Express Scripts Pharmacy Cost Trends Lowest in Over a Decade

$42 Billion Savings Opportunity Still Remains for Nation

ST. LOUIS, April 20 /PRNewswire-FirstCall/ -- In the midst of the financial
crisis and skyrocketing healthcare costs, greater use of generic drugs and
lower-cost brand drugs led to a record-low spending trend for 2008 according
to data from Express Scripts (Nasdaq: ESRX), one of the nation's largest
pharmacy benefit managers. Overall pharmacy cost trend for Express Scripts
clients was 3.0 percent for 2008, down 2.5 percentage points from 5.5 percent
for 2007. The findings were calculated by evaluating total prescription costs
for traditional drugs and specialty drugs, including patient copayments and
payments by plan sponsors, which include employers, health plans and labor
unions.

"Using generic drugs that are safe and effective can help lower costs while
still driving value for patients and employers," said Steven Miller, MD,
senior vice president and chief medical officer at Express Scripts. "Our
results indicate that cost control is achievable through careful management of
appropriate use of drugs and delivery channels, without shifting costs to
consumers. Although the trend is the lowest it has been in over a decade,
significant opportunity to lower spending still exists."

The research shows that failure to make prescription drug choices that take
full advantage of clinically appropriate, lower-cost alternatives to more
expensive brand drugs cost Americans approximately $42 billion in 2008. This
estimate is based upon potential savings for the total U.S. population in only
13 drug-therapy classes. Researchers calculated the $42 billion estimate by
using a commercially insured group of 3,000,000 people to extrapolate savings
for the U.S. commercially insured population (see Table 1 below). These
figures were then applied to others insured by payers such as Medicare and
Medicaid in proportion to the total insured population and the number of
prescriptions.

"Finding ways to reduce spending without compromising health outcomes is the
top priority for healthcare reform, as the Obama administration recognizes,"
said Alan Garber, MD, PhD, Henry J. Kaiser Professor and director of the
Center for Health Policy at Stanford University. "We have long used financial
incentives to try to eliminate waste. Now we're finding that tools that build
upon the insights of behavioral economics and psychology can have powerful,
positive effects." Garber is also an advisory board member at the Express
Scripts Center for Cost-Effective Consumerism.

Express Scripts works with the Center's advisory board to advance
Consumerology, a ground-breaking approach to helping consumers make better and
more cost-effective healthcare decisions.

In addition to working with the Center, Express Scripts partners with clients
to advance Consumerology. Employers from across the nation will be attending
an Express Scripts meeting this week to discuss innovative approaches to
reduce wasteful spending and advance health outcomes, including applications
of behavioral economics principles to healthcare. Research findings being
announced will include drug trend analysis as well as step therapy and
formulary change programs that improve patient outcomes while producing cost
savings.

"In today's economy, we are not only tracking wasteful spending across the
country but developing strategies to reduce it," said George Paz, chief
executive officer at Express Scripts. "By applying the principles of
behavioral economics we are helping consumers make better and more
cost-effective healthcare decisions. We understand we cannot eliminate waste
alone and we are committed to working alongside likeminded organizations, such
as the Federal Coordinating Council for Comparative Effectiveness Research, to
continue to identify strategies to improve our healthcare system."

Significant Opportunities for Generic Drug Savings Potential

Considerable variation was seen in year-over-year state spending trends
(Figure 1). In addition to differences in population size and prescribing
patterns, possible explanations include differences in disease prevalence,
differences in age of the population, baseline drug spend and varying use of
drug-benefit programs that encourage greater use of generics.

Figure 1: 2008 Pharmacy Cost Trends and Wasteful Spending Per State (in
Millions)

(Photo: http://www.newscom.com/cgi-bin/prnh/20090420/DC01276 )

On average, a generic drug is over $90 cheaper than a brand name drug.
Express Scripts data indicates that generic drug usage from 2007 to 2008
increased by 7.5 percent, while utilization of brand name medications
decreased 11 percent.

