Medicines in the US Report - IMS Health

The Use ofMedicines in the

United States:Review of 2011

April 2012

Report by the IMS Institute for Healthcare Informatics

The Use of Medicines in the United States: Review of 2011Report by the IMS Institute for Healthcare Informatics

Breakthrough therapies, innovations in disease treatments, and changes in the consumption of medicines transformed the US healthcare marketin 2011.

Major innovations in disease treatment, including the most new medicinesin a decade, combined to bring transformative therapy options to over 20 million Americans in 2011. At the same time, however, we saw adecrease in the use of medicines by patients and further declines inphysician office visits, a continuing trend of the last few years. Theavailability of new generic drugs in a number of chronic therapiescontributed to lower patient out-of-pocket spending, and a minimal realper capita increase in total spending on medicines.

This retrospective analysis, in which we examine key issues and trends impacting consumption of and spending on medicines, provides new perspective and important background to informing critical decisions currently under consideration by all who have a stake inthe US healthcare system.

This report was developed as a public service by the IMS Institute forHealthcare Informatics, without industry or government sponsorship.

Michael KleinrockDirector, Research DevelopmentIMS Institute for Healthcare Informatics

Introduction

IMS Institute for Healthcare Informatics11 Waterview BoulevardParsippany, NJ 07054

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Executive Summary ............................................................... 2

Transformations in Disease Treatment ..................................... 3

Changes in the Utilization of Healthcare and Medicines .......... 7

Patient Payment for Medicines ............................................. 13

Spending on Medicines ........................................................ 19

Usage and Spending in Major Therapy Areas .......................... 28

Notes on Sources ................................................................ 35

Appendices ........................................................................ 36

About the IMS Institute ...................................................... 43

Contents

Medicine Use By 19-25 Yr Olds +2.0%

Medicine Use By 65+ Yr Olds -3.1%

Average Medicare Part D Copay -$2.66

Real Per Capita Drug Spending +0.5%

Total Drug Spending $320Bn

Patient Office Visits -4.7%

Out-of-Pocket Spending $49Bn

Medicine Use Nationally -1.1%

New Therapies Launched 34

1The Use of Medicines in the United States: Review of 2011Report by the IMS Institute for Healthcare Informatics

2

Executive summaryTRANSFORMATIONS IN DISEASE TREATMENT Major transformations in treatment options fordiseases affecting a few thousand to several millionpatients became available during 2011. They werenot only the most in number in a decade, butrepresented important clinical advances, rarely seenin combination in the last 10 years.

CHANGES IN THE UTILIZATION OF HEALTHCARE AND MEDICINESOverall per capita utilization of medicines declinedin 2011 as patient office visits and non-emergencyroom hospital admissions dropped, and olderAmericans reduced their retail drug use. Not onlywere rates of usage for chronic medicines declining,there were important variations across the countryand by patients’ age, which suggests a concerningtrend in the nation’s use of healthcare services.Young people, aged 19-25, increased their use ofprescription drugs as many were able, for the firsttime, to remain on their parents’ health insurance,while seniors, aged 65 and over, reduced theirvolume of prescriptions.

PATIENT PAYMENT FOR MEDICINESPatients with insurance spent $49Bn out-of-pocketfor prescription drugs, down $1.8Bn from 2010. The declines were largely related to the introductionof subsidies for Medicare Part D beneficiaries in the“donut-hole.” Those with employer or groupinsurance, and in Medicaid, spent no more onprescription drugs in 2011 than they did in 2010,even though per prescription copays increased. The average copay for about 75% of all prescriptionscovered by commercial insurance plans was $10 orless, but as much as $40 on average for branded drugs.

SPENDING ON MEDICINESTotal healthcare system spending on medicinesreached $320Bn in 2011, increasing on a real percapita basis by 0.5%. Declining use of branded drugsand greater availability of lower-cost genericproducts offset price increases and higher spendingon new innovative medicines. Branded products thatlost exclusivity due to patent expiries contributed$15Bn in reduced spending. Spending on newbranded medicines, which declined in prior years,

has rebounded since 2009, and reflected theextensive number of transformative treatments thatare now available. With generics currentlyrepresenting 80% of dispensed prescriptions,spending in this segment grew by $5.6Bn in 2011.Overall spending on medicines continued to beconcentrated on traditional small molecule oral pillsdispensed through retail pharmacies. Spendinggrowth in these segments was outpaced by biologics,injectables, specialty and institutional channels –which accounted for as much as 30% of total spending.

USAGE AND SPENDING IN MAJOR THERAPY AREASNearly one-third of total spending was concentratedin five therapy areas, each of which grew faster thanthe overall market and exhibited a range ofdynamics related to new treatment option usage, andgrowing diagnosis of the related disease. Theseincluded medicines for cancer, asthma and chronicobstructive pulmonary disease, dyslipidemia,diabetes, and mental health medicines for psychosesor bipolar disorders.


3

Transformations in Disease Treatment


• A large number of disease treatments were transformed in 2011 mainlythrough the introduction of new medicines.

• In aggregate these new treatments may be appropriate for an estimated 2.5million patients who are newly diagnosed with these conditions per year, aswell as 20 million who suffer from these diseases.

• Breakthrough therapies became available for the first time to treat severaltypes of cancer, multiple sclerosis, hepatitis C and cardiovascular conditions.

• A significant group of therapies for orphan diseases – which have fewer than200,000 patient sufferers – also became available.

• The 34 new molecular entities launched in 2011 were the most in at least 10 years.

Major transformations in the treatment of a large number of significantdiseases, affecting over 20 million patients, occurred during 2011 mainlydue to the introduction of the most new medicines in a decade.

NEW

MO

LEC

ULA

R E

NTIT

Y

N U M B E R O F P A T I E N T S

Under 50,000

Under 200,000

200,000 — 2 million

2 million — 5 million

Over 5 million

Gastric cancer trastuzumab1

Peripheral T-cell lymphoma romidepsin

Unresectable pancreatic neuroendocrine cancer everolimus

Melanoma peginterferon alfa-2b

Colorectal cancer levoleucovorin

Postherpetic neuralgia gabapentin

Hyperparathyroidism-induced hypercalcemia cinacalcet

Ulcerative colitis infliximab

Wegener's granulomatosis and Microscopic polyangiitis rituximab

Atypical hemolytic uremic syndrome eculizumab

Dyslipidemia atorvastatin

Schizophrenia olanzapine

Breast cancer bevacizumab

Growth failure associated with Turner syndrome (TS) somatropin

Unresectable pancreatic neuroendocrine cancer sunitinib

Benign prostatic hyperplasia tadalafil

D I S E A S E P R O D U C T D I S E A S E P R O D U C T

Noveloral

therapies

Firstpersonalizedmedicines forthe disease

Innovationin

decades-oldtreatment

Majorefficacy

improvementin the standard

of care

First genericin standard

of care 2

treatment

Ineffectivetherapies

withdrawal

Additionalindications

Orphan orrare diseases

indication

Stroke with atrial fibrillation dabigatran1, rivaroxaban

Venous thromboembolism rivaroxaban

Multiple sclerosis fingolimod1

Prostate cancer sipuleucel-T1,3

Transplant rejection belatacept 3

NSCLC crizotinib

Melanoma vemurafenib

Large cell lymphoma brentuximab vedotin

Lennox-Gastaut Syndrome clobazam

Thalassemia deferiprone

Acute lymphoblastic leukemia Erwinia L-asparaginase

Congenital factor XIII deficiency Factor XIII concentrate

Preterm birth hydroxyprogesterone caproate

Hereditary angioedema icatibant

Myelofibrosis ruxolitinib

Thyroid cancer vandetanib

Chronic gout pegloticase1

Melanoma ipilimumab

Acute coronary syndrome ticagrelor

Hepatitis C virus boceprevir, telaprevir

Lupus belimumab

1Launched in Q4 2010 2Standard of care defined as the two most used medicines in a class 3not an orphan indication

Number of patients key reflects new patients per year in the US, except for four chronic conditions (hepatitis C, lupus, multiplesclerosisand stroke prevention in patients with atrial fibrillation) where the new therapies may be appropriate for both new andexisting patients. Number of patients is estimated according to the FDA’s approved label.

