The Hormone Replacement Therapy Market for the Treatment of Menopausal Symptoms in the U.S. A Model of Revenue and Patients Treated

Transcription

1 The Hormone Replacement Therapy Market for the Treatment of Menopausal Symptoms in the U.S. A Model of Revenue and Patients Treated Report by Michael Zuckerman, MD Ben Weintraub, PhD Chris Martin, MBA Julie Hoggatt inthought Research a division of Symphony Health Solutions September 16, 2013, revised December 2,

2 Table of Contents Executive Summary 1 Introduction.. 3 Menopause Overview.. 7 WHI. 8 Bio-Identical Hormone Therapy. 10 Harris Poll.. 11 Construction of the Model.. 11 Data Sources 12 Modeling Parameters.. 13 Modeling Present: Impact of Compounding Pharmacies. 15 The HRT Market in The Future of the Compounded HRT Market.. 16 Modeling Market Subsets. 18 Conclusion

3 Executive Summary This report serves to: (1) analyze the current U.S. market for hormone replacement therapy (HRT) for menopausal symptoms, focusing on the combination HRT products, and (2) forecast the HRT market through Both estrogen and progesterone are available as branded and generic pharmaceuticals, in various formulations and combinations, and also as non-fda approved formulations from compounding pharmacies. Because of the different sources and routes of delivery, and clinical uses, the U.S. market for hormone replacement therapy (HRT) for the treatment of symptoms associated with menopause is complex and difficult to quantify. The overall U.S. HRT market for menopause is currently over $3.7 billion. Pfizer s Premarin and Prempro dominate the branded pharmaceutical market with about $1 billion in U.S. sales this year, down from a peak of nearly $2 billion in The overall revenue from FDA approved HRT drugs will be approximately $2.9 billion this year, with the balance of revenue from compounded HRT. Although use of estrogen by menopausal women has occurred since the 1940s, two factors have changed the market in the last 12 years. First, the Women s Health Initiative (WHI) clinical trial called into question the safety of HRT for menopausal symptoms, leading to a 50% drop in the number of women taking HRT between 2001 and Second, the use of bio-identical hormone replacement therapy (BHRT) for the management of menopause and anti-aging has exploded in popularity. Currently, HRT use is increasing. inthought estimates that the number of treated women in the U.S. will increase from 5.5 million in 2010 to 6.2 million in 2013, then to over 7 million by Physicians are becoming comfortable with the safety profile of HRT, and women continue to seek the proven efficacy of the treatments. Non-FDA approved compounded BHRT represents a significant share of the current HRT market. inthought estimates the current BHRT market for combination product (17β Estradiol and Progesterone) for the treatment of menopausal symptoms (not including sales for anti-aging) at $845 million at an average cash price of approximately $47 for 30 days paid to compounding pharmacies. This translates to a $2.4 billion market at an equivalent FDAapproved branded product WAC price of $135 (the expected price of an FDA approved combination HRT, see chart of Products & WAC below). inthought expects the compounded BHRT market for the treatment of menopausal symptoms to decrease starting in 2014 because of the Drug Quality and Security Act passed by the U.S. Congress this month. Two major sources of growth for the HRT market are use of HRT for anti-aging, and use of vaginal estrogen therapy. These two subsets of HRT will be covered in a future report. 1

4 By 2016, the major catalyst for the field of HRT for menopause will be the results of clinical trials testing new HRT formulations, most notably a low-dose combination of bio-identical estrogen and progesterone, such as that being developed by TherapeuticsMD. If a combination of low-dose bio-identical HRT demonstrates non-inferiority to current treatments, with a similar safety profile, it will be a strong competitor to both FDA approved and especially to compounded HRT. We model FDA approved bio-identical combinations entering the U.S. market in 2016, with revenue increasing to $800 million by

