Mail-Order Rx chips away at retail sales – Pharmacy

Diane West

Mail-order drug sales are hot on the heels of retail. Of the $174.4 billion in prescription drugs dispensed last year, mail order claimed more than a $27-billion chunk, according to numbers crunched for the National Association of Chain Drug Stores by IMS Health.

While chain drug beat that easily with $67.8 billion, the percentages show a different picture. Chain drug sales accounted for 41.2 percent of the market in 2001; slightly below the 42.4 percent of the market the channel claimed in 2000. Mail order claimed 14.6 percent of the market in 2000, but inched up to almost a 17 percent share of the market last year.

Of the drug-selling channels analyzed here (chain drug, mass market, supermarket, independent drug and mail order), mail order achieved the biggest market-share gain in percentage terms. Where mail order drug sales accounted for $20.6 billion in 2000, its $27.6 billion in 2001 sales represented almost a 25 percent increase for the second year in a row. Comparatively, chain drug stores’ $67.8 billion in sales in 2001 represented a 10.6 percent increase from 2000 sales.

“Mail order is still the fastest-growing channel of distribution,” said Doug Long, senior vice president of industry relations at IMS Health. “A lot of this is driven by pharmacy benefit managers and employers looking to contain drug costs, where PBM members can fill one or two prescriptions at retail, but then have mandatory mail order after that.”

Growth in other channels seemed to level off a bit in 2001, perhaps the most notable being supermarket pharmacy sales. Where food stores made a huge percentage sales leap between 1999 and 2000. increasing sales 25.7 percent in the space of one year, 2001 was not nearly as dramatic. Supermarket prescription drug sales came in at $19.9 billion in 2001, a 14.1 percent increase from 2000’s tally of 16.9 billion. That was enough to claim 12 percent of the market in 2001, which is right in line with the channel’s 2000 market share. “A lot of supermarkets’ past pharmacy growth was due to the opening of new locations,” Long said. “I’m not sure whether this growth is temporarily low or not.”

With slight differences, mass market and independent pharmacies kept up very closely with last year’s numbers. Mass market retailers accounted for $15.2 billion of prescription drug sales in 2001. This was enough to claim a 9.3 percent of the market, a slight dip from the 9.9 percent of the market claimed in 2000. Independent pharmacies continue to bring in drug sales double that of mass merchandisers; they rang up sales of $33.9 billion and claimed 20.7 percent of the market last year.

“A lot of people think the independents are stabilizing, and I think that’s good news for them,” Long said. “Part of the reason is that fewer are going out of business–there used to be 1,500 a year going out of business–so the players that are still there are the strongest ones.” A number of retail drug chains, Long added, also have cut back on expansion plans.

There weren’t too many big changes volumewise in terms of the number of prescriptions filled in each channel, save for mail order. The chains filled 1.4 billion prescriptions in 2001, claiming just a whisper more than 47 percent of the market; chains claimed 47 percent of the market in 2000. Mass market, supermarket and mail order prescription volumes all rose. Mail order volume rose almost 11 percent and claimed 5.4 percent of the market.

Generics sales start (slowly) inching up

Perhaps one of the more significant trends is the uptick in generic drug sales, albeit a slight one. But the trend is significant because generic sales have generally been flat–or even down slightly–over the course of the last five years. After peaking in 1999, when new generic drug prescriptions claimed 49.8 percent of the prescription market, they dipped again in 2000 to 48.7 percent. However, last year’s tally has them up again to 48.8 percent market share in terms of new prescriptions. “Generics’ share was drifting up until the third quarter of last year,” Long said. “Then you had Mevacor (lovastatin), Glucophage (metformin HCl) and Prozac (fluoxetine HCl) go generic. With generics, you have to look at the full year effect.”

Brand-name drug sales are still strong. Many of the top sellers in 2000 remained on the top 10 list, and a few more joined the ranks. Astra-Zeneca’s popular “purple pill” for intestinal disorders, Prilosec (omeprazole), took a bruising, however. AZ’s pain may have been both caused (and eased) by the introduction of Prilosec successor, Nexium, (esomeprazole magnesium), which made a strong debut in 2001.

But who is paying for all these drugs? IMS data shows that, in the space of 10 years, third party payors have overtaken cash payers completely. “If there’s a Medicare drug benefit, we’ll see cash payments continue to erode,” Long said. “But it also depends on whether managed care starts excluding coverage for certain products. If they decided not to pay for a drug like Viagra [sildenafil], you’ll see people paying again in cash.”