Source: IMS Institute for Healthcare Informatics, 2011


TRANSFORMATIONS IN DISEASE TREATMENT

Over 20 million patients may be affected by new disease treatments

A wide range of breakthroughs became available for the first time



Multiple sclerosis: fingolimod. The first approved oral disease modifying therapy formultiple sclerosis has been available since late 2010.It brings an improved efficacy and safety profile aswell as convenient oral administration compared toregular injections of beta interferon or immuno-modulatory peptides.

Stroke prevention in patients with atrialfibrillation: dabigatran and rivaroxaban.The standard of care, warfarin, thins the blood toprevent strokes and moderate cardiac issues forpatients with irregular heart rhythms. It requiresroutine blood monitoring checks and doseadjustments, to avoid excess bleeding and other risks.These new medicines improve stroke preventionefficacy while generating less bleeding, and avoidingthe need for ongoing monitoring.

Melanoma: ipilimumab and vemurafenib. The availability of two new targeted therapies formelanoma represents a dramatic improvement in thetreatment paradigm over interleukin-2 with itslimited efficacy and complicated side effects.Ipilimumab, a monoclonal antibody, generates animmune response against the tumor and is approvedfor use in 85% of inoperable patients and improvessurvival by 4 months. Vemurafenib is targeted to theBRAF V600 mutation for inoperable or metastatic

melanomas, the most aggressive form of skin cancer.It interrupts the B-Raf protein process and results inmelanoma cells programming their own death. Itcan be used in up to 60% of melanoma patients andmay extend life by 6 months.

Prostate cancer: sipuleucel-T.The first personalized immunotherapy for late stageprostate cancer brings a new option to patients,many of whom have failed an existing radiotherapy,surgery, or chemotherapy regimen. Sipuleucel-Tgenerates an immune response based on culturingthe patient’s tumor cells and has been shown toimprove overall survival by 4 months.

Non-Small Cell Lung Cancer (NSCLC): crizotinib. The first personalized therapy for NSCLC isappropriate for 3 to 7% of patients whose tumorscarry a unique mutation (EML4-ALK translocation).There are some indications that the particularmutation is becoming more common and incidencecould increase to 10-20% among NSCLC patients.Improved survival of 9.2 months was demonstratedin clinical trials. Late stage cancers are usually fatalwithin months and lung cancers have had feweffective biopharmaceutical options.

New medicines launched last year broughtimproved efficacy, safety and convenience fordiseases affecting millions battling chronicconditions. Additionally, importantbreakthroughs for rare orphan diseases, thatafflict less than 200,000 people, transformeddisease treatment options through personalized medicines based on specificgenetic markers for subtypes of cancer andindividually cultured immunotherapies. Among the most notable developments were:

Hepatitis C: boceprevir and telaprevir. Protease inhibitors, when added on to standard ofcare, are the most advanced direct acting antiviralsand are a “cure” for many patients. They have thepotential to shorten therapy duration in earlyresponders easing the burden of therapy. Theprevious standard year-long interferon regimen hasintolerable side-effects which often result in patientsfailing to complete the regimen and never achievinga cure. The complications associated withunsuccessfully treated chronic hepatitis C includecirrhosis, liver cancer and liver failure, each amongthe most damaging and complicated diseases to treat.


• 34 New Molecular Entities, includingnovel chemical and biologic entities, werelaunched in the US in 2011, the most inthe last 10 years.

• Medicines with new mechanisms ofaction in their therapy areas, werelaunched in greater numbers versus prioryears, many of which representedsignificant breakthroughs.

• Orphan drugs, those which treat rarediseases affecting less than 200,000people, and for which few therapies areeffective, also saw the most launches inthe last 10 years.

New Molecular Entities Launched in the US2002-2011

Chart notesNew Molecular Entity (NME): A novel molecular or biologicentity or combination where at least one element is novel.

NME launches in the US by year of launch, regardless oftiming of FDA approval.

New mechanism: First product with a new mechanism ofaction for its FDA approved indication.

Existing mechanism: Subsequent products with an existingmechanism of action for an indication.

Orphan: Drugs with one or more orphan indicationsapproved by FDA at launch.


13 15 12 11 10 6 6 7 8 9

3 5

5 4 9

5 6 7 9

12

7 6

3 6

8

6 6

17 7

13

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

New Mechanism Orphan Existing Mechanism

More new medicines were launched in 2011 than in the past decade New Molecular Entities Launched in the US

2002-2011



More new medicines were launched in 2011 than in the past decade

7

Changes in the Utilization of Healthcare and Medicines


• Total office visits and non-emergency room hospital admissions both declinedin 2011 although emergency room admissions – which are relatively small innumber – increased.

• The volume of medicines used in retail settings for both chronic and acutetreatment declined on a per capita basis while non-retail use remained steady.

• Per capita retail prescription usage – which averaged 11.33 prescriptions perperson, compared to 11.46 in 2010 – declined in 41 states and fell by morethan 3% in 10 states.

• Patients 65 and over reduced their use of retail prescriptions by 3.1%, mostnotably in the antihypertensive class.

• Those patients aged 19-25 increased their use by 2.0%, coinciding with thefirst full year of Affordable Care Act provisions allowing under-26-year olds toremain covered by their parents’ health insurance.

Overall per capita utilization of medicines declined in 2011 as patientoffice visits and non-emergency room hospital admissions dropped, andolder Americans reduced their retail drug use.

• The lowest-cost medical interventions arepatients’ visits to doctors’ offices, whichcontinued to decline in 2011.

• Non-emergency admissions generallyhave a lower cost for the health systemand payers, so this trend is likely tocontribute to rising health system costs.

• Emergency room visits increased at ahigher rate in 2011, the possible result ofcontinued high levels of uninsuredpatients associated with long-termunemployment.

Fewer patients made office visits while ER visits increased

Change in Hospital Admissions & Office Visits

Chart notesHospital admissions data is projected from chargessubmitted by a statistically significant sample of over 20%of all acute care hospitals in the US. Results are generallycomparable to the National Hospital Discharge Survey 2009from the Centers for Disease Control and Prevention (CDC).Admissions include inpatient and outpatient visits(hospital visits more or less than 24 hours respectively).Visits begin in the emergency room or elsewhere andinclude same-day surgeries, rehabilitation and reoccurringtreatments such as chemotherapy.All payment types are included, such as Medicare,Medicaid, Commercial Third-Party, Cash, Tricare, Workman'sCompensation and Charity.Office visits projected using a national sample of over4,100 office-based doctors each reporting for 2 days perquarter. The margin of error for office visits is +/- 3.9%.


Source: IMS Health, LifeLink; National Disease and Therapeutic Index, Dec 2011

CHANGES IN THE UTILIZATION OF HEALTHCARE AND MEDICINES

Fewer patients made office visits while ER visits increased Change in Hospital Admissions & Office Visits

-4.2%

1.9% 2.3%

-4.7%

-0.1%

7.4%

Office Visits Non-Emergency Admissions

Emergency Room Admissions

2010 2011

• Retail per capita volume usage declinedin 2011, mainly from reduced use ofchronic medicines.

• Retail acute usage declined mostly due toa weaker flu season in 2011 versus 2010.

• Institutional volume remained steady on aper capita basis, consistent with the slightdecrease in non-emergency hospitaladmissions.

Volume usage per capita declined particularly in retail settings

Standard Unit Volume Per Capita

Chart notesA Standard Unit (SU) is a single dosage unit (pill, capsule,vial or ampoule). Differences in product forms andintended usage makes Standard Units not additive ataggregate levels.

Calculation of Standard Unit per capita growth performedat form-specific level and weighted by contribution tooverall spending.

Retail includes independent and chain drugstores, foodstore pharmacies and mail order.

Institutional includes federal and non-federal hospitals,clinics, HMO, home healthcare, long-term care facilitiesand prisons.


Source: IMS Health, MIDAS, Dec 2011; U.S. Census Bureau


Volume usage per capita declined particularly in retail settings

7.6 7.2 7.1 7.0 6.6

3.2 3.1 3.2 3.2 3.2

0.8 0.8 0.8 0.8 0.8

2007 2008 2009 2010 2011 0

5

10

STA

ND

ARD

UN

ITS P

ER C

API

TA

Retail Chronic Retail Acute Non-Retail Chronic Non-Retail Acute

Standard Unit Volume Per Capita

140 129 128 133 128 126

• The per capita change in retail prescriptionvolume, by state, ranged from -7.1% to 5.6%.

