2024 Employer Market Insights Report by Prime Therapeutics

EMPLOYER MARKET INSIGHTS REPORT

CONTRIBUTORS

Matthew Patella

Vice President and General Manager, National and Mid-Market Accounts

Karim Prasla, PharmD, BCPS

Vice President, Clinical Outcomes Analytics and Reporting

Katie Lockhart

Director, Forecasting and Pharmacoeconomics

Danny Melson

Senior Analyst, Forecasting and Pharmacoeconomics

Maryam Tabatabai, PharmD

Vice President, Clinical Information

David Lassen, PharmD

Chief Clinical O cer

Shelae Cheng

Marketing Principal

Jennifer Bostick

Senior Graphic Designer

Jessica Belt

Senior Writer

Forecasts powered by Predict

© 202$ Prime Therapeutics LLC | Magellan Rx Management, LLC, a Prime Therapeutics LLC Company. Prime Therapeutics and Magellan Rx 202$ Employer Market Insights Report™. All rights reserved. All trademarks are the property of their respective owners. The content — including text, graphics, images and information obtained from third parties, licensors and other material (“content”) — is for informational purposes only. The content is not intended to be a substitute for professional medical advice, diagnosis or treatment. Figures may be reprinted with the following citation: Prime Therapeutics and Magellan Rx Employer Market Insights Report™, Seventh Edition, ©202$. Used with permission.

Welcome to the seventh edition of the Prime Therapeutics

OVERALL EMPLOYER

MARKET TRENDS

In 202%, the pharmacy trend in the employer market was 7.2%, with a flat (0.$%) traditional drug trend and a 1$% specialty trend (Figure 1).

(Prime/Magellan Rx)

yer Market Insights Report.

Within this one-of-a-kind publication, you’ll )nd critical pharmacy trend insights that will help you make the best decisions for your business and the people you serve.

Explore in-depth insights on overall pharmacy, traditional and specialty drugs and trends, including information on:

Trend drivers

Three-year forecasts

The main driver of overall trend was drug mix — the shi( between high- and low-cost drugs within a therapeutic class or condition. This was driven in part by continued growth of GLP-1 products for diabetes and obesity, such as Ozempic®, Wegovy ® and Mounjaro®. The total number of claims associated with these products doubled in 202% compared to 2022, likely due to GLP-1s receiving new indications and label expansions, along with continued popularity in social media and media coverage. Wegovy ® and Mounjaro® speci)cally saw triple-digit percentage increases in utilizers (consumers), leading to a combined $2.*2 PMPM impact on 202% trend (Figure %).

Overall, diabetes and obesity drugs accounted for %7 % of cost increase in 202%. Autoimmune — anti-inflammatory drugs accounted for another %0%.

Although traditional pharmacy trend stayed at a relatively flat 0.$% (Figure 1), the diabetesspeci)c trend is expected to grow from about 22% of total spend in 202% to approximately 27 % by 2026, driven by increasing demand for GLP-1s. And GLP-1s are forecasted to almost double in market share, from approximately 11% in 202% to 20% by 2026.

Specialty trend grew by 1$% (Figure 1), primarily due to increased utilization. The number of consumers grew by 6.$% year-overyear,1 led by drugs such as Skyrizi®, Dupixent® , Rinvoq® and Xolair ® (Figure $). Increased utilization drove specialty expenditures up by 10.2%, while unit cost accounted for %.*% of the increase (Figure 2).

Looking ahead, we forecast the specialty trend to decrease and remain in the single digits over the next three years (Figure 1). This lower forecast is due to the recent entry of biosimilars for Humira® (in 202%) and future entry of Stelara® biosimilars in 202,. Overall net cost trend is forecasted to decrease over the next three years due to a slowdown in the growth of specialty spend. This is driven by the introduction of biosimilars to treat anti-inflammatory autoimmune conditions (Figure $).

