.1%

TOTAL 7.1%

Antidepressants Market-Share Trend

First generics to Zoloft, Parnate and Effexor became available in 2006. Additional generics forZoloft were approved in February 2007. The availability of generics to Wellbutrin XL still dependsupon 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 concernsover the use of antidepressants.

The pipeline drug Pristiq the active metabolite and follow-on product to Effexor is beingstudied for treating both depression and vasomotor symptoms associated with menopause.


Pristiq (desvenlafaxine) Depression Pipeline 2007

saredutant Depression Pipeline 2008

SR 58611 Depression Pipeline 2008

Wellbutrin XL Depression Patent Expiration Pending(bupropion extended release)

Paxil CR

Depression Patent Expiration In litigation(paroxetine controlled release)

60%

50%

40%

30%

20%

10%

0%

Generics $32.62

2002


2003 20052004 2006

Lexapro $73.11

Effexor XR $122.36

Zoloft $85.70

Wellbutrin XL $128.86

Cymbalta $121.05


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ANTIDIABETICS NONSPECIALTY RANK 4




TOTAL 15.5%

Antidiabetics Market-Share Trend

The overall 2005 to 2006 trend of 15.5% in the antidiabetics category was similar to the13.4% seen from 2004 to 2005.

The cost component of antidiabetics trend is expected to increase as new branded productswith novel mechanisms of action enter the market. In addition, a lack of first-time genericswill 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 , whichshould 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 Type 2 diabetes Pipeline 2007

saxagliptin Type 2 diabetes Pipeline 2008

Galvus (vildagliptin) Type 2 diabetes Pipeline 2008

60%

50%

40%

30%

20%

10%

0%

Generics $21.79

2002


2003 20052004 2006

Avandia $128.87

Actos $146.73

Lantus $102.38

Humalog $141.51


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ANTIASTHMATICS NONSPECIALTY RANK 5



Price 8.2% # Rx PMPY: 0.46Units per Prescription 0.1% Prevalence of Use: 8.5%Brand/Generic Mix 0 Average Cost/Rx: $83.35Therapeutic Mix 0.8% # Rx/User/Year: 5.39Utilization 2.2%Prevalence 0.7%Intensity 1.6%New Drugs 0...

TOTAL 11.6%

Antiasthmatics Market-Share Trend

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 directcompetitor 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 thebody and patents on hydrofluoroalkane (HFA) propellants.


Alvesco (ciclesonide) Asthma/COPD* Pipeline 2007

Symbicort Asthma/COPD Pipeline 2007(budesonide/formoterol)

Flutiform Asthma/COPD Pipeline 2008(fluticasone/formoterol)

Serevent (salmeterol) Asthma/COPD Patent Expiration 8/12/2008

Advair Diskus Asthma/COPD Patent Expiration 2008 or 2010(fluticasone/salmeterol)

*COPD = chronic obstructive pulmonary disease

40%

35%

30%

25%

20%

15%

10%

5%

0%

Generics $17.13

2002


2003 20052004 2006

Singulair $88.03

Advair Diskus $154.28

Flovent HFA $96.55

Combivent $92.31


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ANTIHYPERTENSIVES NONSPECIALTY RANK 6



Price 3.6% # Rx PMPY: 1.12Units per Prescription -0.1% Prevalence of Use: 11.3%Brand/Generic Mix -0.3% Average Cost/Rx: $34.10Therapeutic Mix -0.4% # Rx/User/Year: 9.90Utilization 2.1%Prevalence 2.7%Intensity -0.6%New Drugs 0...

TOTAL 5.0%

Antihypertensives Market-Share Trend

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 convertingenzyme inhibitors (ACEIs) and angiotensin receptor blockers (ARBs).

