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5500 Preparer's Manual for 2012 Plan Years

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CCH® BENEFITS — 4/5/07

Medicare Part D, Generics, New Drugs Drive Prescription Drug Sales Growth To 8%: IMS Health

from Spencer’s Benefits Reports: Prescription drug sales in the U.S. grew by more than 8% to $274.9 billion in 2006, according to IMS Health, a major provider of information on the pharmaceutical and health care industries. The number of prescriptions dispensed rose 4.6%, compared with 3.2% in 2005. The growth in prescription drug sales and volume was driven by the new Medicare Part D prescription drug benefit, higher use of generics in new therapy classes, and the market introduction of new drugs aimed at diseases such as cancer and diabetes, IMS Health noted. Although IMS Health expects prescription drug sales growth to drop in 2007, compounded annual growth through 2010 will remain in the 6% to 9% range.

“Legislative attempts to control drug expenditures, the increased influence of payers to drive more cost-effective health care, generics competition, and the introduction of biosimilars will impact U.S. prescription growth in the next five years,” said Diana Conmy, corporate director of IMS Market Insights. These realities “put new pressures on manufacturers and intensify the need for them to focus on health economics and outcomes research to demonstrate the value of their medicines.”

Nearly one-fifth of drug sales in 2006 was comprised of six large classes of brand-name drugs used by Medicare Part D beneficiaries: antidepressants, antipsychotics, anticonvulsants, antiretrovirals that protect the immune system, and two classes of anti-cancer drugs. The Centers for Medicare and Medicaid Services requires Part D plans to cover these classes of drugs, IMS Health said. In fact, prescriptions dispensed through the Part D program accounted for 17% of retail prescriptions in 2005. Fifteen of the top 20 drugs dispensed in Part D were generic drugs. Coverage for prescription drugs through the Medicare Part D plan helped increase demand by expanding the number of covered people.

Generic drug sales volume doubled, aided by introduction of new generic versions of drugs for high cholesterol, depression, and “inhaled nasal steroids,” IMS Health noted. The volume of unbranded generics rose by 13%, while sales grew by 22% in 2006. Also driving prescription drug growth in 2006 were biotechnology products, with sales growing by 20% to $40.3 billion.

The largest distribution channels were chain stores, with $96.1 billion in sales and 1,946 million prescriptions. Mail-order pharmacies’ sales reached $42.2 billion and 232 million prescriptions filled. Pfizer was the top drugmaker in terms of sales, at $26.7 billion, but was number two in terms of prescriptions filled (293 million). The top ten drug classes represented $100.1 billion in sales, including antidepressants with 227 million prescriptions filled at a cost of $13.5 billion; cholesterol medications with 203 million prescriptions filled for a total of $21.6 billion; and proton pump inhibitors for digestive disorders ($13.6 billion).

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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