By the end of 2008, 67.3 percent of all prescriptions that Express Scripts
filled were for generic drugs. In comparison, the national average for
generics drugs was 63.7 percent for the 12 months ending September 2008,
according to IMS Health.

Options to save more by using generics will continue to expand going forward.
In 2009, at least 20 branded drugs are expected to become available
generically. Over the next five years, more than $66 billion worth of branded
drugs are expected to lose patent exclusivity.

2008 Drug Trend Report Highlights Savings Opportunity

Drug spending trends are based on the Express Scripts 2008 Drug Trend Report,
which will be released this week. In 2008, Express Scripts managed
prescription-drug benefits for tens of millions of Americans, representing
thousands of plan sponsors throughout North America.

To profile prescription drug trends, researchers evaluated traditional drugs
and specialty drugs separately using a common data set, which included a
sample of plan sponsors that were with Express Scripts in 2007 and 2008. From
this sample, researchers randomly selected approximately three million
commercially insured members. Year-over-year prescription cost trends were
evaluated on a per member per year (PMPY) basis.

The generic savings opportunity projections in Table 1 are extrapolated to the
U.S. commercially insured population only, based on a sample of approximately
three million plan members. These 13 therapy classes treat such conditions as
stomach ulcers, inflammation, depression, high blood pressure and high
cholesterol.

Table 1: 2008 Generic Savings Opportunity across Top 13 Therapy Classes*

Drug Therapy Class 2008 Missed Savings
GFR(+) Opportunity

Antihyperlipidemics 43.9% $5.1 billion
Gastrointestinal Medications 55.3% $4.5 billion
Antidepressants 69.0% $2.6 billion
Anticonvulsants 57.7% $1.2 billion
Antihypertensives 64.5% $935 million
Hypnotics 69.4% $858 million
Antidiabetics 55.3% $668 million
Systemic/Topical Nasal Prod. 49.4% $656 million
Oral Contraceptives 65.3% $454 million
Antipsychotics 32.5% $399 million
Antihistamines 79.2% $260 million
Narcotic Analgesics 93.8% $294 million
Beta Blockers 95.0% $167 million
Total $18.1 billion

* Source: Express Scripts, Inc.
+ Actuals through end of 2008

Behavioral Economics Key to Unlocking Value

At the Center for Cost-Effective Consumerism, leading academics in behavioral
economics are accelerating studies to apply an advanced understanding of human
behavior to the pharmacy benefit and to healthcare at large. Express Scripts
works with the Center's advisory board to advance Consumerology, an innovative
approach to helping consumers make better and more cost-effective healthcare
decisions.

Several Center studies explore loss aversion, the tendency of people to focus
more on possible losses than gains. Aversion to loss is one of the best-known
principles of behavioral economics and one key to unlocking the $42 billion
savings opportunity nationwide.

"Studies have repeatedly shown that people work much harder to avoid losses
than to pursue gains," said Bob Nease, PhD, the company's chief scientist.
"This suggests that a 'stop wasting money' message is more effective than a
message focused on potential savings. In addition, by applying evidence-based
segmentation, we have practical insight into which members are likely to be
most sensitive to loss aversion. One size does not fit all."

Several other principles of behavioral economics are being applied and tested,
as well. For more information, visit http://www.consumerology.org.

About Express Scripts, Inc.

Express Scripts, Inc., is one of the largest pharmacy benefit management (PBM)
companies in North America, providing PBM services to millions of consumers by
serving thousands of client groups, including managed-care organizations,
insurance carriers, employers, third-party administrators, public sector,
workers' compensation and union-sponsored benefit plans.

Express Scripts provides integrated PBM services, including network-pharmacy
claims processing, home delivery services, benefit-design consultation,
drug-utilization review, formulary management, and medical- and drug-data
analysis services. The company also distributes a full range of
biopharmaceutical products directly to patients or their physicians, and
provides extensive cost-management and patient-care services.

Express Scripts is headquartered in St. Louis. More information can be found
at www.express-scripts.com.

SOURCE Express Scripts, Inc.

Maria Palumbo, +1-314-479-1942, MPalumbo@express-scripts.com