Although challenges to the Lotrel patents continue, both components found in Lotrel will be availableas 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 Pipeline 2007

Exforge Hypertension Pipeline 2007(amlodipine/valsartan)

Aceon (perindopril) Hypertension Patent Expiration 02/21/2007

Lotrel Hypertension Patent Expiration 09/25/2007*(amlodipine/benazepril)

Altace (ramipril) Hypertension Patent Expiration 10/10/2008*

*Litigation/Settlement

60%

50%

40%

30%

20%

10%

0%

Generics $14.24

2002


2003 20052004 2006

Diovan/Diovan HCT $58.98

Lotrel $79.98

Cozaar/Hyzaar $58.45

Altace $52.38


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ANTICONVULSANTS NONSPECIALTY RANK 7



Price 0.6% # Rx PMPY: 0.25Units per Prescription -0.3% Prevalence of Use: 3.4%Brand/Generic Mix -1.6% Average Cost/Rx: $97.80Therapeutic Mix 6.9% # Rx/User/Year: 7.31Utilization 7.9%Prevalence 9.2%Intensity -1.2%New Drugs 0...

TOTAL 13.8%

Anticonvulsants Market-Share Trend

Trend in this category increased from 3.4% in 2005 to 13.8% in 2006. While utilization trend foranticonvulsants is not much higher than the previous years trend, the cost component reboundedin 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 treatmentof nerve pain associated with diabetes.

Off-label use continues to expand this market because anticonvulsants are often used forconditions such as bipolar disorder, neuropathic pain and migraine prophylaxis.


Xilep (rufinamide) Epilepsy Pipeline 2008

Trileptal (oxcarbazepine) Epilepsy Patent Expiration 2007

Depakote/Depakote ER Epilepsy/ Patent Expiration 07/29/2008*(divalproex/divalproex Migraineextended release)

*Litigation

70%

60%

50%

40%

30%

20%

10%

Generics $36.00

2002


2003 20052004 2006

0%

Topamax $206.17

Lamictal $224.12

Lyrica $121.55

Depakote $130.13

Trileptal $181.91


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NARCOTIC ANALGESICS NONSPECIALTY RANK 8




TOTAL 2.5%

Narcotic Analgesics Market-Share Trend

Overall narcotic analgesics trend of 2.5% in 2006 was similar to 2005s 1.9% because thecost 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 brandproducts 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 followinga series of patent litigation settlements.

When generics to Actiq were launched in late 2006, the follow-on brand product, Fentora,also became available.


tramadol Pain Pipeline 2007extended release

CIP-tramadol Pain Pipeline 2007extended release

BEMA fentanyl Pain Pipeline 2008

Rapinyl Pain Pipeline 2008(fentanyl transmucosal)

100%

95%

90%

85%

80%

75%

70%

Generics $27.96

2002


2003 20052004 2006


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ANTIVIRALS NONSPECIALTY RANK 10



Price 5.9% # Rx PMPY: 0.09Units per Prescription -0.4% Prevalence of Use: 2.7%Brand/Generic Mix -0.2% Average Cost/Rx: $214.89Therapeutic Mix 4.3% # Rx/User/Year: 3.12Utilization 4.1%Prevalence -0.1%Intensity 4.2%New Drugs 0.1%

TOTAL 14.5%

Antivirals Market-Share Trend

Overall trend in the antivirals class was 14.5% in 2006, down from 23% in 2005. Muchof the higher trend in 2005 was driven by concerns surrounding avian influenza. Increasedutilization and stockpiling of the influenza drug, Tamiflu, also contributed.

As with the antibiotics classes, the antivirals class is affected by seasonality and theseverity 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 expectedto 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. CCR5receptor antagonists, such as maraviroc and vicriviroc, will help keep HIV from entering andinfecting healthy T-cells. MK-0518, an integrase inhibitor, prevents the DNA of HIV from enteringthe DNA of healthy cells. If approved, these new medications likely will be used in combinationwith other therapies for the treatment of HIV.


maraviroc HIV Pipeline 2007

MK-0518 HIV Pipeline 2008

vicriviroc HIV Pipeline 2008

Zerit (stavudine) HIV Patent Expiration 12/24/2008

50%

45%

35%

25%

40%

30%

20%

15%

10%

5%

Valtrex $151.01

2002


2003 20052004 2006

0%

Generics $33.75

Tamiflu $64.08

Famvir $177.77

Sustiva $418.58

Truvada $737.64


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STIMULANTS/ANTI-OBESITY NONSPECIALTY RANK 11



Price 10.5% # Rx PMPY: 0.15Units per Prescription 0.2% Prevalence of Use: 2.1%Brand/Generic Mix -0.3% Average Cost/Rx: $113.46Therapeutic Mix 0.3% # Rx/User/Year: 6.91Utilization 6.7%Prevalence 6.1%Intensity 0.6%New Drugs 0...