• Retail prescription usage, which averaged11.33 prescriptions per person, declinedin 41 states and fell by more than 3% in10 states.

• The states with the highest levels of percapita usage are mostly clustered in theSoutheast and have disproportionatelyolder populations with higher levels ofobesity, diabetes and heart disease.

• The states with the greatest declines inusage in 2011 are clustered in the centerand north of the country.

Retail per capita volume fell in 41 states

Normalized Prescriptions & Change

Chart notesDispensed prescriptions in retail pharmacies, excludingmail order and long-term care pharmacies.

Report reflects prescription-bound products includinginsulins and excluding other products such as OTC.

Normalized prescriptions: prescriptions can be of differentdurations, and this has been shown to vary significantlyacross states, and to change over time. Increasing numbers of3-month prescriptions over time result in fewer prescriptions.This analysis adjusts all prescriptions to the national averagenumber of extended units per prescription in 2010 andcalculates growth on a consistent prescription size basis.


Source: IMS Health, Xponent, Dec 2011; U.S. Census Bureau

CHANGES IN THE UTILIZATION OF HEALTHCARE AND MEDICINESRetail per capita volume fell in 41 states


National -1.1%, 11,331 TRx/1,000

% C

HAN

GE

PER C

API

TA

NORMALIZED PRESCRIPTIONS PER 1,000 POPULATION

AK AL

AR

AZ

CA

CO

CT

DC

DE

FL

GA

HI

IA

ID

IL

IN KS

KYLA

MA

MD

ME

MI

MN

MO

MS

MT

NC

ND

NENH

NJ

NM

NV

NY

OH

OKOB

PA

RI

SC

SDTN

TXUT

VA

VT

WA

WI

WV

WY

-8%

-6%

-4%

-2%

0%

2%

4%

6%

6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

• While Americans' use of medicines perperson declined by 1.1% in 2011, therewas wide variation among age groups.

• The high level of increase in prescriptionsby 19-25 year olds coincides with the firstfull year of implementation of the provisionof the ACA allowing under-26-year oldsto stay on their parents’ health insurance.

• Seniors remained the largest users ofmedicines, with those over 80 using 36,715prescriptions per 1,000 of population.

• Prescriptions for individuals 65 and overdeclined by 3.1% which follows a 2.7%decline in 2010, where both years were aninflection from prior years when seniors’usage of medicines grew on average at 4%.



Normalized prescriptions: prescriptions can be of differentdurations and this has been shown to vary significantlyacross states and to change over time. Increasing numbers of3-month prescriptions over time result in fewer prescriptions.This analysis adjusts all prescriptions to the national averagenumber of extended units per prescription in 2010, andcalculates growth on a consistent prescription size basis.


Source: IMS Health, Vector One: National (VONA), Dec 2011; U.S. Census Bureau


Patients 65+ reduced usage by 3.1%, as those 19-25 increased by 2%

36,715

28,755

20,830

22,212

19,791

8,246

4,165

3,407

11,331 -1.1%

2.0%

-1.8%

-0.8%

-0.3%

-1.9%

-4.3%

-1.8%

-3.4%

Total

0-18

19-25

26-49

50-59

60-64

70-79

65-69

80+


Patient Age

% Change Normalized TRx Per 1,000 Population

-3.1%

• Patients aged 19-25 used 4,165prescriptions per 1,000 population, up2.0% over 2010, and were the only agegroup to increase usage in 2011.

• The increases were concentrated inseveral commonly prescribed therapiesincluding ADHD and antidepressants.

• Seniors aged 65+ used on average 28,767prescriptions per 1,000 population, down3.1%.

• The largest reduction was from hypertensiondrugs, while osteoporosis declines coincidewith increasing evidence of the dangersof long-term use of these medicines.

Largest Changes in Normalized Prescriptions Per 1,000 Population


Normalized prescriptions: prescriptions can be of differentdurations and this has been shown to vary significantlyacross states and to change over time. Increasing numbers of3-month prescriptions over time result in fewer prescriptions.This analysis adjusts all prescriptions to the national averagenumber of extended units per prescription in 2010, andcalculates growth on a consistent prescription size basis.

Charts show the largest changes in per capita prescriptions.

The two charts are not to scale.


Source: IMS Health, Vector One: National (VONA), Dec 2011; U.S. Census Bureau


Changes in medicine usage were concentrated in a few therapiesLargest Changes in Normalized Prescriptions

Per 1,000 Population

Patients 65+ YearsPatients 19-25 Years

Viral Vaccines, 7

Antinauseants, 8

Systemic Antibiotics, 15

Antidepressants, 16

ADHD, 28

Platelet Aggregation Inhibitors, -35

Analgesics, -36

Lipid Regulators, -77

Osteoporosis, -106

Hypertension, -329


Patient Payment for Medicines

• Patients with insurance paid $49 billion out-of-pocket for retail medicines,down from $50.8 billion in 2010.

• The majority of out-of-pocket costs were incurred by commercially insured patients.

• The average copay for 75% of all prescriptions was $10 or less, but as much as $40 on average for branded drugs covered by commercial insurance plans.

• The largest decline in out-of-pocket spending was by seniors covered by theMedicare Part D program, including the impact of subsidies introduced as part of the Affordable Care Act.

• Patients increased their use of copay coupons or vouchers provided bypharmaceutical manufacturers, although their use was limited to less than 5%of dispensed brand prescriptions.

Patients with insurance spent $1.8 billion less out-of-pocket for medicinesin 2011, compared to 2010, as the average copay declined, especially forseniors participating in the Medicare Part D program.

• The decline in overall out-of-pocketspending was the first on record, andlargely related to the introduction of the“donut-hole” subsidy for Medicare Part D beneficiaries, a key provision ofthe Affordable Care Act.

• Out-of-pocket spending by commercialthird-party insured patients and Medicaidpatients was flat relative to 2010.

Insured Patients’ Retail Out-of-Pocket Costs

Chart notesOut-of-pocket costs at retail pharmacies for patients withprivate insurance, Medicare Part D or Medicaid.

Medicaid includes only Fee for Service Medicaid.


Source: IMS Health, National Prescription Audit; Plantrak, Dec 2011

PATIENT PAYMENT FOR MEDICINES

Out-of-pocket payments declined to $49.0Bn in 2011Out-of-pocket payments declined to $49.0Bn in 2011

37.1 38.5 38.4 38.4

10.5 10.8 11.5 9.7

0.8 0.8 0.9 0.9

2008 2009 2010 2011

Commercial Third-Party Medicare Part D Medicaid


$48.4BN $50.1BN $50.8BN $49.0BN

• Patients with insurance paid $49.0Bnout-of-pocket for retail medicines, ofwhich the largest share was by individualswith commercial third-party insurance.

• Less than half of out-of-pocket spendingwas for branded medicines, as insurancebenefits often cover a greater proportionof branded medicines than that ofgenerics.




Excludes patients without insurance coverage.




Commercially insured patients paid most of the out-of-pocket costs

16.7

16.2

5.5

Brands Unbranded Generics Branded Generics

0.9

5.8

3.2

0.7

78% 20%

2%

Commercially insured patients paid most of the out-of-pocket costs Insured Patients’ Retail Out-of-Pocket Costs

Commercial Third-Party $38.4BN

MedicarePart D $9.7BN

$49.0BN

Medicaid $0.9BN

• The average copay for 75% of allprescriptions was $10 or less, but as muchas $40 on average for branded drugscovered by commercial insurance plans.

• Brands accounted for 18% of prescriptionsand 46% of out-of-pocket costs.

• While Medicaid represented 9.5% ofprescriptions, it accounted for only 2% ofpatient out-of-pocket costs, in line withthe design of the program.

• Medicare Part D patients’ brandprescription costs were similar tocommercial third-party insured patients;however, on average, they paid almost halfas much for generic drugs.

Out-of-Pocket Costs for Retail Prescriptions



Excludes patients without insurance coverage.

Medicaid out-of-pocket costs and prescriptions are notsegmented by product type.


Each circle represents 1% of retail prescriptions for insuredpatients.