5 Introduction and Overview Each year in the United States, approximately 11 million women reach the age for natural menopause. Several naturally occurring hormones are considered female hormones because of the role they play in a woman s wellbeing. These include estrogen and progesterone, which are produced in the ovaries and adrenal glands. Menopause is associated with cessation of ovarian function due to aging, resulting in lower levels of these hormones and signifying the end of fertility. On average, menopause begins at age 47 and is characterized by irregular menstrual cycles, hormonal fluctuations, and related symptoms that include hot flashes, night sweats, sleep disturbances, changes in mood, and vaginal dryness. Up to 85% of post-menopausal women report symptoms associated with menopause. There are several options for management of menopausal symptoms, including hormone replacement therapy (HRT), which has been used by women since the 1940s. According to experts who treat menopause, estrogen therapy is the preferred and most efficacious option to treat these symptoms. For women who maintain their uterus, which represents the majority of menopausal women, progesterone therapy is also required in combination with estrogen to prevent cancer of the uterus. HRT is available in the following two classes of hormones: (1) Bio-identical (Natural) hormones (BHRT). Bio-identical hormones are the same molecular-chemical as those naturally produced and circulating in the human body. A number of U.S. Food and Drug Administration (FDA) approved hormones, such as 17β-estradiol (i.e. Estrace) and micronized progesterone (i.e. Prometrium) are considered bio-identical. However, currently there are no FDA-approved products that contain the combination both of the bio-identical/natural 17βestradiol and progesterone together. (2) Synthetic Hormones. Synthetic hormones are non-identical in molecular-chemical structure to hormones naturally occurring in the body. Examples of these include conjugated equine and other synthetic estrogen derivatives (i.e. Premarin) and progestins, such as medroxyprogesterone acetate (MPA) [i.e. Provera] or norethindrone acetate (NETA). Currently, all of the FDA-approved combination products of estrogen and progesterone (Prempro, Premphase, Activella, FemHRT, Angeliq, Prefest) use synthetic progestins to mimic the effect of progesterone. As these synthetic progestins have a different molecular-chemical structure than progesterone, they bind to other steroid receptors (i.e. Mineralocorticoid, Glucocorticoid and Androgen sites) in addition to the progesterone receptors, resulting in a number of negative off-target effects (Cardiovascular, Lipid, Glucose and others). The use of HRT in the U.S. peaked in 2001 with a U.S. prescription market of approximately $6 billion annually. Starting in 2001, several factors significantly changed the market for the treatment of menopausal symptoms. The most dramatic impact resulted from the Women s Health Initiative (WHI) that called into 3

6 question the safety of HRT for menopausal symptoms, leading to over a 50% drop in the number of women taking HRT between 2001 and The estrogen and progestins used in the WHI study were not bio-identical hormones, rather the synthetic hormones Premarin and Prempro, the most commonly prescribed therapies in the U.S. at the time. Women continue to desire treatment for their menopause symptoms and are seeking safer alternatives. As a result, women have increasingly looked to bioidentical hormones as a more natural and safer option (Smith et al, JAMA Intern Med; online September 30, 2013). Both the press and celebrities have popularized the use of bio-identical hormones produced in combination by compounding pharmacies. According to the FDA, compounded hormone therapies safety and effectiveness have not been supported by clinical trials and are considered experimental drugs and the cost is not typically reimbursed by insurance companies, resulting in higher costs and risks to the patients. Nonetheless, since there is no FDA approved drug that contains the combination of both the bio-identical 17β-estradiol and the bio-identical Progesterone (Bioidentical Hormone Replacement Therapy BHRT ), physicians often prescribe BHRT from compounding pharmacies despite the associated costs and risks. Market Analysis and Forecast The different sources and reporting of FDA approved products and compounded products makes the U.S. market for HRT for the treatment of symptoms associated with menopause complex and challenging to quantify. inthought has used various historical and current market data, physician and patient surveys and qualitative analysis of market drivers to arrive at its Market Analysis and Forecasts specifically for the use of HRT for the treatment of menopausal symptoms. FDA Approved HRT All Products The total U.S. market for HRT for menopause is currently close to $3.5 billion. Pfizer s Premarin and Prempro dominate the branded pharmaceutical market with approximately $1 billion in U.S. sales in 2012, down from a peak of nearly $2 billion in In 2002, WHI (specifically the Estrogen Plus Progestin Trial) suggested that combination estrogen-progesterone (Prempro) of conjugated equine estrogens (Premarin) and medroxyprogesterone acetate (Provera) could increase women s risk for cancer, heart disease and other health issues. Before 2002, more than 90% of women who underwent a hysterectomy were treated with some type of hormone therapy to help manage symptoms related to early menopause caused by the operation. As a result of the WHI, the number of women choosing to receive any type of hormone treatment post-hysterectomy dropped dramatically. Due to subsequent revaluation of the results of the WHI study, both physicians and patients are becoming comfortable with the safety profile of HRT for treating 4