TOTAL 18.2%

Stimulants/Anti-Obesity Market-Share Trend

Trend in this category is primarily driven by stimulants for the treatment of attention-deficithyperactive disorder (ADHD).

Overall trend of 18.2% in 2006 was similar to the 20.7% increase in 2005. The cost componentcontinues to drive trend in this class as the branded, once-daily products remain the standardof 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 FDAapproved Vyvanse in February 2007.


Connexyn (guanfacine) ADHD Pipeline 2007

Nuvigil (armodafinil) Excessive sleepiness Pipeline 2007

rimonabant Obesity Pipeline 2007

SPD465 ADHD Pipeline 2007Concerta ADHD Patent Expiration Pending*

(methylphenidate,

extended release)

*Litigation/Citizens Petition

35%

30%

25%

20%

15%

10%

5%

Generics $40.06

2002


2003 20052004 2006

0%

Adderall XR $122.14

Concerta $112.08

Strattera $146.58

Provigil $294.95

Focalin XR $119.48


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ANTIHISTAMINES NONSPECIALTY RANK 14



Price 9.7% # Rx PMPY: 0.29Units per Prescription 0.2% Prevalence of Use: 7.8%Brand/Generic Mix -11.8% Average Cost/Rx: $50.27Therapeutic Mix -1.2% # Rx/User/Year: 3.65Utilization 2.1%Prevalence 1.3%Intensity 0.8%New Drugs 0...

TOTAL -4.9%

Antihistamines Market-Share Trend

Even though utilization increased, overall trend in the antihistamines class was once againnegative 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 competitorsto 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 probablywill be converted to nonprescription status after brand Xyzal becomes available but before theZyrtec patent expires in December 2007.


Xyzal (levocetirizine) Allergies Pipeline 2007

Clarinex (desloratadine) Allergies Patent Expiration 10/01/2007*

Zyrtec (cetirizine) Allergies Patent Expiration 12/25/2007

(Rx to OTC)

*Litigation

60%

50%

40%

30%

20%

10%

0%

Generics $40.77

2002


2003 20052004 2006

Zyrtec $56.77

Clarinex $72.62

Allegra $71.43


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HYPNOTICS NONSPECIALTY RANK 19



Price 13.8% # Rx PMPY: 0.16Units per Prescription 0.2% Prevalence of Use: 3.5%Brand/Generic Mix -0.1% Average Cost/Rx: $75.60Therapeutic Mix 3.1% # Rx/User/Year: 4.58Utilization 16.5%Prevalence 10.6%Intensity 5.3%New Drugs 0...

TOTAL 36.9%

Hypnotics Market-Share Trend

The hypnotics class experienced another significant growth year in 2006, with an overallincrease of 36.9%, compared with 31.6% in 2005. The 2006 increase was driven about equallyby cost and utilization.

Following its debut as the number 23 class in the 2005 Drug Trend Report, hypnotics jumpedto 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 Insomnia Pipeline 2008

indiplon, Insomnia Pipeline 2008immediate release

Silenor (doxepin) Insomnia Pipeline 2008

Ambien (zolpidem) Insomnia Patent Expiration 04/21/2007

Sonata (zaleplon) Insomnia Patent Expiration 10/06/2008*

*Litigation

80%

70%

60%

50%

40%

30%

20%

10%

0%

Ambien $86.13

2002


2003 20052004 2006

Generics $8.64

Ambien CR $86.75

Lunesta $95.28

Sonata $90.70

Rozerem $72.53


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TherapyClassReview


SPECIALTYComponents of utilization and cost have been analyzed for the top six specialty classes, similarto our analyses for the top nonspecialty classes. Noteworthy trends in price, market share andnew drugs have been reviewed for each featured specialty class. Pipelines are discussed for eachclass 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 resolvedbefore 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 Cost per Prescription