Over 75% of prescriptions carried a copay of $10 or less

Over 75% of prescriptions carried a copay of $10 or less Out-of-Pocket Costs for Retail Prescriptions

Medicare Part D

$40.35

$10.34 $5.63

$37.61

$26.85 $24.99

Commercial 3 rd Party

Brands

Unbranded Generics

Branded Generics

=1% TRx share

Chart Key:

Avg Copay

Medicaid

$4.07

$40.35

$10.34

$26.85

Commercial 3rd Party

Brands

Unbranded Generics

Branded Generics

Brands

Unbranded Generics

Branded Generics

=1% TRx share

Chart Key:

Avg Copay

Avg Copay

Medicaid

=1% TRx share Chart Key:

$4.07

$5.63

$37.61

$24.99

Medicare Part D

Commercial 3rd Party Medicaid Medicare Part D

$40.35 $37.61

$10.34$5.63

$26.85

$4.07

$24.99

Brands

Each circle represents 1% of retail prescriptions for insured patients.

Unbranded Generics

Branded Generics Avg Copay



$40.35 $37.61

$10.34$5.63

$26.85

$4.07

$24.99

Brands

Unbranded Generics



Brands

Unbranded Generics


=1% TRx share ChartKey:


$40.35

$37.61

$10.34

$5.63

$26.85

$4.07$24.99

$4.07

Medicaid

$40.35

$10.34

$26.85

Commercial 3 Party rd

$5.63

$37.61

$24.99

Medicare Part D

Brands

Unbranded Generics


=1% TRx share ChartKey:

$4.07

Medicaid

$40.35

$10.34

$26.85

Commercial 3 Party rd

$5.63

$37.61

$24.99

Medicare Part D

• The largest decline in out-of-pocketspending was for seniors covered byMedicare Part D, and included the impactof subsidies introduced as part of theAffordable Care Act.

• Out-of-pocket spending by commercialthird-party insured patients and Medicaid patients was flat relative to2010, as volume changes offset changes incopay levels.

Average Copay By Payment Type





Average patient costs declined for Medicare Part D and Medicaid

$25.97 $23.31

$4.12 $4.07

$24.96 $26.10

2010 2011 2010 2011 2010 2011

Average patient costs declined for Medicare Part D and Medicaid

TOTAL OUT-OF-POCKET SPENDING $BN $11.5BN $9.7BN $0.9BN $0.9BN $38.4BN $38.4BN

Average Copay By Payment Type

Medicare Part D Medicaid Commercial Third-Party

-$2.66

-$0.05

+$1.14

• Patients increased their use of copaycoupons or vouchers provided bypharmaceutical manufacturers, althoughtheir use was limited to less than 5% ofdispensed brand prescriptions.

• Coupons and vouchers typically helpedto reduce a patient’s copay from a non-preferred brand copay level of $35 to $50,and to a more affordable level.

• The use of coupons and vouchersincreased both because of patients’economic concerns, as well as from drugmanufacturers’ focus on ensuring patientsstart and remain on therapy with theirmedicines.

Use of Copay Coupons and Vouchers

Source: IMS Health, LifeLink, Dec 2011

Chart notesAnalysis based on all Rx claims where the brand was knownto have provided a copay card or voucher program duringthe time periods of interest: Apr-Dec 2010 and Apr-Dec2011. There were approximately 395 brands that met thiscriteria which, in aggregate, represented 44% of totalbranded prescription claims.



Patients increased their use of copay coupons and vouchersPatients increased their use of copay coupons and vouchers

Use of Copay Coupons and Vouchers

2010 2011

Average Subsidy

2.4%

3.8%

2010 2011

% Total Claims Associated with Copay

Card

$19.34

$24.28


Spending on Medicines

• Nominal spending reached $320 billion in 2011, up 3.7%.

• Spending on branded products was up 2.2% in 2011.

• Lower volume for branded products contributed to $5.6 billion in lowerspending, offset by unadjusted price increases of $18.5 billion – which areestimated to be $12.6 billion after adjusting for incremental rebates and discounts.

• Losses of patent exclusivity led to $14.9 billion lower spending on affectedmedicines, taking the five year total “patent dividend” to $65.2 billion.

• Spending on new brands reversed a declining trend and contributed $7.7 billionto incremental spending.

• Generics reached 80% of dispensed prescriptions and spending in this segmentgrew by $5.6 billion in 2011.

• Overall spending on medicines continued to be concentrated on traditional small molecule pills dispensed through retail pharmacies, even as growth in thesesegments was outpaced by biologics, specialty, injectables and institutionalchannels – which accounted for as much as 30% of total spending.

Total spending on medicines, on a real per capita basis, increased by 0.5%,as declining use of branded drugs and greater availability of lower costgenerics offset price increases and higher spending on new medicines.

• Nominal spending on medicinesincreased by 3.7% in 2011, up from the2.6% growth in 2010, and continuing thetrend of 5% or lower growth per year thathas occurred since 2007.

• Total spending in 2011 was $320Bn, anincrease of about $50Bn since 2006 and$125Bn since 2002.

• After adjusting for GDP and populationgrowth, real per capita spending increasedby 0.5% in 2011.

• Lower levels of growth in spending inrecent years reflect broad dynamics oflower volume growth, increased use ofgenerics, loss of patent protection formajor branded products and less spendingon new drugs.

Real per capita spending on medicines increased by 0.5% in 2011

Spending & Growth 2002-2011

Source: IMS Health, National Sales Perspectives, Dec 2011

Chart notesMeasures total value of pharmaceutical sales, includinggenerics, branded products, biologics, small molecules,retail and non-retail channels.

Value measured at Trade Price – the price paid towholesalers or manufacturers by retail and non-retailchannels and excluding off-invoice discounts and rebatesthat lower net prices received by manufacturers.


SPENDING ON MEDICINESReal per capita spending on medicines increased by 0.5% in 2011

Spending & Growth 2002-2011

195 215

234 247

270 281 286

301 309 320

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 %

SPE

ND

ING

GRO

WTH

NO

MIN

AL

SPE

ND

ING

US$B

N

Nominal Spending US$BN Nominal Spending Growth Real Per Capita Spending Growth

• Total spending on medicines increased from$308.6Bn in 2010 to $319.9Bn in 2011.

• The decline in the volume of protectedbranded products reduced spending in2011 by $5.6Bn compared to 2010.

• Increases in the pricing of protectedbranded products – without considerationto off-invoice discounts or rebates –raised spending by $18.5Bn.

• Brands losing patent protection orexclusivity in 2011 resulted in a reductionin spending of $14.9Bn.

• Spending growth for new brands was$7.7Bn in 2011 up from $5.2Bn in 2010.

• Spending on generics – including bothvolume and price effects – increased by$5.6Bn in 2011 compared to 2010.

Components of Change in Total Spending $Bn


Chart notesSegments are mutually exclusive and reflect the change inspending between 2010 and 2011 in billions of dollars.Protected brands (brands that have not reached patentexpiry) split based on growth through pricing dynamicsand volume (absent pricing dynamics).New Brands segment includes all 2010 and 2011 launches.LOE - Loss of Exclusivity - includes branded products thatlost exclusivity during 2011 or previous years.


SPENDING ON MEDICINES

Spending changes occurred in 5 major segments

308.6

-5.6

18.5 -14.9

7.7

5.6

319.9

2010 Protected Brands - Volume

Protected Brands - Pricing

LOE Impact

New Brands

Generics 2011

Spending changes occurred in 5 major segments Components of Change in Total Spending $

• Declining spend due to volume forprotected brands, without the impact ofpricing or patent expiries, continued in 2011.

• The largest volume spending increases in2011 were Humalog® KwikpenTM (insulinlispro), Lucentis® (ranibizumab), Humira®

(adalimumab), Lantus® SoloSTAR®

(insulin glargine) and Opana®ER(oxymorphone hydrochloride).

• The products with significant volumedeclines, each over $500Mn, were due toupcoming patent expiries. These include:Actos® (pioglitazone) which expires in2012; Epogen® (epoetin alfa) which alsohas had declining volume due to safetyconcerns; and Nexium® (esomeprazole)which expires in 2014.


Chart notesProtected brands include brands before loss of exclusivity;new brands on the market for less than 24 months areexcluded.

Volume growth is defined as dollar growth driven byvolume and mix changes, excluding price changes.



Declining volume of protected brands reduced spending by $5.6Bn

Protected Brand Volume Growth $Bn

2.1

-6.1

-1.2

-7.2 -5.6

-8

-6

-4

-2

0

2

4

2007 2008 2009 2010 2011

SPE

ND

ING

GRO

WTH

$BN

Declining volume of protected brands reduced spending by $5.6Bn Protected Brand Volume Growth $

• Spending on protected brands increasedby $18.5Bn in 2011 due to invoice pricechanges, compared to $17.5Bn in 2010.