7 menopausal symptoms. As a result, HRT use is again increasing. inthought estimates that the number of treated women in the U.S. will increase from 5.5 million in 2010 to 6.2 million in 2013, then to over 7 million by Branded FDA Approved Combination Oral HRT Products (Source MediSpan Data Base) Product Name Manufacturer Average WAC ACTIVELLA Novo Nordisk $ ANGELIQ Bayer $91.57 FEMHRT Warner Chilcott $73.95 PREFEST Teva $95.00 PREMPHASE Pfizer $97.63 PREMPRO Pfizer $97.65 DUAVEE Pfizer $210* Low-dose Combination HRT TherapeuticsMD $135** * Expected launch February 2014; pricing not yet verified. ** Guidance from TherapeuticsMD FDA Approved Combination HRT Market For the 12 months ended June 2013, U.S. sales of FDA approved combination HRT totaled $650 million (5.6 million units) which is significantly down from its peak of 28 million units in 2001 (per Symphony Health: PHAST Data). Use since 2006 has been increasing steadily as physicians and patients have begun to better understand the implications of the WHI study and the appropriate use of HRT for menopausal symptoms. Bio-identical Hormone Therapy (BHRT) from Compounding Pharmacies Non-FDA approved Compounded BHRT represents a significant share of the current HRT market. inthought estimates the current BHRT market for combination product (17β Estradiol and Progesterone) at $845 million at an average cash price of approximately $47 for 30 days paid to compounding pharmacies. This translates to a $1.8 billion market at an equivalent FDAapproved branded product WAC price of $100 or a $2.4 billion market at an equivalent WAC price of $135 (see chart of Products & WAC below). inthought expects the compounded BHRT market for the treatment of menopausal symptoms to decrease starting in 2014 because of new legislation passed this month by Congress that will likely lead to a significant increase in price of BHRT as well as an increase in physician liability in prescribing it. Compounding pharmacies have been the subject of negative publicity in the last 24 months, with links to cases of meningitis resulting in multiple deaths and other concerns related to contamination, strength, quality and purity all calling public safety into question. The FDA has released multiple studies showing that 5

8 compounded drug potency is often lower than claimed leading consumers to question claims from compounders, and to recognize that that many of the claims made are not backed by clinical trial evidence. External Factors External factors that could impact the market for compounded HRT for menopause are the impact of the new compounding pharmacy legislations and regulations, and major new safety issues. The Drug Quality and Security Act (HR 3204), which prohibits the compounding of FDA-approved drugs, was approved by the House of Representatives in October 2013 and by the Senate in November inthought believes that this new law will have a dramatic impact on the Compounding market with respect to HRT, shifting product back to FDA-approved products. Another likely driver to positively impart the HRT market by 2016 would be new HRT formulations, most notably a FDA-approved low-dose combination of bodyidentical estrogen and progesterone. TherapeuticsMD is currently in phase III clinical trials of such a product. inthought believes a low-dose, combination bioidentical HRT product with similar safety and efficacy profiles to the current treatment modalities will be a strong competitor to both FDA approved and especially to compounded HRT. 6

9 Menopause Overview Menopause is a natural event, defined as the final menstrual period and is usually confirmed after 12 consecutive months of cessation of a woman's menstrual cycle in the absence of other causes. Menopause is associated with reduced Prevalence of Menopause Symptoms functioning of ovaries due to aging, resulting in lower levels of estrogen and 100% other hormones and signifies the 90% 80% permanent end of fertility. Most women in the U.S. experience natural menopause between the ages of 40 and 58 and 78% experience symptoms. 70% 60% 50% 40% 30% 20% 10% 0% 78% 22% Have Experienced Symptoms Never Experienced Symptoms BASE: Women aged years (n=1,099) harris INTERACTICE July 2013 S10. Are you currently going through or have you ever experienced menopause? Peri-menopause is the transition time of 6 years or more immediately prior to the occurrence of menopause and includes 1 year after menopause. On average, it begins at age 47 and it is characterized by irregular menstrual cycles, hormonal fluctuations, and other symptoms such as hot flashes, night sweats, change in mood, vaginal dryness and insomnia. Hot flashes (also called vasomotor symptoms) are the most common symptom, occurring in up to +80% of women. When hot flashes occur at night, women describe them as night sweats. They usually start as the feeling of heat centered on the upper chest and face that becomes generalized. This sensation lasts typically lasts from two to four minutes, is often associated with sweating and occasionally palpitations, and is sometimes followed by chills and shivering and a feeling of anxiety. Hot flashes can occur several times per day. Most women will continue to have hot flashes for a year or more. Untreated, hot flashes usually stop spontaneously five years after their onset, and most women do not seek treatment. 7

