Express scripts study says prescription drug coverage for seniors may cost three to four times more than coverage for those under 65

May 24, 2001

Findings hold implications for policymakers entrusted with design of a prescription drug plan under Medicare

ST. LOUIS, MO, MAY 25, 2001 -- A new study released today by Express Scripts (NASD:ESRX), one of the nation's leading pharmacy benefit managers (PBMs), examines the unique patterns of prescription drug usage among a commercially insured senior population, defined as those age 65 or older. Through original research involving analysis of millions of prescription claims, the study documents high levels of prescription drug consumption among this population. The findings hold significant implications for policymakers charged with crafting a Medicare prescription drug benefit, say Express Scripts researchers.

"In 1998, commercially insured individuals age 65 or older consumed, on average, the equivalent of 29 one-month-supply prescriptions at an annual per-person cost of approximately $1,185," observed Express Scripts Outcomes Researcher Emily R. Cox, Ph.D., lead investigator on the study. "At this rate of consumption, the cost of covering a senior employee or retiree can be three to four times greater than the cost of covering a younger employee for the same period."

Although the sample population was limited to enrollees in private-sector plans, the study's findings hold important implications for development of a prescription benefit under Medicare, said Cox. "Seniors' drug-consumption patterns and average costs provide important benchmarks that policymakers can and should use to evaluate the appropriateness of coverage offered by various Medicare prescription plan proposals."

The report, "Prescription Drug Use Among a Commercially Insured Senior Population," which may be read in its entirety at http://www.express-scripts.com/other/news_views/outcomes_research.htm, is the latest drug-utilization and cost study to be released by Express Scripts. In June, the company will release Express Scripts' 2000 Drug Trend Report and three new studies, including one examining demographic and clinical characteristics exhibited by high-cost patients. The releases will coincide with Express Scripts' fifth annual Outcomes Conference, to be held in St. Louis, June 18-20.

Analyzing prescription claims histories for 1998, researchers documented the number of senior members who used the benefit over the year, the number of prescription claims per member, each member's total prescription expenditures, and the drug categories most extensively used. The team also looked at medication use and costs by age group and by gender, geographic variations in utilization, the type of cost-share method used in each benefit plan, and the impact of cost-share method on members' out-of-pocket costs and the plan's costs.

Highlights of "Prescription Drug Use Among a Commercially Insured Senior Population":

Concentrated in a Few Chronic Therapy Classes, Seniors' Utilization Differs by Gender.
Researchers found that 35% of all prescription claims for the sample population were in five therapeutic categories, all used to treat cardiovascular disease: antihypertensive agents, antihyperlipidemics, diuretics, calcium channel blockers and beta blockers. Men were found to use certain cardiovascular therapies at a 14% to 37% greater rate than women. Women, on the other hand, used antidepressants and antianxiety agents at a rate over 60% greater than that of men.

Cost of One Drug to Treat a Chronic Condition Can Average Above $500 per Year.
The mean average wholesale price for a single prescription in five of the top ten drug categories consumed by seniors -- ulcer therapy, antihyperlipidemics, calcium channel blockers, antiasthmatics and antidiabetic agents -- exceeded $40 for a month's supply. Assuming full compliance, the average annual cost of one product in any of these chronic therapy categories would exceed $500.

Private Prescription Plans for Seniors Tend to Be Generous.
Approximately 80% of seniors studied had fixed-dollar copayments, averaging $9-$10 for single-source and multisource brand medications and $5 for generics. On average, these seniors paid $200 out-of-pocket, or 22% of actual cost. Another 8% had coinsurance rates as their means of cost-sharing. These seniors' out-of-pocket expenditures averaged $280, or 27% of actual cost.

Findings Hold Implications for Plan Design.
The Express Scripts study underscores differences between the utilization profiles of people 65 and over and those of younger populations. "These differences are primarily due to the fact that seniors are more likely to use medications to treat chronic, rather than episodic, conditions," said Cox. "In addition, they are more likely to have multiple, coexisting conditions and are thus more likely to use more drugs."

Taking multiple medications raises not only costs but also concern about safety. "If plans covering older adults are to meet their goals of safety and cost-effectiveness, sponsors need to understand the complexity of drug use in this population and recognize the need for special measures," Cox said. Effectively addressing the needs of older adults, she explained, includes implementing online adjudication programs to flag potential risks to health and safety, physician-education programs to encourage appropriate prescribing for seniors, patient-counseling and education programs to help patients understand how to take medications properly, and disease-state management programs to address cost and safety issues.

Those charged with defining public policy affecting healthcare for America's seniors will also need to consider the implications of cost-sharing, emphasized Cox. "The current economic climate makes it doubtful that coverage under any Medicare prescription drug program established by Congress would be as generous as coverage now provided by many private employers. Any substitution of a government-funded senior drug benefit for current employer-sponsored plans may lead to increased retiree dissatisfaction due to potentially higher out of pocket expenses." As policymakers go about the business of crafting a prescription benefit for older adults, they need to be cognizant of the unique requirements that characterize the population such a benefit will serve.
-end-
Express Scripts Contacts:
Ryan Soderstrom, Corporate Communications
(952)-837-5160 ryan.soderstrom@express-scripts.com
David Myers, Investor Relations
(314)-702-7173 david.myers@express-scripts.com


The full text of the Express Scripts study, with complete findings and supporting charts and graphs, is available at www.express-scripts.com.

About Express Scripts
Express Scripts, a Fortune 500 and Forbes Platinum 400 company, is one of the largest pharmacy benefit management (PBM) companies in North America. Through facilities in seven states and Canada, the company provides pharmacy services and pharmacy benefit plan-design consultation for more than 10,000 client groups, including managed-care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. The company covers 45.5 million lives. Core services include pharmacy network management, mail and Internet pharmacies, formulary management, targeted clinical programs, integrated drug and medical data analysis, market research programs, medical information management, workers' compensation programs and informed-decision counseling. The company also provides non-PBM services, including distribution services for specialty pharmaceuticals through its Specialty Distribution Services subsidiary. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at www.express-scripts.com, which includes expanded investor information and resources.

SAFE HARBOR STATEMENT
This press release contains forward-looking statements, including, but not limited to, statements related to the company's plans, objectives, expectations (financial and otherwise) or intentions. Actual results may differ significantly from those projected or suggested in any forward-looking statements. Factors that may impact these forward-looking statements include but are not limited to: (i) risks associated with our ability to maintain internal growth rates, or to control operating or capital costs; (ii) continued pressure on margins resulting from client demands for enhanced service offerings and higher service levels; (iii) competition, including price competition, and our ability to consummate contract negotiations with prospective clients; (iv) adverse results in regulatory matters, the adoption of new legislation or regulations (including increased costs associated with compliance with new laws and regulations, such as privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA), more aggressive enforcement of existing legislation or regulations, or a change in the interpretation of existing legislation or regulations; (v) the possible termination of contracts with key clients or providers; (vi) the possible loss of relationships with pharmaceutical manufacturers, or changes in pricing, discount or other practices of pharmaceutical manufacturers; (vii) adverse results in litigation; (viii) risks associated with our leverage and debt-service obligations; (ix) risks associated with our ability to continue to develop new products, services and delivery channels; (x) developments in the healthcare industry, including the impact of increases in health care costs, changes in drug utilization and cost patterns and introductions of new drugs; (xi) competition from new competitors offering services that may in whole or in part replace services that the company now provides to its customers; and (xii) other risks described from time to time in our filings with the SEC. The company does not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Kupper Parker Communications

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