• Growth of spending due to protectedbrand invoice pricing contributed tooverall spending growth by 5.8% in 2011,compared to 5.7% in 2010.

• Protected brands invoice price increasesaveraged 9.5% in 2011, up from 8.8%.

• Increasing levels of off-invoice discountsand rebates have accompanied theseinvoice price increases resulting in anestimated $5.9Bn or 1.9% (+/- 0.25%)lower net price growth contribution.

• Trends for net pricing contribution areestimated to remain around 4%.


Chart notesProtected brands include brands before loss of exclusivity; newbrands on the market for less than 24 months are excluded.Price spending growth is dollar growth driven by invoiceprice changes and excludes the impact of rebates andcontract pricing agreements.Price contribution to growth is contribution to marketgrowth and does not reflect a price growth rate.Estimated net price growth is based on a comparison ofcompany reported net sales and IMS Health reported salesat invoice prices from wholesaler transactions.



Spending due to brand pricing trended up, but was offset by rebates

Protected Brand Price Spending Growth

0%

2%

4%

6%

8%

0

5

10

15

20

2007 2008 2009 2010 2011 PR

ICE

CO

NTR

IBU

TIO

N T

O G

RO

WTH

%

PRIC

E SPE

ND

ING

GRO

WTH

$BN

Net Brand Price Growth $BN Net Sales Adjustment $BN Brand Invoice Price Growth Contribution % Estimated Net Price Growth Contribution %

Spending due to brand pricing trended up, but was offset by rebates Protected Brand Price Spending Growth

• The “patent dividend” – the savings tothe health system due to patent expiries –was $65.2Bn over the 5-year periodending 2011.

• Brands first exposed to generics totaled$22.1Bn in 2011, and the full impact ofcost reductions associated with genericentry has not yet been realized becausekey expiries came late in the year.

• The declines of spending associated withpatent expiry, including those whichexpired before 2011, was $14.9Bn, whichis similar to the level seen in 2010.

• Major products with patent expiries in2011 included Lipitor® (atorvastatin),Advair Diskus® (fluticasone propionate),Zyprexa® (olanzapine), Levaquin®

(levofloxacin) and Concerta®

(methylphenidate), which each hadannual spending above $1Bn during the12 months prior to their patent expiry.

Source: IMS Health, MIDAS, Dec 2011

Chart notesSales in prior year of brands that lost patent protection ineach year.



Brand spending has declined by $65.2Bn since 2007 due to expiries

Pre-Expiry Spending and Expiry Impact

Brand spending has declined by $65.2Bn since 2007 due to expiries Pre-Expiry Spending and Expiry Impact

15.5

8.8

17.8 19.2 22.1

-15.0 -11.7

-9.2 -14.4 -14.9

2007 2008 2009 2010 2011

Spending in Year Prior to Patent Expiry $BN

Impact on Brand Spending by Patent Expiries $BN

YEAR OF PATENT EXPIRY

-$65.2BN

• Total drug spending on products that havebeen available to patients for less than 24months increased to $12.2Bn in 2011, upfrom $7.5Bn in 2009.

• Spending on new molecular entitiesreached a 5-year high of $8.5Bn comparedto $2.7Bn in 2009.

• Spending on new medicines represented5.5% of total brand spending, still below the6.1% level seen in 2007.

• In 2011, there were 330 brands which were lessthan 2 years old, including 77 new molecularentities and 253 other branded products.

• Average spending per new molecular entitywas $110Mn in 2011, up from $45Mn in 2009.

• Other new brands include those approvedby FDA following their focus on reviewingunapproved drugs, 80% of which hadspending of less than $10Mn in 2011.


Chart notesNew brands defined as brands launched in the prior 24months. Spending on medicines in the group of productsmarketed for less than 24 months in 2011 increased by$7.7Bn, from $4.6Bn in 2010 to $12.2Bn in 2011.New molecular entities include both small molecules andbiologic medicines.Chart has been adjusted to reflect the complete spending on Prevnar13®, which is understood to be under-reported by IMS Health.



New brand spending grew to over $12 billion in 2011

New Brand Spending

5.9 4.6

2.7

5.1

8.5

7.0

5.5

4.8

3.4

3.7

0

2

4

6

8

10

12

14

2007 2008 2009 2010 2011

New Molecular Entities Other New Brands

New brand spending grew to over $12 billion in 2011

New Brand Spending N

EW B

RAN

D S

PEN

DIN

G $

BN

$12.2BN

$8.5BN

$7.5BN

$10.1BN

$12.9BN

• Spending on generics increased by$5.6Bn as volume reached 80% ofprescriptions.

• Generics are now dispensed 94% of thetime where a generic form is available, up1% from 2010.

• Patent expiries that occurred in late 2011had not yet impacted utilization orspending by the end of the year, with themajority of the increased usage ofgenerics driven by expiries in 2010 andearly 2011, including Lovenox®, Aricept®and Effexor XR®.

• Generics now make up 27% of totalspending.

Source: IMS Health, National Prescription Audit, Dec 2011

Chart notesIncludes all prescriptions dispensed through retailpharmacies, including independent and chain drug stores,food store pharmacies and mail order as well as long-termcare facilities.

Generics include branded and unbranded generic medicinesdispensed in retail pharmacies, mail order and long-termcare pharmacies.

Prescription counts are not adjusted for length of therapy.

90-day and 30-day prescriptions are both counted as oneprescription.



80% of prescriptions were dispensed as a generic in 2011

Generic Share of Prescriptions

67%

72% 74%

78% 80%

2007 2008 2009 2010 2011

80% of prescriptions were dispensed as a generic in 2011 Generic Share of Prescriptions

2011 Spending Increase $5.6BN

• Spending on branded drugs totaled $235Bn,or 73% of total spending, with branded andunbranded generics accounting for 27%.

• Traditional medicines were 75%, whilespecialty reached 25% and includes avariety of treatments for serious diseasesincluding cancer, autoimmune diseases,HIV and multiple sclerosis.

• Small molecule spending totaled $245Bn,as biologics reached $75Bn.

• Oral forms of medicines remained themost common form, while injectableswere 26% of spending.

• Retail channels accounted for 71% of thetotal and included an increasing amountof injectable medicines that patients areable to self-administer.


Chart notesEach bar represents total spending in nominal dollars usinga distinct segmentation of overall spending; thepercentage refers to the segments’ share of the total.

Brands are those products with current or former patentprotection or other forms of market exclusivity.

Specialty, Traditional, and Biologics segments are based onproprietary IMS Health definitions.



Spending was concentrated on small molecule pills in pharmacies

2011 Spending

$0 $50 $100 $150 $200 $250 $300

Spending was concentrated on traditional small molecule pills in pharmacies

SPENDING $BN

2011 Spending

Total Market: $319.9Bn

Brands: 73% Branded Generics: 13%

Traditional Pharmaceuticals: 75% Specialty: 25%

Small Molecules: 77% Biologics: 23%

Orals: 58% Injectables: 26%

Retail: 71% Non-Retail: 29%

Generics: 14%

Other:16%

28

Usage and Spending in Major Therapy Areas


• Oncologics spending was $23.2 billion in 2011, up 4.2% from innovative newtargeted therapies and offset by patent expiries.

• Spending for respiratory treatments reached $21 billion, up $1.7 billion, morethan half of which came from anti-asthmatic products. Overall, 7.4 millionpatients were regularly taking asthma or COPD medicines.

• 19.8 million Americans regularly used cholesterol medicines, up 160,000 from2010, while spending increased by $1.4 billion. Usage shifted to othermedicines in the class following a safety warning for the higher dosage versionsof generic simvastatin.

• Antidiabetes spending grew by $1.9 billion, driven by insulins and furtheruptake of newer generation therapies. 11 million patients were treated withdiabetes medicines.

• 3.1 million patients were treated for a variety of mental health conditionsusing antipsychotic medications, resulting in $18.2 billion in overall spending.

Nearly one-third of spending was concentrated in five therapy areas,each of which grew faster than the overall market, and exhibited a rangeof dynamics related to new treatments and growing diagnosis of therelated diseases.