10 Approximately 20%-30% of women seek medical treatment for menopausal symptoms. In addition to the symptoms of menopause, estradiol production from the ovary stops after menopause as a result of ovarian follicular depletion. The long-term effects of estrogen deficiency include osteoporosis, cardiovascular disease, and dementia. Overview of the WHI Clinical Study In 1991, The National Institute of Health (NIH), initiated a large (160,000 women), long-term, multi-center study called the Women s Health Initiative (WHI) to address major health issues concerning cardiovascular disease, cancer and osteoporosis in postmenopausal women. A component of the WHI clinical trial was to evaluate the benefits of combined estrogen and progestin in healthy menopausal women. However, the WHI Estrogen Plus Progestin Trial studied the combination of conjugated equine estrogens as its estrogen component with medroxyprogesterone acetate as its progestin. In July 2002, the clinical trial was halted early because interim monitoring of these combined estrogen-progestin treatment group showed increased risk of coronary heart disease, stroke, invasive breast cancer, and pulmonary embolism compared to women taking placebo pills. There were noteworthy benefits of estrogen plus progestin, including fewer cases of hip fractures and colon cancer, but the risk outweighed the benefit. Before the WHI findings, many physicians suggested that women use supplemental hormone treatments to restore levels of estrogen and progesterone after menopause. Hormone treatments provided relief of menopausal symptoms including hot flashes. Additionally, the general medical consensus was that hormone supplementation would lower a woman s risk of cancer and heart disease. While the hormone treatments did provide relief of menopausal symptoms, the WHI found that the risks of HRT did not justify long-term use for the prevention of other chronic conditions. Specific study findings for the combination of conjugated equine estrogen with medroxyprogesterone acetate compared to placebo include: A 41% increase in strokes A 29% increase in heart attacks A doubling of rates of venous thromboembolism (blood clots) A 22% increase in total cardiovascular disease A 26% increase in breast cancer A 37% reduction in cases of colorectal cancer A one-third reduction in hip fracture rates A 24% reduction in total fractures Taking estrogen and progestin did not protect against dementia No difference in total mortality (of all causes) 8

11 Taking estrogen alone without the co-administration of medroxyprogesterone acetate in women who have had a hysterectomy demonstrated a slightly lower risk of breast cancer. Figure 3: Results from the WHI Trial Source: National Institutions of Health The WHI transformed the understanding of the health effects of HRT. Follow-up studies have expanded and refined the original findings, but many questions remain. Are different forms of estrogen and progesterone safer and more effective than those tested in the WHI trial? Are different delivery methods more favorable than those studied in the in the WHI trial? Are different doses more favorable than those studied? Is there an optimal age to begin therapy or an optimal duration of therapy that maximizes benefits and minimizes risks? After the publication of the WHI, there was a rapid decrease in the use of HRT. According to Sprague et al (Sprague BL, Trentham-Dietz A, Cronin KA. A sustained decline in postmenopausal hormone use: results from the National Health and Nutrition Examination Survey, Obstet Gynecol Sep;120(3): ) in , the prevalence of oral postmenopausal hormone use was 22.4% % for estrogen alone, and 8.3% for estrogen plus progestin. A sharp decline in use of all formulations occurred in , when the overall prevalence decreased to 11.9%. Hormone use continued to decline through across all patient demographic groups, with the current prevalence now at 4.7% overall, 2.7% for estrogen alone, and 1.7% for estrogen plus progestin. This report quantifies the past and current use of HRT in the U.S., and forecasts the use of HRT through 2021, looking at various different forms and sources of 9

