Aon Survey: Specialty Pharmacy Trend Rate to Rise 22.5 Percent in 2005; Significantly Outpacing General Pharmacy Rate's 13.1 Percent Increase

CHICAGO, June 13 /PRNewswire-FirstCall/ -- According to the Aon Spring 2005 Health Care Trend Survey, specialty pharmacy costs are on the rise, with a trend rate of 22.5 percent -- significantly higher than the general pharmacy trend rate of 13.1 percent. The specialty pharmacy trend rate is a new addition to the semi-annual survey as Aon has identified specialty pharmacy as an emerging concern for employers. The overall medical trend rate is down slightly from Fall 2004, but at 13.2 percent, it still maintains a double- digit percentage increase for the sixth year in a row.

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Specialty pharmacy includes high cost pharmaceutical products that are generally, but not exclusively, biotech in nature. Most require injection or other unique methods of administration and refrigeration or special handling. Conditions most commonly treated by specialty pharmaceuticals include anemia/neutropenia, rheumatoid arthritis, cancer, multiple sclerosis. The annual per patient cost of these drugs can range from $10,000 - $250,000.

Randy Vogenberg, senior vice president with Aon Consulting's Life Sciences practice, said, "Specialty pharmacy is an increasingly important issue for employers, due to our aging workforce and the ongoing development of advanced drugs for diseases such as depression, Alzheimer's, Parkinson's and cancer. These drugs offer significant advances in treating rare diseases and increasingly common disorders; but they are currently very costly due to lack of generic competition and inconsistent benefit plans across managed care organizations. Because drug development continues at a fast pace, it's a complex task to forecast the increasing costs."

Specialty medications carry significantly higher costs than traditional drug products taken by mouth. They currently represent about five percent of overall pharmacy spending, but are expected to grow as biotechnology and genomic drugs become more readily available and commonly used. In 2005 alone, drug manufacturers report that 800 specialty pharmacy medications are in development.

Vogenberg advised, "Employers should look to implement cost management strategies for dealing with rising specialty pharmacy costs. Potential solutions include use of specialty prescription brand managers (PBM) and coordination with health plans, the use of evidence-based medicine to guide diagnosis and treatment, and analysis of claims and other data using economic models for proactive plan strategy."

Also of note is the consumer driven health plan (CDHP) trend rate, which is now modestly better than the HMO, POS and PPO trend rates. As predicted by Aon in Spring 2004, the CDHP trend rate is now lower than that of traditional health plans.

Bill Sharon, a senior vice president with Aon Consulting, said, "We expect to see improved CDHP trend rates in the future as consumers change their health care purchasing behavior and more data becomes available."

Overall, health care trend rates were similar to Aon's Fall 2004 forecast, with slight downward movement across the board in HMO, PPO, Indemnity and CDHP. The general pharmacy rate did not change, and continues to be almost identical to the medical trend rate. Dental and vision trend rates have increased slightly compared to Fall 2004.

Sharon said, "This survey provides the first look at 2006 trend rates. As in past years, our survey indicates that medical plan costs are forecasted to increase at double-digit rates. Reasons for these increases include increasing patient demand for services, an aging population and lessening of tight managed care controls, as well as an increase in medical technology costs, hospital costs, medical malpractice costs, increasing price and utilization of prescription drugs, and poor lifestyle choices."

2006 Rate Projections The following table summarizes the trend rate for 2006: Medical With Rx Without Rx HMO 13.2% 12.9% POS 13.0% 12.7% PPO 13.0% 12.7% Indemnity 14.6% 14.6% CDHP 12.7% 12.4% Dental DHMO 4.7% PPO 7.1% Indemnity 7.6% Pharmacy General 13.1% Specialty 22.5% Vision 3.9% To see complete survey results, please visit http://www.aon.com/ . About Aon

Aon Corporation ( http://www.aon.com/ ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

Aon Consulting is among the top global human resources consulting firms, with 2004 revenues of $1.247 billion and 7,000 professionals in 120 offices throughout the world. Aon Consulting delivers integrated consulting solutions to help clients with employee benefits, human resources outsourcing, compensation, communication and management consulting.

Contact: Dana Sohn, Aon Consulting, +1.312.381.4786, dana_sohn@aon.com or Bianca Wright, RF Binder Partners, + 1.212.994.7545, bianca.wright@rfbinder.com

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