1 Prime/Magellan Rx internal claims data

FIGURE 1: 2023 DRUG TREND AND

FIGURE 2: 2023 DRUG TREND DRIVERS

FIGURE 3: KEY TRADITIONAL DRUG UTILIZERS IMPACT

FIGURE 4: KEY SPECIALTY DRUG UTILIZERS IMPACT

TRADITIONAL PHARMACY

TRENDS FORECAST

Traditional pharmacy trend was well managed in 202% at 0.$%. Drug mix had a major influence and alone would have driven traditional trend to nearly 6%; however, this was mitigated by favorable cost share and pricing impacts overall (Figure 2 on Page 2).

Drug mix for diabetes and obesity contributed $2.$% PMPM ($*%) of the total $,.21 PMPM increase in 202%, due to continued growth of GLP-1 products for these conditions. As a note, despite overall GLP-1 growth, market share for GLP-1s such as Trulicity ®, Victoza® and Bydureon® decreased because of the continued shi( to Ozempic®. In 202%, diabetes matched the autoimmune – anti-inflammatory condition as the highest spend category, with both having approximately 22% of market share by spend.

Over the next three years, the traditional trend forecast is expected to remain relatively flat with minimal fluctuation (Figure ,), driven by overall slowed growth in the top traditional conditions. For example, asthma/COPD is forecasted to be flat by 2026. The migraine trend is forecasted to grow by 1$%–2$% over the next three years, which is still less than the %6% trend experienced in 202%. ADHD is forecasted to decrease by 7.-% in 202$ due to the Vyvanse® generic entry before remaining nearly flat in 202, and 2026 (Figure 6). We expect diabetes to continue showing high

single- to double-digit growth; however, this is considerably less than the 2,.1% increase experienced in 202% for Ozempic® and Mounjaro® (Figure 7 ).

The primary growth drivers for traditional trend continue to be GLP-1 medications, such as Ozempic®, Mounjaro®, Jardiance®, Zepbound® and Wegovy®. Mounjaro® speci)cally saw a rapid uptake in 202%, as it was released in 2022; we expect this will continue to impact trend in 202$. Anti-clotting agent Eliquis® joins these high-growth drivers and is forecasted to grow by -%–10% due to expanding indications and the increasing prevalence of conditions requiring anti-clotting therapy as the U.S. population ages (Figure 7 ).

The primary growth drivers for traditional trend continue to be GLP-1 medications.

FIGURE

SPECIALTY PHARMACY

TRENDS FORECAST

Specialty pharmacy trend increased by 1$% in 202%. This was mainly due to increased utilization, which accounted for 10.2% of the specialty trend, with the unit cost driver increasing by %.*% (Figure 2 on Page 2).

Specialty trend growth is forecasted to decrease over the next three years, with projections of 6.-%, $.-% and %.%% trend for 202$, 202, and 2026, respectively (Figure *). The reduction in specialty trend is driven by continued decline in the autoimmune – anti-inflammatory condition. This condition had a trend of 21.,% in 202%, which is expected to decrease over the next three years due to Humira® biosimilars entering the market (Figure -). In 202,, we’re also expecting the release of a biosimilar for Stelara®, which will help reduce specialty trend further.

However, we expect continued growth of other autoimmune – anti-inflammatory products such as Rinvoq®, Skyrizi® and Tremfya® (Figure 10). These drugs, along with Talz® and Orencia Clickjet®, saw utilization impact greater than 7,% of the autoimmune anti-inflammatory trend (with cost increases driving the other 2,%).

Multiple sclerosis continues to decrease in spend on the pharmacy bene)t, most likely due to utilization shi( s on the medical bene)t (Figure -).

In 202%, we saw signi)cant growth in the atopic dermatitis condition, which was primarily driven by Dupixent® (Figure -). Dupixent® had a trend of $0% in 202% and is forecasted to continue growth with trend in the upper teens, driving the overall atopic dermatitis trend (Figure 10).*

In addition to the growth with select atopic dermatitis and autoimmune – anti-inflammatory products, we expect Trika(a® to have double-digit trend over the next three years (Figure 10).

AND 2024–26 FORECAST

Specialt y trend growth is predicted to slow to single digits over the next three years, primarily due to a declining autoimmune – anti-inﬂammatory trend.