12 HRT, the catalysts that will determine their future use, and the attitudes of patients and physicians that are the drivers for that use. Bio-Identical Hormone Therapy In recent years, interest in use of bio-identical hormone therapy for menopausal women has been increasing dramatically. Celebrities such as Suzanne Somers and Oprah Winfrey have popularized bio-identical hormones. Bio-identical hormone preparations are medications that contain hormones that have the same chemical formula as those made naturally in the body (identical molecular structure). The hormones are created in a laboratory by altering compounds derived from naturally-occurring plant products. While the active pharmaceutical ingredient (API) for these hormone preparations are U.S. FDAapproved and manufactured by drug companies, the combination and preparation of the API are made at compounding pharmacies. Compounded products do not go through the FDA approval process and unlike FDA-approved drugs, these products are not verified for quality, safety, purity, and effectiveness. In 2012, The American College of Obstetricians and Gynecologists Committee on Gynecologic Practice and the Practice Committee of the American Society for Reproductive Medicine made the following conclusions and recommendations with regard to compounded HRT: Evidence is lacking to support superiority claims of compounded bioidentical hormones over conventional menopausal hormone therapy. Customized compounded hormones pose additional risks. These preparations have variable purity and potency, and lack efficacy and safety data. Because of variable bio-availability and bio-activity of compounded products, both under dosage and over dosage are possible. Conventional hormone therapy is preferred over compounded hormone therapy given the available data. Despite claims to the contrary, evidence is inadequate to support increased efficacy or safety for individualized compounded hormone therapy regimens based on salivary, serum, or urinary testing. The North American Menopause Society (NAMS) and the Endocrine Society have issued similar statements. A population study of 384 postmenopausal women published recently in Lancet Internal Medicine suggests a lower risk of cardiovascular events associated with bio-identical estrogen compared to equine estrogen (Smith et al, published online September 30, 2013). This study is likely the first of several studies that will validate the hypothesis that bio-identical hormones are superior to current FDA approval estrogen products. 10

13 Harris Interactive - Survey A survey fielded by Harris Interactive in July of 2013, quantified HRT use in 801 women of menopausal age. The survey showed that: Roughly one in seven women ages that have experienced menopause have tried either traditional HRT (14%) or bio-identical HRT (2%). The use of HRT greatly benefits from the recommendation of a medical doctor A change in lifestyle and natural therapies were predominately selfrecommended HRT, bio-identical HRT, and non-hrt prescription medications yield a high level of relief compared to changes in lifestyle and natural therapies. Of women who use/have used HRT almost all (96%) received a prescription for their HRT Estrogen and progesterone combinations and estrogen alone are the most commonly used HRT is used for an average of 50 months by current and discontinued users 3 out of 4 women said that their HRT was covered by insurance Almost all women are not sure if they believe that bio-identical HRT compounded at a specialty pharmacy are FDA approved. Construction of the inthought Model Commissioned by TherapeuticsMD, inthought has modeled the hormone replacement therapy (HRT) market from 1998 to The market includes use of estrogens and its derivatives, progesterone and its derivatives, and combinations of these. We also include use of estrogen plus testosterone for the early years of the model, although use of this combination for menopausal symptoms has fallen to near zero in recent year. For the purposes of this model, we group HRT into three main categories. (1) FDA approved HRT brands (2) Generics of these FDA approved products (3) Compounded HRT. The model looks at the five top brands separately: Premarin / Prempro (the leading brand of estrogen, available in various forms and dosages. Prempro is Premarin in combination with the branded progestin Provera) Estrace Vivelle-DOT (a transdermal estrogen and has recently become available as a generic ) Climara (a transdermal estrogen) 11

14 Prometrium (an oral progesterone that has recently become available as a generic) We combine all other estrogen and progesterone formulations into an Other FDA Approved HRT model that consists primarily of generics. The second major category is compounded HRT. These formulations are not FDA approved, but have the perceived advantage of using bio-identical estrogen and progesterone is flexible dosing tailored to each patient. As opposed to FDA approved HRT, compounded HRT is typically not covered by insurance in the U.S. The third category is FDA approved bio-identical combinations of estrogen and progesterone, likely in a formulation that takes advantage of low doses of both drugs. Currently there are no FDA approved bio-identical combination therapies available in the market. The lead drug in this category is being developed by TherapeuticsMD, which in September 2013, enrolled the first patient in its phase III trial. Our model assumes that FDA approved bio-identical HRT becomes available in the U.S. in Data Sources The primary source of data used to build the model is historical prescription data from Symphony Health Solutions. We triangulate those estimates with: Published literature on the overall size of the HRT market, looking at both numbers of patients treated and revenue Published data from IMS, which is similar in quality and conclusion to the Symphony data Company reported revenue for Premarin / Prempro from Wyeth and Merck, and for Estrace from Warner Chilcott Results from various surveys of health care providers and women of menopausal age Interviews with thought leading OB/GYN physicians and experts in the compounded drug market Position statements by various stakeholders such as the North American Menopause Society. Pricing data is from PriceRx, a service of Wolters Kluwer Health. This provides historical pricing data on all HRT products. Our modeling uses a discount to wholesale acquisition cost (WAC) pricing of 20%. Discounts have been increasing over the last decade as drug companies increase nominal prices of drugs such as HRT, while at the same time making increasingly favorable deals with insurance companies. Pricing data for compounded HRT comes from a survey of 134 U.S. compounding pharmacies conducted by TherapeuticsMD. 12

