2007 Express Scripts Workers' Compensation Drug Trend Report

2007 Express Scripts Workers’ Compensation Drug Trend ReportApril 2008IntroductionWorkers’ compensation pharmacy benefit managementexperienced a number of dynamic events in 2007, includingchanges in state fee schedules, the consolidation of third-partybillers (TPBs), the introduction of generics for some key drugs,and direct-to-consumer advertising of drugs, such as Lyrica ® ,Cymbalta ® and Celebrex ® . These market forces created a newset of challenges for workers’ compensation payers, resultingin increased awareness to the cost and use of prescriptiondrugs in workers’ compensation.TrendAmong Express Scripts workers’ compensation clients, pharmacytrend for 2007 rose 6%* — considerably less than the prioryear’s 11.4% increase. Per utilizer per year ingredient-cost trendwas analyzed for the following major dimensions:Change in ingredient cost perprescription of common drugs**Change in utilization ofcommon drugs2006 2007TrendTrend8.3% 4.4%2.6% 1.5%New drugs*** 0.2% 0.1%Overall Trend 11.4% 6.0%Drilling down by therapy class, narcotic analgesics had thegreatest impact on trend, with a 10.1% increase in 2007. (Withthe removal of OxyContin ® generic alternatives, we can expect tosee this trend increase in 2008.) In contrast, while nonsteroidalanti-inflammatory drugs (NSAIDs) remained in the top fourtherapy classes for both utilization and cost, they experienceda 10% decrease in trend.When we examined specific drugs, we found that Actiq ® ,Mobic ® , Ambien ® and Zoloft ® helped control the trend.These multisource brand drugs were widely used in workers’compensation before their generic equivalents becameavailable, at which point their utilization dramaticallydecreased. Conversely, upward drivers of trend included Lyrica,OxyContin and various fentanyl products, such as Fentora ®and the generic alternatives for Actiq and Duragesic ® . Whatis unusual about this scenario is that while it’s expected thatActiq would help control trend as its utilization decreased,its generic alternative (fentanyl citrate) was the top trend driverbecause of its excessive price. (Although the average ingredientcost of a brand drug is $221.53 as compared to $57.08 fora generic, the average ingredient cost of Actiq is $3,973.73versus $2,679.28 for its generic alternative.) Furthermore, whilesome Express Scripts Workers’ Compensation clients choose notto include antidepressant medications on their drug list duringthe first 30 days following an injury, Cymbalta remained in thetop four upward trend drivers for our book of business.* As we analyzed data for our second annual Workers’ CompensationDrug Trend Report, we recognized limitations from delays in receivinginvoices from TPBs. Therefore, Express Scripts revised our methodologybased on the dates prescriptions were billed to the payer rather thanthe dates they were filled. Thus, the trend data in this report compareprescriptions billed to payers in 2007 with those billed in 2006.Furthermore, because of this improved methodology, we are restatingthe trend for 2006.** Common drugs refers to those medications that were dispensedin both 2006 and 2007.*** New drugs refers to those medications that were dispensedin 2007 but not 2006.