2005 2006 % Change 2005 2006 % Change

1. Inflammatory $15.52 $19.04 22.7% $1,397.48 $1,479.11 5.8%

Conditions2. Multiple $11.43 $13.60 19.0% $1,277.27 $1,469.93 15.1%

Sclerosis3. Cancer $ 7.49 $10.44 39.5% $1,271.21 $1,592.69 7.2%4. Blood Cell $ 4.81 $ 5.01 4.0% $1,602.80 $1,682.69 5.0%

Deficiency5. Growth $ 3.74 $ 4.59 22.8% $2,143.28 $2,552.01 19.1%

HormoneDeficiency

6. Hepatitis C $ 3.76 $ 3.45 -8.3% $1,161.81 $1,132.78 -2.5%Other $13.26 $16.44 24.0% $1,107.32 $1,226.45 10.8%

Total $60.02 $72.58 20.9% $1,307.30 $1,454.14 11.2%

Expanding therapeutic indications drove utilization trend for specialty therapies, chiefly in theinflammatory conditions class. Already approved for certain inflammatory conditions suchas rheumatoid arthritis (RA), tumor necrosis factor (TNF) blockers Enbrel, Humira andRemicade continue to be studied for treating other autoimmune inflammatory conditions.Some existing specialty drugs are also used for multiple conditions. For example, several cancertherapies are also used to treat multiple sclerosis (MS) or hepatitis C. As additional indicationsare discovered and approved, both utilization and spend will continue to grow.


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INFLAMMATORY CONDITIONS SPECIALTY RANK 1



Price 6.0% # Rx PMPY: 0.0129Units per Prescription -1.5% Prevalence of Use: 0.2%Brand/Generic Mix 0 Average Cost/Rx: $1,479.11Therapeutic Mix 1.4% # Rx/User/Year: 8.30Utilization 15.8%Prevalence 17.9%Intensity -1.8%New Drugs 0.1%

TOTAL 22.7%

Inflammatory Conditions Market-Share Trend

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 spondylitisand Crohns disease.

The FDA approved Soliris, a monoclonal antibody, in March 2007. Approved initially for thetreatment of a rare genetic blood disorder, paroxysmal nocturnal hemoglobinuria (PNH), Solirisis 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, adversereactions (increased infections and elevated cholesterol levels) have been associated with its use.

Inflammatory Conditions PipelineBrand Generic Route of Administration Proposed Use Anticipated Availability

Cimzia certolizumab SQ Crohns disease, RA 2007*

Actemra tocilizumab IV infusion RA 2008

*May be approved earlier for an indication other than RA

100%

90%

70%

50%

80%

60%

40%

30%

20%

10%

Enbrel $1,436.32

2002


2003 20052004 2006

0%

Humira $1,534.59

Raptiva $1,514.96

Remicade $2,705.47

Kineret $1,209.44


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TherapyClassReview

30

MULTIPLE SCLEROSIS SPECIALTY RANK 2



Price 14.4% # Rx PMPY: 0.0093Units per Prescription 0.4% Prevalence of Use: 0.1%Brand/Generic Mix 0 Average Cost/Rx: $1,469.93Therapeutic Mix 0.2% # Rx/User/Year: 9.65Utilization 3.4%Prevalence 2.7%Intensity 0.6%New Drugs 0

TOTAL 19.0%

Multiple Sclerosis Market-Share Trend

Inflation continues to be the key driver of trend for drugs that treat multiple sclerosis (MS), withthe 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 tolerablethan 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 treatmentof 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 cladribine Oral MS 2008

MBP-8298 IV infusion MS 2008

Rituxan* rituximab IV infusion MS, Lupus 2008teriflunomide Oral MS 2008

*Already on the market for another indication

3 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.