15 Modeling Parameters We have modeled the use of HRT solely for menopausal symptoms. For the purposes of this report, we have grouped together various formulations of HRT, including oral, transdermal, injected, and vaginal. The model does not specifically break out any of these products, except for vaginal preparations. Use of vaginal HRT has been growing rapidly compared to the use of the other formulations over the last few years, and we expect that growth to continue. Not included in this report is the hormone market attributed to anti-aging, a significant market subset that is growing rapidly. The American Academy of Anti- Aging Medicine (A4M) reports over 22,000 physicians as members worldwide. A4M s position paper issued in September 2013 supports the judicious application of modern and advanced medical technologies to address the changes in chemical, hormonal, physical, and nutritional needs that occurs with aging. Such repletion includes the restoration of hormones to an optimal physiological state when deficiency is determined by objective assessment. Bioidentical Hormone replacement therapy (BHRT) is an essential and extensively documented protocol for clinical intervention in the disorders of aging. This segment of the market utilizes hormone replacement therapy in various forms for a large percentage of its patients in conjunction with other treatments. A significant portion of this specialty is cash pay patients, so there is no reliable data available for this market particularly in regards to the use of BHRT. A CNN report estimates the worldwide market for anti-aging medicine to be $291 billion by Based on the number of physician members in A4M and other drivers (aging baby boomer population), inthought believes this market may be significant in size. The anti-aging HRT market will be the subject of a future report from inthought. Modeling Using Symphony data as a primary source, our model shows that the number of women treated with HRT in the U.S. increased from 7.6 million in 1998 to 10.3 million in 2001, then fell to 5.2 million in 2005 due to the impact of the WHI findings (Figure 4). The Symphony data are generally consistent with published literature, although conclusions from that published literature are varied. We have identified two key studies: (1) Stagnitti et al, November 2011, Medical Expenditure Panel Survey by the Agency for Healthcare Research and Quality. (2) Sprague et al, Obstet Gynecol 120(3): , Sep Our estimate of the year 2000 of 9.2 million women treated with HRT is in between the Sprague estimate of 8.0 million and the 2001 Stagnitti estimate of 17.9 million. For 2004, we estimate 5.2 million, between the Sprague estimate of 4.2 million and the Stagnitti estimate of 9.2 million. All data sources agree that use declined by approximately a factor of two following the WHI study. We believe that 13

16 the Symphony prescription data represents the most accurate historical measure of actual use. Figure 4: Women Treated for Menopausal Symptoms with HRT in the U.S., In order to model the impact of the WHI study, we modify the percent of women eligible for HRT down from 90% in 2002 to 45% today. This adjustment reflects the current consensus that HRT is contraindicated in women with history of or risk of cancer, cardiovascular disease, thrombosis and other less common contraindications. We use the following step-down decrease in percent eligible from 90% in 2002, 60% in 2003, 55% in 2004, and 45% in The gold standard for drug revenue is company reported revenue. We found company reported revenue for the Premarin family of products (from Wyeth and Pfizer) and Estrace (from Warner Chilcott) to be consistent with Symphony reported revenue. Symphony reports revenue based on reimbursement received by the pharmacy and does not necessarily take into account discounts. As such, we generally use 95% of Symphony reported revenue. We also note that IMS data is similar (within 5%) of our model for revenue reported from FDA approved HRT in 2009 and Additionally, the price of HRT has increased dramatically over the last 10 years. For example, the list price of Premarin has increased by 9% every six months over the last three years. Our model estimates that FDA approved HRT costs a typical patient $285 in 1998, increasing to $420 in 2008 and $572 in Our pricing is net of discounts negotiated by payors and assumes an average of 10 months of use per patient per year (83% compliance) for menopausal symptoms. FDA approved HRT is generally covered by health insurance while compounded HRT is generally not. 14