Top 10 suppliers in U.S. market

2001 %

Rank Company sales (*) % change of market

1 Pfizer $17,631 14% 10.0%

2 GlaxoSmithKline 15,474 22 8.8

3 Merck 12,519 15 7.1

4 Johnson & Johnson 10,922 29 6.2

5 Bristol-Myers Squibb 10,505 10 6.0

6 Astra Zeneca 10,067 17 5.7

7 Lilly 7,627 8 4.3

8 Wyeth (**) 6,983 18 4.0

9 Novartis 6,787 19 3.9

10 Pharmacia 6,512 17 3.7

Source: IMS Health, Retail and Provider Perspective 2002

(*)Sales in millions Year 2001 is a 53-week year versus a 52-week year

in 2000.

(**)Formerly American Home Products

Top 10 classes

2001 %

Rank Class sales (*) % change of market

1 Cholesterol-reducing Rx statins $11,291 24% 6.4%

2 Proton pump inhibitors 10,243 22 5.8

3 SSRI/SNRI 9,861 18 5.6

4 Antipsychotics, other 5,374 33 3.1

5 Erythropoietins 5,125 30 2.9

6 Cox-2 inhibitors 4,708 28 2.7

7 Calcium blockers 4,600 1 2.6

8 Seizure disorders 4,559 28 2.6

9 Antihistamine caps/tabs 4,338 26 2.5

10 Ace inhibitors 3,760 7 2.1

Source: IMS Health Retail and Provider Perspective 2002

(*)Sales in millions Year 2001 is a 53-week year versus 52-week year in

2000.

Top 10 products in U.S. market

2001 %

Rank Product sales (*) % change of market

1 Lipitor (Pfizer) $5,224 25% 3.0%

2 Prilosec (AstraZeneca) 4,611 -2 2.6

3 Zocor (Merck) 3,680 31 2.1

4 Prevacid (TAP) 3,553 12 2.0

5 Celebrex (Pharmacia) 2,615 21 1.5

6 Epogen (Amgen) 2,563 24 1.5

7 Procrit (Ortho Biotech) 2,556 37 1.5

8 Zyprexa (Lilly) 2,510 29 1.4

9 Zoloft (Pfizer) 2,270 14 1.3

10 Paxil (GlaxoSmithKline) 2,154 16 1.2

Source: IMS Health Retail and Provider Perspective 2002

(*)Sales in millions Year 2001 is a 53-week year vs. 52-week in 2000.

Top U.S. prescription launches

2001 Month 2001 %

Rank Product launched total $ (*) of market

1 Nexium (AstraZeneca) (**) March $529 13%

2 Advair Diskus March 529 13

(GlaxoSmithKline)

3 Fluoxetine HCI (Barr Labs) August 379 9

4 Detrol LA (Pharmacia) January 208 5

5 Buspirone HCI (Mylan Labs) April 189 5

6 Fluoxetine HCI (Par Pharm) August 188 5

7 Geodon (Pfizer) March 142 3

8 Gleevec (Novartis) May 119 3

9 Buspirone HCL (Watson Phama) April 99 2

10 Peg-Intron (Schering Plough) February 87 2

Source: IMS Health for all pharmaceutical distribution channels.

(*)Sales in millions

(**)Nexium’s total dollars are actually slightly higher than Advair;

rounding made the number equal to this chart.

Prescription sales by channel

2001 % change %

sales (*) vs. 2000 of market

Chain drug $67.8 10.6% 41.2%

Mass 15.2 14.6 9.3

Supermarket 19.9 14.1 12.1

Independent 33.4 8.1 20.7

Mail order 27.6 24.3 16.8

Source: NACDS

(*)In billions

No. of prescriptions filled

2001 Rx % change %

volume (*) vs. 2000 of market

Chain drug 1,418 5.5% 47.1%

Mass 311 6.3 10.3

Supermarket 418 6.0 13.9

Independent 700 1.6 23.3

Mail order 161 10.7 5.4

Source: NACDS

(*)In millions

Retail prescription scorecard

Total prescriptions 2001 2000

% branded 57.3% 57.6%

% generic 42.7 42.4

% Third party 73.0 70.4

% Medicaid 11.0 11.1

% cash 16.0 18.5

Branded price change 9.0 8.0

Generic price change 14.0 6.0

Source: NACDS

Third party is No. 1 form of payment/reimbursement

% of prescriptions

Cash Medicaid Third party

1990 63% 11% 26%

1996 33% 12% 55%

1997 29% 11% 60%

1998 25% 10% 65%

1999 21% 11% 68%

2000 19% 11% 70%

2001 16% 11% 73%

Source: IMS Health: NPA+7, Method of Payment Report, 2001

Note: Table made from bar graph

Generic utilization edges up

Generic drugs’ percentage share of market

Total prescriptions Total new prescriptions

1995 42% 46.9%

1996 42.5% 47.7%

1997 43% 49.1%

1998 43.1% 49.4%

1999 43.2% 49.8%

2000 42.3% 48.7%

2001 42.7% 48.8%

Source: IMS Health: NPA+7, Method of Payment Report, 2001

Note: Table made from bar graph

COPYRIGHT 2002 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.

COPYRIGHT 2002 Gale Group

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