1. Can the Specialty Beast Be Tamed? Steven B. Miller, MD Express Scripts

2.  2008 Express Scripts, Inc. All Rights Reserved. 2 Specialty Growth Continues to Outpace Traditional Drug Market Source: Express Scripts analysis of IMS data. Specialty: $59 billion Non-Specialty: $227 billion 2007 (Actual) 21%

3.  2008 Express Scripts, Inc. All Rights Reserved. 3 Specialty Growth Continues to Outpace Traditional Drug Market Source: Express Scripts analysis of IMS data. 21% 27% Specialty: $59 billion Non-Specialty: $227 billion 2007 (Actual)

4.  2008 Express Scripts, Inc. All Rights Reserved. 4 Specialty Growth Continues to Outpace Traditional Drug Market Source: Express Scripts analysis of IMS data. Specialty: $98 billion Non-Specialty: $ 267 billion 2011 (Projected) Specialty: $59 billion Non-Specialty: $227 billion 2007 (Actual) 21% 27%

5.  2008 Express Scripts, Inc. All Rights Reserved. 5 Agenda

6.  2008 Express Scripts, Inc. All Rights Reserved. 6 What Are Specialty Medications? Frequent dosing adjustments Intensive clinical monitoring Intensive patient training Limited or exclusive distribution Specialized handling and administration Cost >$500 per 30 days

7.  2008 Express Scripts, Inc. All Rights Reserved. 77 Overall Specialty Trend: 14% PMPY

8.  2008 Express Scripts, Inc. All Rights Reserved. 8 “Specialty”: Now the #1 Therapy Class PMPY

9.  2008 Express Scripts, Inc. All Rights Reserved. 99 Utilization Drove Trend More Than Last Year PMPY

10.  2008 Express Scripts, Inc. All Rights Reserved. 10 Key Specialty Therapy Classes 2006:2007 PMPY + 17% + 1% - 10% + 20% + 16% + 18% PMPY + 6%

11.  2008 Express Scripts, Inc. All Rights Reserved. 11 Key Specialty Therapy Classes 2006:2007 PMPY + 17% + 1% - 10% + 20% + 16% + 18% + 6%

12.  2008 Express Scripts, Inc. All Rights Reserved. 12 Expanded and Earlier Use Inflammatory Conditions

13.  2008 Express Scripts, Inc. All Rights Reserved. 13 Expanded and Earlier Use Inflammatory Conditions

14.  2008 Express Scripts, Inc. All Rights Reserved. 14 Price Drove Trend Multiple Sclerosis

15.  2008 Express Scripts, Inc. All Rights Reserved. 15 Price Drove Trend Multiple Sclerosis

16.  2008 Express Scripts, Inc. All Rights Reserved. 16 Price Drove Trend Multiple Sclerosis

17.  2008 Express Scripts, Inc. All Rights Reserved. 17 Price, Place and Product Cancer

18.  2008 Express Scripts, Inc. All Rights Reserved. 18 Price, Place and Product Cancer

19.  2008 Express Scripts, Inc. All Rights Reserved. 19 Price, Place and Product Cancer Temodar: 3 – 11% Xeloda: 15.6% Revlimid: 3 – 9.9% Price Market share decreased for Lupron ($792/Rx) Market share increased for Gleevec ($3109/Rx) Mix Tykerb most meaningful (1.4% of cancer market) Several others, much smaller New Drugs

20.  2008 Express Scripts, Inc. All Rights Reserved. 20 Safety Changed the Landscape Blood Cell Deficiency

21.  2008 Express Scripts, Inc. All Rights Reserved. 21 Safety Changed the Landscape Blood Cell Deficiency

22.  2008 Express Scripts, Inc. All Rights Reserved. 22 Prevalence and Price Overwhelmed Mix Growth Hormone

23.  2008 Express Scripts, Inc. All Rights Reserved. 23 Prevalence and Price Overwhelmed Mix Growth Hormone

24.  2008 Express Scripts, Inc. All Rights Reserved. 24 Growth Hormone Use Is Rapidly Moving Into Older Patients Users above age 20

25.  2008 Express Scripts, Inc. All Rights Reserved. 25 Medical Shifted to Pharmacy Anticoagulants

26.  2008 Express Scripts, Inc. All Rights Reserved. 26 Medical Shifted to Pharmacy Anticoagulants

27.  2008 Express Scripts, Inc. All Rights Reserved. 27 Where are the Patients Going? Hepatitis C

28.  2008 Express Scripts, Inc. All Rights Reserved. 28 Where are the Patients Going? Hepatitis C

29.  2008 Express Scripts, Inc. All Rights Reserved. Hepatitis C Prevention Is Working US has 3.2 Million Chronically Infected and 10,000 Annual Deaths 29 http://www.cdc.gov/ncidod/diseases/hepatitis/resource/PDFs/disease_burden.pdf accessed March 24, 2008

30.  2008 Express Scripts, Inc. All Rights Reserved. Hepatitis C Prevention Is Working US has 3.2 Million Chronically Infected and 10,000 Annual Deaths 30 http://www.cdc.gov/ncidod/diseases/hepatitis/resource/PDFs/disease_burden.pdf accessed March 24, 2008

31.  2008 Express Scripts, Inc. All Rights Reserved. 31 Specialty Growth Continues to Outpace Traditional Drug Market Source: Express Scripts analysis of IMS data. Specialty: $98 billion Non-Specialty: $ 267 billion 2011 (Projected) Specialty: $59 billion Non-Specialty: $227 billion 2007 (Actual) 21% 27%

32.  2008 Express Scripts, Inc. All Rights Reserved. 32 Follow-on Biologic Savings Opportunity ESI studied four classes of specialty drugs

33.  2008 Express Scripts, Inc. All Rights Reserved. 33 Follow-on Biologic Savings Opportunity ESI studied four classes of specialty drugs

34.  2008 Express Scripts, Inc. All Rights Reserved. 34 In the first ten years: $71 Billion Savings $ Billions Inflation and prevalence drive trend in this model

35.  2008 Express Scripts, Inc. All Rights Reserved. Every Study Says “Billions”

36.  2008 Express Scripts, Inc. All Rights Reserved. 36 Key Issues SafetySavings Impact on Industry

37.  2008 Express Scripts, Inc. All Rights Reserved. 2007 Was An Active Legislative Year for Follow-On Biologics Repeat clinical trials and interchangeability at FDA’s direction Critics concerned about inadequate market exclusivity for innovator S 623 & HR 1038 Access to Lifesaving Medicine Act Requires clinical testing, risk management, surveillance Prohibits interchangeability; provides data exclusivity Provides >14 years of market exclusivity for innovator HR 1956 Patient Protection and Innovation Act Passed in Senate H.E.L.P. committee in June 2007 Requires proof in switching or alternating agents Provides >12 years of market exclusivity for innovator S 1695 Biologics Price Competition and Innovation Act of 2007 High-level excerpts of selected issues; not a complete description of legislative proposals.

38.  2008 Express Scripts, Inc. All Rights Reserved. 2008 Biogenerics Legislation Mentions creating an FDA regulatory pathway. Suggest BIO wants to deal with this under Bush. Clinton, Obama, and McCain all are viewed as more pro-generic than the current Administration. Bush’s new budget Clear FDA approval pathway Reasonable number of years of market exclusivity Good legislation is needed Expect a deal on the table, but unclear which constituents it will favor. Coming this summer

39.  2008 Express Scripts, Inc. All Rights Reserved. 39 Conclusions