17 Figure 5: Revenue from HRT Formulations in the U.S., ($millions) Present: Impact of Compounding Pharmacies Our estimates of the FDA approved HRT products are likely to be within 5% of the actual number of patients treated and revenue. By contrast, the most difficult aspect of our HRT model is the estimation of the impact of compounding pharmacies. No good data is available to quantify the U.S. compounding market. Prescriptions are not tracked, compounders do not report sales or financial results, insurance claims are not made, and surveys of patients and physicians are incomplete with respect to compounded HRT. Nonetheless, the U.S. compounding market is estimated at $10 billion and HRT represents approximately 22% of the compounded drugs market. Perhaps the most rigorous method to estimate the total use of compounded HRT for menopausal symptoms is to subtract the number of women using FDA approved products (estimated from company sales and Symphony prescription data) from the total number of women using HRT (from surveys and population estimates). Using this methodology, we estimate that approximately four million women are using FDA approved HRT. From the Harris survey and other estimates, we model approximately 6 million total women using HRT, leaving approximately 2 million using compounded HRT (31%). The share of the HRT market going to compounded drugs increases from 9% in 1998 to 10% in 2004, and jumps from 16% in 2008 to 31% now as personalized, bio-identical HRT has been promoted by celebrities and the popular press. With over 30% of the market for HRT overall going to compounded product, we estimate that compounded HRT market for menopausal symptoms will generate nearly $850 million in the U.S. this year. Given the lower price of compounded 15

18 HRT compared to branded FDA approved drugs, this represents a $1.7 billion opportunity if the market for compounded HRT were to be captured by a branded FDA approved drug price premium. The HRT Market in Our model suggests an average of 4% growth in the number of U.S. women who will use HRT for menopausal symptoms each year from 2013 to Growth is driven by increasing physician acceptance that HRT has an acceptable risk:benefit profile for symptomatic women. There is no argument among physicians about the efficacy of HRT. Further, current research along with the related medical societies have been supportive of the renewed interest in HRT along with its safety. The HRT market has no major products expected through No major trials are ongoing and little new clinical data are expected. While we may see additional studies where cancer, heart disease or other morbidities are associated with various HRT formulations, it is unlikely that this would negatively impact the market. Position papers from medical societies such as the North American Menopause Society, the American College of Obstetrics and Gynecology, the Society for Women s Health Research and others will continue to support at least limited use (5 years or less) of HRT in healthy women. Several prominent gynecologists expect use of HRT to increase significantly over the next decade, and there is room for upside to our estimates. However, physician behavior is slow to change and the impact of such position papers and thought leader views likely will be slow and modest. We expect celebrities to have relatively little impact on the HRT market in the next few years, in spite of the profound impact some have had in the last five years. The novelty of the compounded therapy appears to have worn off and as women become better educated on the topic they will require clinical data to influence their behavior. The Future of the Compounded HRT Market The share of the market going to compounded HRT over the next few years is likely to decline significantly for two main reasons: 1. Public opinion is turning against compounded drugs 2. The Drug Quality and Security Act passed by Congress in the last two months will have a profound impact on the cost and prescription of compounded medicines. This month, the Senate passed H.R. 3204, which had already been passed by the House of Representatives. The bill will almost certainly be signed into law by the President. We believe it will have the following major impacts on the use of compounded HRT for menopausal symptoms: 16