2007 Express Scripts Workers’ Compensation Drug Trend ReportHow Express Scripts ManagesWorkers’ Compensation Pharmacy TrendArmed with proven solutions, Express Scripts remainscommitted to making the use of prescription drugs saferand more affordable for our workers’ compensation clients.In Q4 2007, Express Scripts Workers’ Compensation achieveda record-setting 68.9% generic fill rate (GFR). Achievedthrough a comprehensive approach to driving generics,our clinical programs address both single-source andmultisource brand drugs. In addition to drug-list managementand clinical consultation, which includes detailed analysisand recommendations from dedicated pharmacists, ExpressScripts effectively uses Step Therapy programs to targetbrand-name drugs that have therapeutically equivalent genericalternatives. Additionally, by communicating with prescribersof dispense-as-written (DAW) prescriptions, the ExpressScripts Physician Outreach Program (POP) aims to decreasethe use of brand-name drugs. Exhibit 1 demonstrates theincrease in GFR, which can be attributed to our clients’willingness to adopt our progressive clinical strategies.Exhibit 1Change in Generic Fill Rate69.50%69.00%68.50%68.00%67.50%67.00%66.50%66.00%65.50%65.00%64.50%2006 Avg. Q1 2007 Q2 2007 Q3 2007 Q4 2007Source: Express Scripts Internal DataNetwork penetration is another key metric within the workers’compensation pharmacy arena.* By leveraging directrelationships with our pharmacies, discouraging the useof TPBs and maximizing our ID card program, Express Scriptsnetwork penetration reached 89.9% in Q4 2007. Paymentoptions for TPB invoices and a number of our programs, suchas paper bill conversion, first fill and pharmacy outreach, helpclients save money by increasing network penetration andreducing TPB involvement.*Express Scripts defines network penetration as the percentageof billed prescriptions (electronic and paper claims) which were filledwithout TPB involvement at participating pharmacies (includingExpress Scripts pharmacies).Exhibit 2 demonstrates that TPB-submitted invoices decreaseas network penetration increases.Exhibit 2Increase in Network Penetration Versus DecreaseIn TPB Invoices% TPB invoices (of total scripts)16%14%12%10%8%6%4%2%0Q3 2006Q4 2006Q1 2007Source: Express Scripts Internal DataQ2 2007Q3 2007% TPB Invoices Network PenetrationQ4 2007Home Delivery offers another opportunity for workers’compensation payers to manage drug spend, whileensuring safety and increasing convenience for injuredworkers. Home Delivery automation produces a 99.9%accuracy rate, compared with 98.3% accuracy for retail. 1In other words, for every 1,200 prescriptions moved fromparticipating pharmacies to Home Delivery, there will be oneless clinically significant drug error. 1 Client interest in HomeDelivery dramatically increased during 2007 as Express Scriptsexpanded its aggressive program for targeting injured workerswho were ideal candidates for Home Delivery.12003 study by the American Pharmaceutical Association; PublishedJournal of American Pharmaceutical Association 43(2): 191-200, 2003.92%90%88%86%84%82%80%78%Network Penetration

Pain Management: Current andFuture Challenges to Managing CostsCost-effective management of pain is a major challengefor workers’ compensation payers. Fentanyl is especiallyproblematic. Approved as generics in some dosage forms,fentanyl is also available as brands, such as Duragesicpatches, Actiq lozenges and Fentora buccal tablets. A keypoint to note is that when a brand drug loses its patent,sometimes its manufacturer replaces it with a single-sourcebrand drug, which occurred with Actiq and Fentora. Whilethese two products are only FDA-approved for cancer-relatedbreakthrough pain, they are often prescribed off-labelfollowing injuries or surgery. However, significant risksof overdose, misuse, addiction and death have promptedFDA warnings about their use. 2, 3 As mentioned, even genericfentanyl products have significantly high ingredient costs.As a result, Express Scripts recommends that our clientsrequire prior authorization of these drugs.Another pain-related issue involves OxyContin. After generics(oxycodone controlled-release tablets) were introduced in2004, patents for OxyContin were determined to still be valid.As a result, generics are being pulled from the market andOxyContin is regaining its status as a single-source branddrug. Once supplies of the generic have been depleted, theGFR is expected to decrease. To help manage this situation,Express Scripts will recommend that clients institute a planlimitation for this drug.A third pain medication to watch is Lyrica. Indicated forseveral painful conditions, in 2007 Lyrica became heavilypromoted as the only FDA-approved drug to treat fibromyalgia.This increase in direct-to-consumer advertising likelycontributed to its growth during 2007 and is expectedto continue into 2008. Express Scripts, with our LyricaStep Therapy module, is well-positioned to defend againstany upward trend for this particular drug.A new NSAID on the market that’s also widely prescribedfor pain relief is the Flector ® patch. The first prescriptiontopical NSAID, Flector is indicated for acute pain dueto minor strains, sprains and contusions. Becauseof its extremely high price, Express Scripts clients will beencouraged to implement our drug-exception processfor this product and require prior authorization beforethis drug can be dispensed.ConclusionThe facts are clear. Workers’ compensation is full of uniquechallenges for payers and injured workers. Our provensolutions are hard evidence that we have been successfulin helping clients navigate, dissect and master their workers’compensation pharmacy program. Additionally, we’ve giveninjured workers an efficient and stress-free process. Byfocusing on areas that impact trend — generics, networkpenetration and Home Delivery — we consistently deliveron our commitment to help clients drive out waste andlower pharmacy costs.2http://www.fda.gov/cder/drug/infopage/fentanyl_buccal/default.htm3http://www.fda.gov/cder/drug/advisory/fentanyl_2007.htm2007 Express Scripts Workers’ Compensation Drug Trend Report

2007 Express Scripts Workers’ Compensation Drug Trend Report© 2008 Express Scripts, Inc. All Rights Reserved. PUB08-07603