• Absolute spending growth gains werehighest for antipsychotics, antidiabetes,respiratory agents, autoimmune diseasesand lipid regulators.

• Standard of care therapies have nowbecome available as generics in severalleading traditional classes including lipidregulators and antipsychotics.

• Specialty class spending was up more than10% in multiple sclerosis, autoimmunediseases and HIV antivirals, but up lessthan 5% in oncology.

• 14 classes had over $7Bn in spending in2011, with erythropoietin spendingfalling from $6.1Bn to $5.1Bn, in 2011,due to volume declines.


Chart notesSpecialty, Traditional and therapy area definitions based onproprietary IMS Health definitions.

Spending measured at the price paid to wholesalers ormanufacturers by retail and non-retail channels andexcluding off-invoice discounts and rebates that lower netprices received by manufacturers.


USAGE AND SPENDING IN MAJOR THERAPY AREAS

Spending in Leading Therapy Areas

Nearly one-third of spending was concentrated in 5 therapies

Therapy Area $BN % Growth 23.2 4.2% 21.0 8.8% 20.1 7.2% 19.6 10.7% 18.2 12.7% 12.0 12.9% 11.0 -5.8% 10.3 11.1% 10.1 -15.4% 8.3 -1.8% 7.9 17.0% 7.8 10.4% 7.6 -11.9% 7.1 22.5% 6.3 10.5% 5.9 4.6% 5.2 7.3% 5.1 -16.2% 4.5 8.1% 3.7 14.8%

Oncologics Respiratory Agents

Lipid Regulators Antidiabetics

Antipsychotics Autoimmune Diseases

Antidepressants HIV Antivirals Anti-Ulcerants

Narcotic Analgesics

ADHD Antiplatelets

Angiotensin II

Multiple Sclerosis Vaccines

Anti-Epileptics Hormonal

Erythropoietins Immunostim. Agents Antivirals (excl. HIV)

Nearly one-third of spending was concentrated in 5 therapies Spending in Leading Therapy Areas

Specialty Traditional

• Oncologics led all classes in spending in2011, at $23.2Bn.

• Spending grew by nearly $1.1Bn, whichwas higher than the $0.8Bn in 2010.

• Targeted agents grew by $1.3Bn, higherthan the $1.1Bn in 2010. New targetedagents launched in 2011 includedipilimumab, vemurafenib and crizotinib.

• Hormonal therapies, typically for breastand prostate cancer, reduced spend by$0.6Bn after letrozole became genericallyavailable in 2011.


Chart notesTherapy areas are based on proprietary IMS Healthdefinitions.

Spending growth defined as dollar growth driven by price,volume, new products and mix changes.



Oncology Spending by Area

Oncologics spending reached $23.2Bn in 2011Oncologics spending reached $23.2Bn in 2011

0

5

10

15

20

25

2007 2008 2009 2010 2011

SPE

ND

ING

$BN

Targeted Cytotoxics Hormonals

Oncology Growth by Area

• Respiratory agent spending was $21.0Bnin 2011. Spending growth was $1.7Bn in2011, up from $1.2Bn in 2010 due tocontinued spending on anti-asthmaticswhich led the change.

• Anti-asthmatics made up two-thirds ofthe spending within the respiratory classesin 2011, at $14Bn. Leading anti-asthmatictherapies included combination productfluticasone/salmeterol and montelukast.

• Anticholinergic agents used in thetreatment of COPD contributed $0.5Bnin growth versus $0.4Bn in 2010. Leadingtherapies in this class included tiotropiumbromide inhalation powder and albuteroland ipratropium inhalation.



Spending growth defined as dollar growth driven by price,volume, new products and mix changes.

COPD – Chronic Obstructive Pulmonary Disease.



Respiratory Agent Spending by Area

Asthma and COPD accounted for $21.0Bn in spendingAsthma and COPD accounted for $21.0Bn in spending

Anti-Asthmatics Anticholinergenics Plain & Combo Short-Acting B2-Stimulants, Inhalant All Other Products

Respiratory Growth by Area

0

5

10

15

20

25

2007 2008 2009 2010 2011

SPE

ND

ING

$BN

• Lipid regulators were the third largesttherapy class by spending in 2011, at$20.1Bn, growing by $1.4Bn with thehighly anticipated generic availability ofatorvastatin in November 2011.

• Nearly 20 million Americans regularlyused a cholesterol medicine, and over 3million are regularly taking atorvastatin.

• Atorvastatin remained the largest source ofspending in the class, and grew by 12.8%in the year. On November 30, 2011,generic atorvastatin became available andrapidly captured over 60% of prescriptionsfor the molecule. Prices can be expectedto drop substantially during 2012.

• Dispensed prescriptions for lipidregulators exceeded 260 million in 2011,with 63% filled with a generic; this isexpected to rise to over 75% followingthe Lipitor® patent expiry.


Chart notesTherapy areas are based on proprietary IMS Health definitions.

Lipid regulators include all cholesterol lowering drugs.

Chart shows combined brand and generic forLipitor®/atorvastatin and Zocor®/simvastatin.



Lipid Regulators Spending by Area

Spending on lipid regulators reached $20.1Bn in 2011Spending on lipid regulators reached $20.1Bn in 2011

Lipitor/atorvastatin Crestor Vytorin/Zetia

Zocor/simvastatin All Other Products

Lipid Regulators Growth

0

5

10

15

20

25

2007 2008 2009 2010 2011

SPE

ND

ING

$BN

• Diabetes spending reached $19.6Bn, asgrowth remained high at $1.9Bn in 2011,the same as in 2010.

• Patients filled 173Mn prescriptions in2011, up 0.5% over 2010.

• Much of the spending growth came fromwidely used human insulins and syntheticanalogues which contributed 71% of spendinggrowth ($1.4Bn) led by insulin glargine.

• DPP-IV therapies contributed steadily tospending growth since their initialintroduction in 2007 and includedsitagliptin and saxagliptin.

• GLP-1 therapies exenatide and liraglutidetogether had spending growth of $336Mn.

• Two glitazone therapies, roziglitazone andpioglitazone, will become genericallyavailable in 2012 and have also seen usagedecline due to concerns overcardiovascular complications.


Chart notesTherapy areas are based on proprietary IMS Health definitions.

All Other Products include multi-therapy combinations andother therapies used in diabetes.



Antidiabetes Spending by Area

Increased diabetes spending was driven by insulins and DPP-IVsIncreased diabetes spending was driven by insulins and DPP-IVs

Insulins & Analogues Glitazones DPP-IV

Traditional Type II Antidiabetes GLP-1 All Other Products

Antidiabetes Growth by Area

0

5

10

15

20

25

2007 2008 2009 2010 2011

SPE

ND

ING

$BN

• Antipsychotic spending reached 18.2Bngrowing by $2.1Bn, in 2011, versus$1.5Bn in 2010.

• Patients filled 57Mn prescriptions in2011, up 2.4%, with over 60% filled forbranded therapies.

• Aripiprazole (Abilify®) and quetiapine(Seroquel®) were the two leadingtherapies in 2011, with a combinedgrowth of $1.1Bn over the previous year.

• With the patent expiry of Zyprexa®

(olanzapine) in October 2011, and the July2008 expiry of Risperdal® (risperidone),two of the new generation atypicalantipsychotics are now generically available,with a third, Seroquel® (quetiapine)expected to follow in early 2012.



Includes selected products and follow-on product orgeneric, where applicable. Zyprexa® spending includesZyprexa® Zydis®, RelprevvTM and Intramuscular as well asgeneric olanzapine and olanzapine ODT. Risperdal®spending includes Risperdal® Consta® and M-Tab® as wellas generic risperidone.



Antipsychotics Spending by Area

Antipsychotics spending in 2011 reached $18.2BnAntipsychotics spending in 2011 reached $18.2Bn

0

5

10

15

20

Abilify

Seroquel/Seroquel XR

Zyprexa/olanzapine

Risperdal/risperidone

Invega/Invega Sustenna

All Other Products

Antipsychotics Growth by Area

2007 2008 2009 2010 2011

SPE

ND

ING

$BN


Notes on sourcesThis report is based on the IMS Health services detailedin the panel on the right. Analyses exclude OTCproducts and focus on prescription-bound products(including insulins which are available withoutprescription). Spending is reported at wholesaler invoice prices and does not reflect off-invoice discountsand rebates.

