Arthrotec

With pharmaceutical sales at an all-time high and increased drug utilization across all patient categories, chain pharmacies saw major gains in 1998 and advances that significantly affected both the business and practice of pharmacy. An aggressive and mobilized pharmaceutical industry broadly targeted healthcare professionals and consumers with its message that pharmaceuticals are the key to disease management, prevention and, ultimately, cost containment. At the same time chain pharmacies increasingly redefined their roles and their business imperatives to negotiate more effectively in the new climate of pharmaceutical health care.

Retail sales of prescription drugs in 1998 reached a record $103 billion in retail dollars, up 15.6 percent from $89.1 billion in 1997, according to the National Association of Chain Drug Stores. Chain stores, with pharmacy sales of $63.24 billion, accounted for 61.4 percent of those prescriptions. Drug, food and mass outlets all showed more than 16 percent growth in 1998 prescription sales. Chain drug stores captured 40.3 percent of the total retail market, with sales of $41.49 billion and prescription volume of 1.087 billion, according to NACDS. Supermarket pharmacies came in with $1 1.38 billion in sales--showing 16.4 percent growth over 1997 and holding 11 percent of market share, while mass merchant pharmacies produced sales of $10.37 billion for 10.1 percent of the market.

Despite the spectacular launch of Viagra, the strong growth in 1998 was fueled less by new product introductions than by solid gains by blue-chip drugs in established therapeutic classes. 1998 saw the first $5 billion dollar pharmaceutical drug, Prilosec. A 10-year-old drug, soon to lose patent protection, Prilosec has been kept at the top of its crowded category by aggressive, proactive marketing that included a dedicated sales force, heavy direct-to-consumer advertising, intensive detailing and an increased focus on its role in prevention, ongoing therapy and wellness.

This emphasis on broadly increased utilization was key to 1998's focus on pharmaceutical life cycle management. Branded pharmaceutical companies will use every possible approach to maintain their branded products' life cycles because the stakes are just too high for them, said Hemant Shah, an independent pharmaceutical industry analyst. "The level of market capitalization and the level of resources at their disposal are so great, you're going to see them fight tooth and nail for every product that's about to go off patent," he said.

New products aimed for equally high visibility by aggressively targeting the consumer. According to IMS estimates, Propecia spent more than $92 million on direct-to-consumer advertising for the year, and Evista invested $42 million--but neither managed to land among the top-grossing launches of 1998.

That honor went to Viagra, with $550 million in sales for 1998 since its launch in April, according to IMS figures. Some 598,000 prescriptions were written in its first month on the market--before a single promotion or DTC ad appeared--and the number doubled to 1.26 million the following month. Prescriptions for the drug now have leveled off at roughly 700,000 a month, a decline that can be at least partly attributed to the following factors: some insurers have denied coverage of the $10 pill, the Food and Drug Administration reported deaths linked to the drug and the drug didn't help a percentage of the men who took it. But the product has raised the stakes for the potential of lifestyle drugs, with their various physical and psychological components, and it has helped boost the genitourinary class of drugs to its position as the fastest growing therapy class. Because of the performance of the urologicals sub-class, which essentially includes Viagra, sales rose 124 percent.

Of the 10 top-selling therapeutic categories at chain pharmacies in 1998, as ranked by IMS Health, all but three of the categories showed double digit growth. The top gainers included oral diabetes drugs (a 42 percent increase), cholesterol reducers/statins (31 percent), SSRIs (24 percent), drugs for seizure disorders (22 percent), antiulcerants (11 percent) and ace inhibitors (11 percent), according to IMS Health. Others in the top 10 include oral contraceptives, antiarthritics, calcium blockers and antihistamines. Sales in these top 10 categories accounted for 42 percent of all sales in chain pharmacies.

The top-selling branded drugs of 1998 showed substantial sales growth over the previous year, according to IMS. Lipitor sales grew 163 percent since it was launched in January 1997; the SSRIs Prozac and Paxil saw 32 percent and 28 percent growth, respectively; older drugs such as Claritin still saw growth of 30 percent.

The top 10 best-selling drugs in chain pharmacies--Prilosec, Prozac, Lipitor, Zocor, Zoloft, Claritin, Paxil, Prevacid, Norvasc and Augmentin--accounted for 20 percent of all chain pharmacy prescription sales, according to IMS. With three antidepressants (Prozac, Zoloft, Paxil), two cholesterol reducers (Zocor, Lipitor) and two antiulcer medications (Prilosec, Prevacid), the top 10 represent the three most crowded, competitive and lucrative prescription categories and those most aggressively and uniquely targeted by branded marketing efforts to differentiate their products, both to consumers and healthcare professionals.