70%

60%

50%

40%

30%

20%

10%

Avonex $1,413.29

2002


2003 20052004 2006

0%

Copaxone $1,455.67

Rebif $1,568.42

Betaseron $1,518.42


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TherapyClas

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CANCER SPECIALTY RANK 3



Price 13.1% # Rx PMPY: 0.0066Units per Prescription 0.2% Prevalence of Use: 0.2%Brand/Generic Mix -0.3% Average Cost/Rx: $1,592.69Therapeutic Mix -5.1% # Rx/User/Year: 3.92Utilization 5.5%Prevalence 8.3%Intensity -2.6%New Drugs 26.4%

TOTAL 39.5%

Cancer Market-Share Trend

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 platinumchemotherapy agent; all current platinum compounds are administered by IV.

Tasigna is a targeted tyrosine kinase inhibitor in development for the treatment of chronic myeloidleukemia (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 rolein the treatment of patients with advanced breast cancer.

Cancer Pipeline


Onconase ranpirnase IV infusion Mesothelioma 2007

Provenge

sipuleucel-T IV infusion Prostate cancer 2007satraplatin Oral Prostate cancer 2007

Tasigna nilotinib Oral CML 2007

Torisel temsirolimus IV infusion Renal cell carcinoma 2007

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Lupron Depot $714.19

2002


2003 20052004 2006

Xeloda $1,018.54

Temodar $1,841.17

Gleevec $2,958.07

Thalomid $3,728.36

Tarceva $2,640.27


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32

BLOOD CELL DEFICIENCY SPECIALTY RANK 4



Price 1.8% # Rx PMPY: 0.0030Units per Prescription 0.7% Prevalence of Use: 0.1%Brand/Generic Mix 0... Average Cost/Rx: $1,682.69Therapeutic Mix 2.4% # Rx/User/Year: 4.54Utilization -0.9%Prevalence 5.3%Intensity -5.9%New Drugs 0...

TOTAL 4.0%

Blood Cell Deficiency Market-Share Trend

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 elevatedtoo 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 anemiaassociated with chronic kidney disease. Mircera is dosed once-monthly compared to more frequent dosingregimens 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 approvedin 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 thrombocytopeniapurpura (ITP), a bleeding disorder related to low platelet counts.

Blood Cell Deficiency Pipeline


Mircera continuous IV and SQ Anemia 2007erythropoietinreceptor activator

Leukine

* sargramostim IV and SQ Crohns disease 2007AMG 531 IV and SQ ITP 2008

Promacta eltrombopag Oral ITP 2008

ferumoxytol IV Anemia 2008

Macrotac lanimostim SQ AIDS, Osteoporosis, Burns 2008

Mozobil plerixafor SQ Stem cell mobilization 2008

*Already on the market for another indication

60%

50%

40%

30%

20%

10%

0%

Procrit $1,208.86

2002


2003 20052004 2006

Aranesp $1,386.66

Neupogen $2,427.12

Neulasta $3,855.75

Epogen $1,213.17


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GROWTH HORMONE DEFICIENCY SPECIALTY RANK 5



Price 5.6% # Rx PMPY: 0.0018Units per Prescription 10.7% Prevalence of Use: 0Brand/Generic Mix 0... Average Cost/Rx: $2,552.01Therapeutic Mix 1.9% # Rx/User/Year: 8.47Utilization 2.9%Prevalence 6.3%Intensity -3.2%New Drugs 0.3%

TOTAL 22.8%

Growth Hormone Deficiency Market-Share Trend

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 accumulationsof fat around the neck and abdomen.

Growth Hormone Deficiency Pipeline


Accretropin recombinant SQ Growth hormone deficiency 2007human growthhormone

TH-9507 SQ HIV-related lipodystrophy 2007

40%

35%

30%

25%

20%

15%

10%

5%

0%

Nutropin AQ $2,541.00

2002


2003 20052004 2006

Humatrope $2,271.77

Genotropin $2,409.64

Norditropin $2,780.75

Saizen $2,233.21


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TherapyClassReview

34

HEPATITIS C SPECIALTY RANK 6



Price 6.7% # Rx PMPY: 0.0030Units per Prescription -0.1% Prevalence of Use: 0Brand/Generic Mix -10.1% Average Cost/Rx: $1,132.78Therapeutic Mix 1.7 # Rx/User/Year: 10.17Utilization -5.9%Prevalence -11.0%Intensity 5.7%New Drugs 0...

