Generic Biotech Medicines Could Save Plan Sponsors and Patients $71 Billion

Business Wire, Feb 15, 2007

ST. LOUIS -- Generic biotech medicines could save U.S. plan sponsors and patients $71 billion over ten years, with $3.5 billion of the savings occurring the first year, according to a report issued by Express Scripts, one of the nation's largest managers of pharmacy benefit plans.

Savings for plan sponsors could amount to $1,900 in the first year for a multiple sclerosis patient with a therapy treatment that includes biotech medicines.

"Given the savings potential for plan sponsors and the patient, we believe it is critical that an approval pathway for generic biotech medicines be established," says Steve Miller, Express Scripts chief medical officer and vice president, specialty pharmacy.

A pathway for generic biotech medicines would be created with the enactment of The Access to Life Saving Medicine Act of 2007, which is sponsored by Senators Charles Schumer (D-NY), Hillary Rodham Clinton (D-NY), David Vitter (R-LA) and Susan M. Collins (R-ME) and Representatives Henry Waxman (D-CA) and Jo Ann Emerson (R-MO). Miller says, "Express Scripts applauds and supports this important legislation to make biotech drugs more affordable."

In addition to increased savings for plan sponsors and patients, the use of generic medicines has been shown to lead to better outcomes such as improved medication adherence for chronic conditions.

Most biotech medicines are injectable, infused, oral or inhaled and generally require special handling along with close supervision and monitoring of the patient's medication therapy. These medicines treat chronic or complex illnesses that affect less than three percent of the general population, but they come with a significant price tag -- these patients account for 25 - 30 percent of a company's overall pharmacy costs.

Biotech medicines differ from traditional drugs in that they are derived from living sources such as humans, animals or microorganisms as opposed to drugs synthesized using chemical reactions in the lab.

The $71 billion savings potential could be achieved if the Food and Drug Administration (FDA) were able to release guidelines for the approval of generic biotech medicines. Without the guidelines, generic manufacturers are unable to offer Americans the lower-cost alternatives to brand biotech medicines.

Controlling the cost of biotech medicines, one of the fastest growing segments of health care, is a top priority for employers, insurers and the federal government. Spending for biotech medicines in the U.S. is expected to reach $90 billion in 2009. Increasing the use of generics is a proven tool in decreasing costs.

The report's conclusions were based on a review of four biotech medicine therapy classes for which key patents have already expired. The therapy classes represent medicines used to treat multiple sclerosis, anemia, growth hormone deficiencies, and diabetes.

The largest estimated savings of $40.7 billion over ten years is found in erythropoietins, the class of medicines used to treat anemia. There are 350,000 dialysis patients and 450,000 oncology patients using erythropoietins.

There are 15 million Americans diagnosed with diabetes. More than 25 percent of the market could move to a generic biotech medicine and save $797 million in the first year.

Fifty percent of the 320,000 multiple sclerosis patients treated with interferons could move to a generic biotech medicine and achieve a $678 million savings in the first year.

Generic biotech medicines could be used to treat 80 percent of patients with a growth hormone deficiency, leading to $27.7 million in first year savings.

The report also includes an analysis of savings for each state and the District of Columbia. Twenty-six states would save more than $1 billion dollars over a ten year period with California and New York achieving the greatest savings of $7.7 and $5.8 billion respectively.

The Express Scripts analysis used a conservative discount of 25 percent off the branded equivalent medicine. This is consistent with the discount on the biotech medicine somatropin, which was released last year in Europe. The analysis is also based on an 83 percent generic market share and a 15 percent annual increase in biotech medicine costs, which is consistent with industry forecasts.

Both the discount and the generic biotech medication fill rate are more conservative numbers than used for traditional drugs where a 95 percent market share can be achieved and, on average, a generic drug costs approximately 60 percent less than a brand name drug.

Additionally, the analysis assumes that once the FDA guidelines are issued, generic biotech medicine manufacturers would quickly begin production and distribution. To view a copy of the study go to: http://www.express-scripts.com/ourcompany/news/outcomesresearch/online publications/. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

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Express Scripts, Inc. (Nasdaq: ESRX) is one of the largest pharmacy benefit management (PBM) companies in North America, providing PBM services to over 55 million patients through facilities in 13 states and Canada. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com.