In 1998, the pharmaceutical industry spent more than $5.7 billion to detail products and nearly $2.3 billion on promotional meetings and events, increases of 14.6 percent and 28 percent, respectively. According to Scott-Levin, these strategies are indicative of a general sea change in the healthcare arena. In the past two to three years, there has been an incredible shift in the decision-making process in the United States, moving away from managed care intervention to more control by physicians, said analyst Shah. Pharmaceutical companies have moved aggressively to place the decisions back in the hands of physicians.

New products approved by the FDA in 1998 include 30 molecular entities and nine new biologics, to treat diseases afflicting more than 180 million patients, according to Alan Holmer of the Pharmaceutical. Research and Manufacturers of America. Among the treatments: a once-a-day-AIDS drug, the first vaccine to treat Lyme disease, the first new tuberculosis drug in 25 years, the first in a new class of drugs for Parkinson's disease, three new medicines for rheumatoid arthritis, the first in a class of once-a-day asthma drugs, and two important new medicines for breast cancer, acute coronary syndrome, two therapies for acute migraine and the first medicine specifically approved to treat Crohn's disease.

Three new combination products--Travafloxacin (Meseylate and Azithromycin), Activelle (Estradiol and Norethindrone Acetate) and Diovan HCT (Valsartan and Hydrochlorothiazide)--were approved, as well as numerous novel formulations of existing drugs.

The 30 drugs were reviewed by the FDA in an average of 11.7 months; the biologics were reviewed in an average of 13.5 months--a tribute to the benefits of the user fee system that has helped the FDA reduce review times, which had averaged more than 30 months before the start of the program.

According to IMS, pharmaceutical companies spent a total of $1.3 billion on direct-to-consumer ads during 1998. Thanks to a $185 million DTC ad campaign representing a 171 percent consumer ad spending increase over 1997, Claritin was the No. 1 advertiser to consumers. The result: $833 million in sales.

Zocor, another big DTC spender at $44 million, had sales growth of 11 percent for a 1998 total of $982 million. Prozac's $41 million in DTC spending contributed to its $1.5 million in sales and was the No. 2 best-selling drug in chain pharmacies in 1998.

After Viagra, the top launches of 1998 were Arthrotec, Trovan, Meridia and Singulair.

But in terms of blockbuster launches, the year couldn't match 1997, when Lipitor hit the market with nearly $600 million in sales, followed by Neupogen and Rezulin, each registering sales of more than $300 million, according to IMS.

Celebrex, the Cox-2 inhibitor launched in January 1999, produced 82,600 prescriptions in its first three weeks on the market. IMS data show that before Pfizer officially started promoting the drug, before physician detailing began and without a single DTC ad, the drug registered the second fastest start for a new drug in recent years, surpassing Lipitor, but remaining behind Viagra.

Brand drugs, after several years of price stability, have shown an upward trend. In the past two years, prices increased 4 percent in 1998, up from 3.5 percent in 1997 and 2.9 percent in 1996, according to IMS figures. Statistics showed that for the second year in a row, generic prides declined; in 1997 they declined 6.9 percent, in 1998, 4.1 percent.

Total retail prescription volume for 1998 reached 2.73 billion prescriptions, up 7.9 percent from the 2.53 billion in 1997. Chain stores filled 60.1 percent of those prescriptions, according to NACDS, with drug accounting for 39.9 percent of that volume. The food/drug channel grew its prescription volume 13.8 percent to 11.2 percent of the total; mass increased 7.1 percent for 10 percent of the market. Independents remained stable with a slight increase in market share, and mail order, which accounted for 13.5 percent of total prescription volume, showed 12.2 percent growth. Mail order also scored a substantial increase in dollar sales, rising 17 percent over 1997 to $13.38 billion.

Of new prescriptions, however, 66.5 percent were filled at chain pharmacies, and only 7.5 percent through mail order, IMS figures show.

In 1998, third party payers covered 1.6 billion new and refill prescriptions, almost twice the number paid for by cash and Medicaid combined. The share of third party payments is steadily rising, with third parties covering 68 percent of prescriptions in chain pharmacies dispensed in 1998, according to IMS, compared with 62 percent in 1997. The jump in third party payments corresponds with a drop in cash payments, from 28 percent to 23 percent in one year alone.

Managed care, as well, is continuing to rethink and revise its market position in terms of the pharmacy benefit. Use of a triple-tier co-pay system is increasing; the trend toward more restrictive formulary designs, or closed designs, is well established; mandated coverage requirements are proliferating, pharmacy directors report more widespread use of pharmacy benefit reimbursement caps and broader use of physician and pharmacy incentives through 1999; and the significant increase in disease management programs continues, with an emphasis on outcomes data.

COPYRIGHT 1999 Lebhar-Friedman, Inc.
COPYRIGHT 2000 Gale Group