TOTAL -8.3%

Hepatitis C Market-Share Trend

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. Viramidinesapproval 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 whenadded to ribavirin and pegylated interferon in patients with difficult-to-treat genotype 1 hepatitis C.

Hepatitis C Pipeline


Viramidine taribavirin Oral Hepatitis C 2007merimepodib Oral Hepatitis C 2008

telaprevir Oral Hepatitis C 2008

Zadaxin thymosin alpha 1 SQ Hepatitis C 2008(thymalfasin)

60%

50%

40%

30%

20%

10%

0%

ribavirin $633.52

2002


2003 20052004 2006

Pegasys $1,542.49

Peg-Intron Redipen $1,519.97

Ribasphere $545.84

Rebetol $1,000.30


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Forecast 4Express Scripts 2006 Drug Trend Report


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Forecast

Nonspecialty DrugsOur 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)

In 2007, look for slightly higher growth in the number of prescriptions for acute conditions. Thecyclical 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-managementprograms become more prevalent.

We anticipate that use of cardiovascular drugs primarily antihypertensives, beta blockers andcalcium blockers will grow slightly faster in 2007 than in 2006. The expected release of severalnew brand-name antihypertensives will be a main factor in the increase. In a departure from previousforecasts, we no longer expect the use of prescription nonsedating antihistamines to drop offprecipitously in 2008 following additional movement of products to over-the-counter status. Most plansponsors 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 overallutilization 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 feltas the first generic manufacturers lose exclusivity, additional manufacturers enter the market andcompetition drives down prices. These declines will be balanced by increases in cost due to twomajor factors: the loss of generics for OxyContin and Plavix, and the market removal of genericalbuterol inhalers that contain chlorofluorocarbons (CFCs). As CFC inhalers are phased out, lookfor albuterol inhalers to be in short supply and their costs to rise. Cost trend in hypnotics andstimulants, two classes with high 2006 cost trend, should moderate because generics are expectedfor 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.

Forecast


Cost

Rxs

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

2005 2006 2007 2008 2009 2010

0%


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Exhibit 15

2007 to 2010 Forecast for Selected Nonspecialty Therapy Classes

2006Trend

Rank 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.

2. Gastrointestinals 7.1% 9.2% 10.2% -1.2% 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.

3. Antidepressants 3.9% 9.2% 10.2% 8.1% 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.

4. Antidiabetics 18.8% 21.0% 23.2% 23.2% 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.

5. Antiasthmatics 15.4% 11.2% 9.2% 7.1% HFA inhalers will replace CFC-containing

products and drive up cost dramatically

in 2007 and 2008. Symbicort, expected

to be more expensive than existingantiasthmatics, 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.

Forecast



43/49

2006 Trend


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.

7. Anticonvulsants 15.6% 13.4% 8.1% 10.2% 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.

8. Narcotic Analgesics 20.8% 11.3% 12.4% 13.4% 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.

10. Antivirals 12.3% 12.3% 12.3% 1.9% 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.

11. Stimulants/ 17.6% 11.3% 5.0% 9.2% Health concerns about ADHD drugs areAnti-Obesity 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.

14. Antihistamines 5.0% -14.5% -7.3% -7.3% 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.

19. Hypnotics 9.8% 13.3% 0.4% 13.4% Utilization growth rates are expected todecline 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.

Other 7.1% 7.1% 8.2% 8.2%

Total 7.6% 8.6% 9.2% 7.5%

Forecast



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SPECIALTY DRUGSThe data sample in the 2006 Drug Trend Reportincludes only specialty drugs that were adjudicatedthrough the pharmacy benefit. By this measure, specialty drugs account for only 9.2% of the totalpharmacy-benefit ingredient cost. Since a large portion of specialty-drug spend is paid through themedical 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 asreported by IMS Health estimates that total specialty trend was only 16.6% in 2006, compared withthe 20.9% trend shown in this report. This disparity may be explained, in part, by the much lowergrowth rate (4% to 6%) in hospital-drug expenditures4 because many specialty medications areadministered in the hospital and are billed under the medical benefit.