IMS National Sales Perspectives (NSP)™ measures spending within the USpharmaceutical market by pharmacies, clinics,hospitals and other healthcare providers. It is theonly source to report 100 percent coverage ofthe retail and non-retail channels for nationalpharmaceutical sales at actual transaction prices.

IMS National Prescription Audit (NPA)™ is asuite of services that provides the industrystandard source of national prescription activityfor all products.

IMS LifeLink™ provides a broad set of real-world patient metrics derived from clinically richtransactional information on over 260+ millionde-identified patients in over 13 countriesglobally. Within its US assets, LifeLink containsinformation on over 200 million unique patientsad captures longitudinal events across thepatient's experience including prescriptiondispensing, medical encounters, hospital visits,laboratory findings and consumer preferences.

NPA Market Dynamics (NPA-MD)™ is anational-level prescription offering that linksNPA with de-identified patient-level data thattracks patients over time and enables analysissuch as whether a patient’s prescription wasnew, switched from another medicine, or addedto an existing regimen in the last year.Diagnoses, compliance and persistence, as wellas ethnicity analytics are among other analysesthat are possible.

IMS Formulary Focus™ & Plantrak CoPay™ are part of the IMS Managed Market Servicessuite and include tracking of health planformulary design, link to IMS NPA suite, andmeasure copayments at the point of sale.

Vector One®: National (VONA) projects retailactivities of prescriptions linked at a patientlevel.VONA tracks patient prescriptionactivities by demographic variables includingpatient gender and patient. It employs TruePatient Measures, tracking new therapy starts,continuances, and therapy switching by patients.

IMS National Disease and Therapeutic Index(NDTI)™ is a database of patient contacts withoffice-based physicians projected from a panelof physicians in the US who report on allpatient contacts for two consecutive workdayseach quarter. Information collected includespatient demographics, diagnosis and treatmentinformation, and physician demographics.

IMS MIDAS™ is an analysis platform used toassess worldwide healthcare markets. Itaggregates IMS’s global audits and normalizes tointernational standards of product naming,company ownership, currency exchange rates,volume metrics and product segmentations, andestimates of price levels at different points in thesupply chain. Segmentations include therapyclasses, forms, dosages, price levels and thoserelated to brands, generics and patent protection.


APPENDIX 1

On-Therapy Patients - 2011Appendix notesOn-therapy patients are defined as those who have received adispensed prescription in prior months and for which the amountof medicine and dosage prescribed has not been exhausted.This data excludes mail order and long-term care.Therapy areas are based on proprietary IMS Health definitions.Patients treated in these 20 leading chronic therapy areasrepresent 52% of spending and 55% of prescriptions in 2011.Hypertension includes ace inhibitors, angiotensin II inhibitors,renin inhibitors, beta blockers and calcium channel blockers.Lipid regulators include all cholesterol lowering drugs.Antidepressants include SSRIs, SNRIs and newer generation products.Narcotic analgesics include codeine, morphine, propoxyphene andother synthetic narcotics.Anti-ulcerants is limited to the proton pump inhibitors (PPI).Antidiabetics includes human insulins & analogues, oralantidiabetics and newer generation diabetes treatments includingglitazones, GLP-1 analogues and DPP-IV inhibitor classes.Thyroid includes natural & synthetic thyroid hormonal preparations.Anti-epileptics include drugs for seizure disorders, some of whichare also used for pain indications.Respiratory agents include products for asthma & COPD.Insomnia includes melatonin agonists and other non-barbituratesleep aids.Antiplatelets/anticoagulants include oral antiplatelets such asPlavix®, and anticoagulants such as warfarin.ADHD (Attention Deficit Hyperactivity Disorder) includesmedications such as Ritalin® and newer generationpsychotherapeutic agents.Benign prostate hyperplasia (BPH) includes alpha blockers andother agents for benign prostate hyperplasia.Antipsychotics includes typical and atyipical antipsychotics.Osteoporosis includes biphosphonates, calcitonins, bone densityregulators and bone formation agents, but not hormonal therapies.Overactive bladder includes antispasmodics for urinary incontinence.

Treated Patients in Selected Therapies

Source: IMS Health, LifeLink, Dec 2011

42.4 19.8

18.5 15.6

11.7 11.0 10.5

9.2 7.4 7.4

5.4 5.2 5.1

3.3 3.1

2.4 1.5 1.3 1.1 1.0

Hypertension Lipid Regulators Antidepressants

Narcotic Analgesics Anti-Ulcerants (PPI)

Antidiabetes Thyroid

Anti-Epileptics Hormonal Contraceptives

Respiratory Agents Insomnia

Antiplatelets/Anticoagulants ADHD

Benign Prostate Hyperplasia Antipsychotics Osteoporosis

Overactive Bladder Parkinsons

Antimigraine Alzheimers

ON-THERAPY PATIENTS MN

Treated Patients in Selected Therapies Appendix 1: On-Therapy Patients - 2011

APPENDIX 2


Top Therapeutic Classes by Prescriptions

Appendix notesTherapy areas are based on proprietary IMS Healthdefinitions.


Includes all prescriptions dispensed through retailpharmacies - including independent and chain drug stores,food store pharmacies and mail order as well as long-termcare facilities.

Prescription counts are not adjusted for length of therapy.90-day and 30-day prescriptions are both counted as oneprescription.

Updated February 17, 2012.IMS Health, National Prescription Audit, Dec 2011

DISPENSED PRESCRIPTIONS MN 2007 2008 2009 2010 2011

Total US Market1 Antidepressants2 Lipid Regulators3 Narcotic Analgesics4 Antidiabetics5 Ace Inhibitors (Plain & Combo)6 Beta Blockers (Plain & Combo)7 Respiratory Agents8 Anti-Ulcerants9 Diuretics10 Anti-Epileptics11 Tranquillizers12 Thyroid Preparations13 Calcium Antagonists (Plain & Combo)14 Antirheumatic Non-Steroid15 Hormonal Contraceptives16 Angiotensin II Inhibitors17 Broad Spectrum Penicillins18 Macrolides & Similar Type Antibiotics19 Hypnotics & Sedatives20 Vitamins & Minerals

3,8662412422391661631641471391351101011049091948674666059

3,9492472542411691661631521461321161041059392938577696358

3,9932542602441721681621531471311221081079693918476676358

4,0242642602381731641611531501281281111109897908677696360

3,825237233231165159162147134137102981038790948377635860

DRAFT38The Use of Medicines in the United States: Review of 2011


APPENDIX 3

Top Medicines by Prescriptions

Appendix notesReport reflects prescription-bound products includinginsulins and excluding other products such as OTC.

Table shows leading active-ingredients or ingredientfixed-combinations, and includes those produced by bothbranded and generic manufacturers.

Includes all prescriptions dispensed through retailpharmacies - including independent and chain drug stores,food store pharmacies and mail order as well as long-termcare facilities.

Prescription counts are not adjusted for length of therapy.90-day and 30-day prescriptions are both counted as oneprescription.



Total US Market1 Hydrocodone/acetaminophen2 Levothyroxine sodium3 Simvastatin 4 Lisinopril 5 Amlodipine besylate 6 Omeprazole (RX) 7 Metformin HCL 8 Azithromycin 9 Amoxicillin 10 Alprazolam 11 Hydrochlorothiazide 12 Zolpidem tartrate 13 Atorvastatin14 Furosemide 15 Oxycodone/acetaminophen16 Fluticasone17 Citalopram HBR 18 Metoprolol tartrate 19 Sertraline HCL 20 Metoprolol succinate 21 Warfarin sodium 22 Tramadol HCL23 Potassium24 Prednisone25 Atenolol

3,866125.598.968.077.246.035.851.651.951.343.348.539.158.544.433.626.222.638.433.741.534.923.335.827.142.0

3,949129.4100.284.183.052.145.653.854.752.945.347.942.751.743.836.730.127.341.134.826.935.725.535.227.839.5

3,993132.1103.294.487.657.853.557.053.652.447.747.843.745.343.637.934.832.238.936.233.035.628.034.728.736.4

4,024136.7104.796.888.862.559.459.156.253.849.148.144.643.342.338.838.437.837.837.634.533.933.933.733.733.4

3,825120.997.449.071.540.827.749.247.154.041.448.534.565.844.731.323.918.143.533.433.034.420.636.725.945.0



TRx Per 1,000 Population & Growth

APPENDIX 4

Appendix notesDispensed prescriptions in retail pharmacies, excludingmail order and long-term care pharmacies.