19 Increase price of compounded HRT by approximately 75% over the next two years. Although registration of compounded products is voluntary under the new law, major compounders of HRT will likely be forced to register because of liability risk and the misbranding provisions in the law. Compounders of HRT will be subject to lawsuits for any false and misleading claims. Compounders will not be allowed to position their products as lower cost to FDA branded products. For these reasons, the cost of operating in the compounded HRT space will mean that compounded HRT will be at least the same price as FDA approved HRT, and often significantly more expensive. Physician willingness to prescribe compounded HRT will decrease. Although some doctors are likely to continue to prescribe large volumes of HRT, many doctors will shift their practices over to FDA approved products. Some of this trend will be a reaction to negative press and experience with compounded products in general, but inthought believes a significant amount will be a reaction to the provisions of the new law that will call attention to physician liability for adversities associated with prescription of compounded products. Many compounding pharmacies do not carry product liability insurance, and the realization that the physician themselves could be liable is likely to have a significant dampening effect on the prescribing of compounded HRT. Reimbursement of compounded HRT, already minimal, will become more of a barrier to use. The new law highlights that compounded products are viewed as experimental medicines by the FDA, giving payors cover for not reimbursing their use. As the price of compounded HRT increases, the lack of reimbursement becomes a more and more significant issue. Our model predicts that the number of women using compounded HRT in the U.S. will decrease from 1.7 million this year to 400,000 by 2021 (Figure 4) and that revenue from this use will decrease from $845 million this year to $369 million by 2021 (Figure 5). Modeling The data generated by clinical trials of one or more new HRT formulations are likely to be the most important catalysts of HRT use in the timeframe. As doctors seek to find safe ways to use HRT for menopausal symptoms, nearly all experts with whom we have spoken have expressed excitement for a trial of low-dose bio-identical estrogen + bio-identical progesterone in combination such as that being developed by TherapeuticsMD. If a phase III study were to show that such a combination was as efficacious as currently approved HRT and safer due to the lower doses of the hormones, such a product would significantly expand the HRT market. Our model assumes that phase III data from a bio-identical low-dose combination will be released in 2015, leading to an FDA approved product in Further, we 17

20 see the HRT overall expanding with an increase in the percent eligible from 45% to 51% in and the number of treated women increasing from 6.4 million in 2015 to 7.6 million in 2021 (Figure 4). FDA approved bio-identical combinations will account for $866 million in 2021 revenue in our model (Figure 5). As the outcomes of the clinical trials are difficult to predict, we examine the scenarios where trials are not successful (bear case) and where trials show an unequivocal benefit of the new product (bull case). Although the compounded HRT market will be in significant decline prior to the FDA approval of a bio-identical combination HRT product, there will still be a market need for the compounded product. Once an FDA approved combination is available, use of compounded HRT will be further decreased. Market Subsets: Vaginal Estrogen Therapy and HRT use for Anti-Aging Two sources of growth for the HRT market are use of vaginal formulations of low dose estrogen and the use of HRT for anti-aging. Vaginal estrogen is not indicated for the treatment of vasomotor symptoms, but rather for treatment of vulvar and vaginal atrophy (VVA). VVA is a chronic condition starting at menopause that often requires treatment for the duration of a woman s life. We calculate historical vaginal use primarily from Symphony Health prescription data, which reports scripts and revenue by formulation. Premarin s vaginal formulation accounts for approximately 26% of current revenue, increasing from 13% in Estrace is currently 97% vaginal, an increase from 88% in Of the drugs in the Other FDA Approved HRT model, vaginal formulations currently account for 31% of revenue. Experts in HRT use have cited a significant unmet need that a vaginal formulation of bio-identical estrogen could address. We expect the vaginal HRT market to continue to grow, and will quantify this growth in a future report. As discussed earlier, use of HRT for anti-aging is another high growth subset of the HRT market. As with vaginal estrogen therapy, this subset will be the subject of a future report. 18

21 Conclusion The HRT market for menopausal symptoms has been driven by two major factors over the past decade (1) the WHI findings and (2) the popular trend to use compounded bio-identical hormones. In the future, the major catalysts will be new clinical trial data, primarily from bio-identical low-dose HRT combinations, and the impact of strong new legislation regulating the compounded drug market in the U.S. We expect the HRT market to grow steadily over the next eight years, with the total number of women treated reaching 7.6 million by 2021, compared to just over 10 million women treated in 2001 before the results of WHI. Revenue will grow to $4.6 billion, exceeding the pre-whi peak of just under $3.5 billion. Several factors will influence the use of HRT over the next eight years, including public opinion about compounded HRT, new legislation/regulation, new safety and efficacy data, and physician attitudes and responses to position statements on proper use of HRT. Most important will be clinical trial data showing the effectiveness of low-dose bio-identical HRT. If the new formulations are able to show a risk/benefit profile on par with current therapies, new FDA approved bioidentical(s) will likely capture $860 million of the HRT market. Demonstration of significantly superior benefits of low-dose combination HRT could lead to even greater revenue and additional expansion of the market. 19