Exhibit 16

2006 and Projected 2010 Spend for Specialty Medications

Source: Express Scripts analysis of IMS Health data.

In this section of the Drug Trend Report, we have not simply extrapolated the overall specialty trendbetween 2005 and 2006 over the next few years. Instead, we have attempted to forecast growthin the top six specialty categories based on expected utilization and cost dynamics of the drugs ineach class. Then, class-specific estimates were combined with trend estimates for the remainingspecialty drugs. This final specialty forecast supplements our nonspecialty forecast to produce anoverall view of expected changes in the pharmacy benefit for the next four years.

Forecast


4 Hoffman JM, Shah ND, Vermeulen LC, et al. Projecting future drug expenditures--2007. Am J Health Syst Pharm. 2007;64(3):298-314.

20% 26%

2006 2010

Specialty Rx Spend$54 Billion

Specialty Rx Spend$99 Billion

Nonspecialty Rx Spend$284 Billion

Nonspecialty Rx Spend$221 Billion


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Specialty drug utilization is expected to slow in the next couple of years due to lower than historicalgrowth in a few categories. In the inflammatory conditions class, market expansion beyond thetreatment of rheumatoid arthritis (RA) has leveled off leading to a slowdown in the explosivegrowth seen since 1998. That deceleration is expected to continue even as new products, such asCimzia, 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 severalrecent studies have reported safety issues with the use of erythropoietin (EPO).5, 6 Toward the endof the decade, utilization growth will be fueled by new products that are expected in 2008 and2009 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 productsexpected in 2007 and by true generic anticoagulants that should enter the market within the nextfew years. Additional downward pressure may be exerted by new oral medications for conditionssuch as MS, currently treated only by injectables. Movement toward new, more expensive productswill 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)

Forecast


Cost

Rxs

30%

25%

20%

15%

10%

5%

2005 2006 2007 2008 2009 2010

0%

5 Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, Reddan D; CHOIR Investigators. Correction of anemia with epoetin alfain chronic kidney disease. N Engl J Med. 2006;355(20):2085-2098.

6 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.


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Exhibit 18

2007 to 2010 Forecast for Selected Specialty Therapy Classes

2006Trend


1. Inflammatory 21.9% 21.9% 21.9% 21.9% New products such as CimziaTM and

Conditions 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.

2. Multiple Sclerosis 16.2% 16.3% 16.4% 15.4% 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 useof existing MS drugs.

3. Cancer 43.8% 38.0% 38.0% 38.0% New drugs and combination therapy

will drive up utilization.

4. Blood Cell 5.0% 6.1% 7.1% 7.1% Less growth is expected in utilization,

Deficiency primarily driven by recently publicized

safety concerns associated with the use

of EPO products for anemia.

5. Growth Deficiency 5.0% 10.2% 9.2% 9.2% 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.

6. Hepatitis C -0.3% -0.3% 12.4% 14.5% 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 24.2% 25.4% 26.5% 26.5% Other specialty categories are expectedto 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.

Total 21.2% 22.0% 23.5% 24.0%

Forecast



47/49

Methods 5Express Scripts 2006 Drug Trend Report


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Methods

The analyses presented in the 2006 Drug Trend Reportare based on prescription-drug usefor 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 throughMedicare Part D plans or Managed Medicare Prescription Drug Plans (PDPs) were excluded fromthis 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 thecalculation of cost.

As was the case in earlier Drug Trend Reports, prescription counts have been converted to equivalentquantities that would have been dispensed through participating pharmacies to adjust for differentialHome-Delivery use rates and varying benefit structures. Medications sold over the counter andprescriptions dispensed in inpatient settings are not included in this analysis. Trends are reportedand discussion presented for two separate groupings of drugs: nonspecialty drugs and usuallyexpensive medications requiring special handling and patient care com

2006 drug trend report

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