AdvancePCS Report Shows How Health Plans Beat Risings Costs of Prescription Drugs.

Health/Medical Writers

IRVING, Texas--(BUSINESS WIRE)--Aug. 25, 2003

Case studies presented in a new report by AdvancePCS (Nasdaq: ADVP), the nation's leading health improvement company, prove that effective solutions exist to help health plans outperform the national trend in managing rising prescription drug costs and achieving significant savings.

The case studies of four market segments demonstrate that health plans using integrated prescription benefit management programs achieved exceptional cost savings by employing a blend of strategies and services designed to lower net pharmacy costs.

The segments outperformed the national average drug trend of 14 percent, achieving per-member, per-month trends ranging from 4.6 to 10.7 percent. The studies were based on an analysis of 2002 drugs trends for high-tech employers, Taft-Hartley union groups, public sector plans and small insurance carriers.

"Multiple factors are contributing to rising drug costs, so it is vital that payers have opportunities to take advantage of proven solutions for achieving savings while enhancing clinical outcomes," said David D. Halbert, AdvancePCS chairman, president and CEO. "The case studies in our latest Health Improvement Report offer evidence that balancing quality care, access and cost management is possible by implementing a mix of prescription drug management programs."

One high-tech employer, for example, achieved a 2.7 percent per-member, per-month drug cost trend by applying a customized blend of such programs. These initiatives saved the employer more than $25 million in one year.

Over a 12-month period, the client offered its employees incentives to maximize the use of mail service, increased generic and preferred drug dispensing supported by tiered mail and retail plan design, promoted greater employee compliance with AdvancePCS' Performance Drug List (PDL), and applied utilization management and prior authorization management programs to control use of inappropriate medications. A major contributor to the client's overall savings was mail pharmacy utilization, which was 43 percent higher than the previous year.

As a segment, high-tech employers realized a per-member, per-month trend of 4.8 percent. The trend for insurance carriers in the study was 4.6 percent; government plans, 8.8 percent; and union groups, 10.7 percent.

Other highlights noted in the report:

-- Ten therapeutic classes accounted for more than three-fourths

of the total drug costs on a per-member, per-month basis in

2002, according to an AdvancePCS analysis of its claims for

the year. Cardiovascular drugs comprised the largest class,

contributing 17.3 percent of total drug costs, followed by

mental health, anti-infectives and gastrointestinal drugs.

-- Analysis of claims data shows that retail average wholesale

prices for most common strengths or formulations of the top 10

drugs have increased 8.7 percent on average over the past

year. AdvancePCS offers clients the ability to offset these

increases through manufacturer rebates aligned with drugs

prescribed from the PDL.

-- Increased availability of generic drugs may present notable

savings opportunities, thus slowing the overall rate of

increase in drug spend. Up to eight major brand-name drugs may

lose patent protection and marketing exclusivity over the next

two years. In some cases, however, new generics initially may

cost more than their brand-name counterparts, due to discounts

achieved through manufacturer rebates.

-- The use of biotech, or specialty, drugs for the treatment of

complex, chronic conditions will increase. Treating these

conditions generates a disproportionately large share of total

health care expenses -- costs that frequently are difficult to

identify because of the unique challenges of specialty drug

benefit administration. (See related news release, Aug. 25,

2003: AdvancePCS Report Reveals Hidden Cost of Specialty

Drugs, www.advancepcs.com)

The AdvancePCS Health Improvement Report is available at www.advancepcs.com. The report is a periodic, issue-specific publication in which AdvancePCS shares information and knowledge from its unique resources, capabilities and expertise.

About AdvancePCS

AdvancePCS (www.advancepcs.com) is the nation's largest independent provider of health improvement services, touching the lives of more than 75 million health plan members and managing approximately $28 billion in annual prescription drug spending. AdvancePCS offers health plans a wide range of health improvement products and services designed to improve the quality of care delivered to health plan members and manage costs.

The company's capabilities include integrated mail service and retail pharmacy networks, innovative clinical services, customized disease management programs, specialty pharmacy, outcomes research, information management, prescription drug services for the uninsured and online health information for consumers. AdvancePCS clients include Blue Cross and Blue Shield organizations, insurance companies and HMOs, Fortune 500 employers, Taft-Hartley groups, third-party administrators, state and local governments, and other health plan sponsors.

AdvancePCS is ranked by Fortune magazine as one of America's 100 fastest-growing public companies and is included on the Forbes Platinum 400 list of best big companies. AdvancePCS earned the No. 3 spot on the Barron's 500 list of best performing companies.