Generic drug use varies widely by state, study reveals

December 06, 2004

ST. LOUIS, DECEMBER 6, 2004 - Generic drug use varies widely by state, according to a new Express Scripts study that measured per capita generic drug utilization in 2003 using a random sample of approximately 3 million pharmacy benefit plan members age 18 to 64.

The study revealed that Massachusetts had the highest generic dispensing rate, at 51%, followed by New Mexico and Oregon, with generic dispensing rates of approximately 50%.

Eastern states, such as New Jersey and New York; and southern states, including Texas, Louisiana, Florida and Mississippi, used generics to fill fewer than 43% of all prescriptions. New Jersey used generics for fewer than 40% of all prescriptions.

Possible explanations for the variations in generic fill rates include variations in prescribing patterns, state regulations, differences in disease prevalence and varying use of drug benefit designs that encourage greater use of generics. A copy of the study is available at www.express-scripts.com/ourcompany/news/outcomesresearch/onlinepublications/.

By the end of 2008, branded pharmaceutical products accounting for more than $38 billion in sales last year are expected to lose patent protection. Taking advantage of generics can result in significant savings for plan sponsors and their members. Express Scripts statistics show that for every 1% increase in generic drug use, prescription benefit plan sponsors save nearly 1% off their cost for drugs in providing the benefit. Express Scripts' overall generic dispensing rate increased to 51% in the third quarter of 2004.

The generic variation study is the second Express Scripts study to examine geographic variations in prescription drug use. In 2001, Express Scripts research in geographic variation in prescription drug use found significant variation in the prevalence of use of prescription medication overall and across many therapy classes. This study points to opportunities currently available to plan sponsors to encourage greater use of generic medications.

"Generic drugs are the key to managing the growing cost of prescription drugs, making it possible for plan sponsors to continue to provide an attractive prescription benefit for their members," says Brenda Motheral, vice president of Research and Trend Management, Express Scripts.

Express Scripts offers plan sponsors numerous programs that promote the cost-saving opportunities associated with generic drugs, saving money for both plan sponsors and their members.

For example, GenericsWorkSM, a generics-focused program, provides savings opportunities for plan sponsors and members by promoting the use of generics and low-cost brands. Plan sponsors that implement GenericsWork should see their generic fill rate increase to 75%. A plan sponsor providing prescription benefits for 100,000 members would realize an estimated $25 million in savings over three years using GenericsWork. Express Scripts also offers a Zero Dollar Generic Copay program, which allows a plan to waive six months worth of prescription copayments for members who switch from using a higher-cost branded drug to a lower-cost generic within certain therapy classes. With the Zero Dollar Generic Copay program, sponsors save through greater use of generics, and members get lower copayments.

In addition, more clients are choosing to implement step therapy programs, which require the member to try a lower-cost alternative, often generic, before a more expensive brand product is covered. Step therapy has proven to be such a successful tool for plan sponsors that enrollment in step therapy grew from 4.5 million to 12.4 million members from the end of 2002 to June 2004, with the average plan sponsor implementing more than four of the 20 modules available.

Express Scripts recently launched Rx OutreachSM, the country's first prescription drug assistance program for generic drugs. Rx Outreach offers more than 50 different FDA-approved generic medications to lower-income adults and children for health problems such as diabetes, asthma, high blood pressure, breast cancer and depression.

Medicines through Rx Outreach cost $18 for a three-month supply or $30 for a six-month supply. Rx Outreach offers significant savings. Without access to Rx Outreach, consumers would pay an average of $100 for a 90-day supply of a medicine available through the program. For some Rx Outreach medicines, the price can be as much as $400 for a 90-day supply.
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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 50 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 provides integrated PBM services, including network pharmacy claims processing, mail pharmacy services, benefit design consultation, drug utilization review, formulary management, disease management, medical and drug data analysis services, and medical information management services. The Company also provides distribution services for specialty pharmaceuticals through its Specialty Distribution 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.

Express Scripts, Inc.

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