* Dupixent is also used for asthma and COPD indications. We assigned all uses of Dupixent ® to atopic dermatitis, as that is the drug’s )rst and main indication.

FIGURE 8: SPECIALTY DRUG 2023 TREND

FIGURE 9: KEY SPECIALTY CONDITIONS TREND FORECAST (2024–26)

FIGURE 10: KEY SPECIALTY PRODUCTS TREND FORECAST (2024–26)

PIPELINE FORECAST

We closely monitor the evolving drug pipeline landscape, including key investigational pharmacy drugs and select new-to-market brand-name drugs. Notably, in Q1 202$, the FDA approved oral resmetirom (Rezdi. ra®), the )rst treatment for non-alcoholic steatohepatitis (NASH), the most severe form of a common chronic liver disease. In that quarter, the FDA also approved subcutaneous sotatercept (Winrevair ®), the )rst activin signaling inhibitor that targets underlying pulmonary arterial hypertension (PAH).

In Q2 202$, the FDA approved danicopan (Voydeya®) as the )rst complement factor D inhibitor oral formulation for extravascular hemolysis in the rare blood disorder paroxysmal nocturnal hemoglobinuria (PNH) to be used as an add-on therapy to ravulizumab or eculizumab.

An FDA decision for injectable crovalimab for PNH is anticipated in late July 202$. In September 202$, an FDA decision for oral xanomeline-trospium is expected. This is the )rst potential new target in several decades to treat schizophrenia, a serious mental illness that a.ects 1% of the population.

Rezdi ra® Nonalcoholic steatohepatitis (NASH)

Winrevair® Pulmonary arterial hypertension (PAH)

lebrikizumab Atopic dermatitis

relacorilant Cushing syndrome

a camten Hypertrophic cardiomyopathy

xanomelinetrospium Schizophrenia

crovalimab Paroxysmal nocturnal hemoglobinuria (PNH)

Voydeya® Paroxysmal nocturnal hemoglobinuria (PNH)

Lebrikizumab, a monoclonal antibody used to treat atopic dermatitis (eczema), received the FDA’s complete response letter in October 202% due to manufacturing issues. However, the manufacturer anticipates regulatory action in the second half of 202$. 2 Two oral agents for rare diseases in phase % trials relacorilant for Cushing syndrome and a)camten for hypertrophic cardiomyopathy are not expected until 202, and forecasted to contribute $0.12 and $0.10 PMPM in 2026, respectively (Figure 11).

2 Eli Lilly and Company. (202$, April %0.) Lilly Reports First-Quarter 2024 Financial Results and Raises Full-Year Revenue Guidance by $2 Billion, Highlights Pipeline Momentum. https://investor.lilly.com/news-releases/news-release-details/lilly-reports-)rst-quarter-202$-)nancial-results-and-raises

FIGURE 11: KEY PHARMACY PIPELINE PRODUCTS FORECAST

METHODOLOGY AND DISCLAIMER

• All forecasts are based on the methodology Prime/Magellan Rx uses to project trend impact for years 202$, 202, and 2026. All forecasts are based on available market and product information as of June 2*, 202$. Forecasts are subject to change if marketplace events evolve. Forecasting results are based on aggregate data to provide directional results for informational purposes only and may not reflect actual results for individual plan sponsors.

• Specialty drugs include only those covered on the pharmacy bene)t and are based on Prime/Magellan Rx specialty de)nition.

• Pipeline drugs are de)ned as any new-tomarket brand products approved or expected to be approved during the forecast period (202$–26).

• Overall drug trend and forecast is based on plan paid per member per month (PMPM) change year over year a(er rebates and network discounts.

• Traditional and specialty drug trend and forecast is based on plan paid PMPM change year over year a(er rebates and network discounts; individual condition drug trend and forecast is prior to rebate impact but includes network discounts. Utilization is divided into consumers (utilizers) and consumption (days’ supply per utilizer).

• Historical and forecasted drug trends for overall, specialty and traditional categories are reported at a net level (with rebates); speci)c condition and drug trends are reported at a gross level (without rebates).