Normalized prescriptions: prescriptions can be of differentdurations, and this has been shown to vary significantlyacross states, and to change over time. Increasing numbersof 3-month prescriptions over time result in fewerprescriptions. This analysis adjusts all prescriptions to thenational average number of extended units per prescriptionin 2010 and calculates growth on a consistent prescriptionsize basis.

Updated February 17, 2012.IMS Health, Xponent, Dec 2011

STATES TRx PER 1000 % CHANGE

NationalBelow Avg TRxMENJIDNVCAAKBelow Avg TRxOKILCTFLWISDORAZUTTXMTMDMNNHVTWANMWYHICO

11,331Per Capita/Above

10,5249,8009,7309,4817,6466,882

Per Capita/Below11,29711,23511,19211,16210,3909,8739,7809,7349,7159,6679,5719,3519,1689,1589,0058,9048,7268,3698,3608,331

-1.1%Avg Growth

-1.0%2.5%-0.5%-1.0%1.4%-0.4%

Avg Growth-2.1%-2.3%-1.1%-5.0%-5.8%-2.6%-1.3%-2.6%-1.6%-1.8%-4.4%-3.4%-4.4%-2.8%-3.9%-1.8%-2.9%-6.3%-4.3%-2.4%

STATES TRx PER 1000 % CHANGE

NationalAbove Avg TRxWVKYLAALMSDCPAOHKSINNYVAMIAbove Avg TRxRITNARSCMONDNCGAMANEIADE

11,331Per Capita/Above

19,40518,31917,42516,74614,92914,40113,72713,59313,23712,69311,72811,56611,456

Per Capita/Below17,12516,99514,13314,07313,18713,15613,08912,91012,58511,69311,55311,401

-1.1%Avg Growth

-0.7%0.4%0.9%-0.7%-0.9%0.1%0.7%-0.2%-0.6%-0.7%5.6%-0.2%0.0%

Avg Growth-2.6%-2.6%-7.1%-1.3%-2.6%-6.2%-2.3%-2.9%-1.4%-2.5%-1.2%-3.1%



APPENDIX 5

Dispensing by Payment Type

Appendix notesMedicare Part D reflects only retail pharmacy prescriptions.Mail order delivery of Medicare Part D prescriptions is notdistinguished from other Commercial Third-Party.


Medicaid includes only Fee for Service Medicaid. A numberof states transitioned Fee for Service Medicaid programs tocommercial administrators, so-called Managed Medicaid.The declines in Medicaid prescriptions, particularly in2011, were more attributable to this shift in managementthan to changes in the prescription-filling behavior byMedicaid beneficiaries.



Total US Prescription MarketCashMedicaidCommercial Third-PartyMedicare Part D

3,866319273

2,489785

3,949305296

2,530818

3,993274337

2,513870

4,024258326

2,547893

3,825415261

2,444705



APPENDIX 6

Dispensing Locations

Appendix notesReport reflects prescription-bound products includinginsulins and excluding other products such as OTC.

IMS Health routinely updates its market audits, which mayresult in changes to previously reported market size andgrowth rates.

Prescriptions include all prescriptions dispensed throughretail pharmacies - including independent and chain drugstores, food store pharmacies and mail order as well aslong-term care facilities.

Updated February 17, 2012.IMS Health, National Sales Perspectives, Dec 2011

Total US Prescription MarketRetail ChannelsChain StoresMail ServiceIndependentFood StoresInstitutional ChannelsClinicsNon-Federal HospitalsLong-Term CareFederal FacilitiesHome Health CareHMOMiscellaneous

285.7203.599.746.536.920.482.133.026.813.73.92.51.31.0

300.7215.0105.451.037.421.285.734.827.613.94.12.61.71.0

308.6219.3108.251.838.021.389.336.828.114.83.92.62.11.0

319.9227.3112.655.138.121.592.638.428.315.24.22.82.71.0

280.5199.196.044.137.521.581.432.726.413.34.02.51.51.0

SPENDING $BN 2007 2008 2009 2010 2011

Total US Prescription MarketRetail ChannelsChain StoresIndependentFood StoresMail ServicesInstitutional ChannelsLong-Term Care

3,8663,5582,047769481261307307

3,9493,6332,129755488261316316

3,9933,6742,173748489264319319

4,0243,6952,212740483260329329

3,8253,5302,012783478257295295




Top Therapeutic Classes by Spending

APPENDIX 7

Appendix notesTherapy areas are based on proprietary IMS Healthdefinitions.


IMS Health routinely updates its market audits, which mayresult in changes to previously reported market size andgrowth rates.

Updated February 17, 2012.IMS Health, National Sales Perspectives, Dec 2011

SPENDING $BN 2007 2008 2009 2010 2011

Total US Market1 Oncologics2 Respiratory Agents3 Lipid Regulators4 Antidiabetics5 Antipsychotics6 Autoimmune Diseases7 Antidepressant8 HIV Antivirals9 Anti-Ulcerants10 Narcotic Analgesics11 ADHD12 Platelet Aggregation Inhibitors13 Angiotensin II Inhibitors14 Multiple Sclerosis15 Vaccines (Pure, Comb, Other)16 Anti-Epileptics17 Erythropoietins18 Immunostimulating Agents19 Hormonal Contraceptives20 Antivirals, excl. Anti-HIV

285.719.716.018.113.614.38.611.77.114.27.34.75.77.64.15.011.14.56.94.13.9

300.721.518.118.615.814.79.711.58.214.18.05.86.58.65.04.76.94.76.34.14.8

308.622.319.318.817.716.210.611.69.311.98.46.77.18.75.85.75.64.86.14.23.2

319.923.221.020.119.618.212.011.010.310.18.37.97.87.67.16.35.95.25.14.53.7

280.518.115.119.412.212.87.611.76.214.66.74.05.06.53.45.910.04.18.44.13.6


About the InstituteThe IMS Institute for Healthcare Informatics leveragescollaborative relationships in the public and privatesectors to strengthen the vital role of information inadvancing healthcare globally. Its mission is to providekey policy setters and decision makers in the globalhealth sector with unique and transformational insightsinto healthcare dynamics derived from granular analysisof information.

Fulfilling an essential need within healthcare, theInstitute delivers objective, relevant insights and researchthat accelerate understanding and innovation critical tosound decision making and improved patient care.

With access to IMS’s extensive global data assets andanalytics, the Institute works in tandem with a broad setof healthcare stakeholders, including governmentagencies, academic institutions, the life sciences industryand payers, to drive a research agenda dedicated toaddressing today’s healthcare challenges.

By collaborating on research of common interest, itbuilds on a long-standing and extensive tradition ofusing IMS information and expertise to support theadvancement of evidence-based healthcare around the world.

GUIDING PRINCIPLES

The Institute operates from a set of Guiding Principles:

The advancement of healthcare globally is a vital, continuous process.

Timely, high-quality and relevantinformation is critical to sound healthcaredecision making.

Insights gained from information andanalysis should be made widely available tohealthcare stakeholders.

Effective use of information is oftencomplex, requiring unique knowledge and expertise.

The ongoing innovation and reform in allaspects of healthcare require a dynamicapproach to understanding the entirehealthcare system.

Personal health information is confidentialand patient privacy must be protected.

The private sector has a valuable role toplay in collaborating with the public sectorrelated to the use of healthcare data.

R ESEARCH AGENDA

The research agenda for the Institute centerson five areas considered vital to theadvancement of healthcare globally:

Demonstrating the effective use ofinformation by healthcare stakeholdersglobally to improve health outcomes, reducecosts and increase access to available treatments.

Optimizing the performance of medical carethrough better understanding of diseasecauses, treatment consequences and measuresto improve quality and cost of healthcaredelivered to patients.

Understanding the future global role forbiopharmaceuticals, the dynamics that shapethe market and implications for manufacturers,public and private payers, providers, patients,pharmacists and distributors.

Researching the role of innovation in healthsystem products, processes and deliverysystems, and the business and policy systemsthat drive innovation.

Informing and advancing the healthcareagendas in developing nations throughinformation and analysis.

IMS Institute for Healthcare Informatics11 Waterview BoulevardParsippany, NJ 07054

USA

[email protected]

www.theimsinstitute.org

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Medicines in the US Report - IMS Health