Hormone Replacement Therapy Market in US (Dec 13)

8/12/2019 Hormone Replacement Therapy Market in US (Dec 13)

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The Hormone Replacement Therapy Market for theTreatment of Menopausal Symptoms in the U.S.

A Model of 1998-2021 Revenue and Patients Treated

Report byMichael Zuckerman, MD

Ben Weintraub, PhDChris Martin, MBA

Julie HoggattinThought Researcha division of Symphony Health Solutions

September 16, 2013, revised December 2, 2013


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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 1998-2006 13

2007-Present: Impact of Compounding Pharmacies. 15

The HRT Market in 2013-2015.. 16

The Future of the Compounded HRT Market.. 16

Modeling 2016-2021 17

Market Subsets. 18

Conclusion..... 19


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Executive Summary

This report serves to: (1) analyze the current U.S. market for hormonereplacement therapy (HRT) for menopausal symptoms, focusing on thecombination HRT products, and (2) forecast the HRT market through 2021.

Both estrogen and progesterone are available as branded and generic

pharmaceuticals, in various formulations and combinations, and also as non-FDAapproved formulations from compounding pharmacies. Because of the differentsources and routes of delivery, and clinical uses, the U.S. market for hormonereplacement therapy (HRT) for the treatment of symptoms associated withmenopause is complex and difficult to quantify.

The overall U.S. HRT market for menopause is currently over $3.7 billion. PfizersPremarin 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 2001.The overall revenue from FDA approved HRT drugs will be approximately $2.9billion 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 WomensHealth Initiative (WHI) clinical trial called into question the safety of HRT formenopausal symptoms, leading to a 50% drop in the number of women takingHRT between 2001 and 2005. Second, the use of bio -identical hormonereplacement therapy (BHRT) for the management of menopause and anti-aginghas exploded in popularity.

Currently, HRT use is increasing. inThought estimates that the number of treatedwomen in the U.S. will increase from 5.5 million in 2010 to 6.2 million in 2013,

then to over 7 million by 2017. Physicians are becoming comfortable with thesafety profile of HRT, and women continue to seek the proven efficacy of thetreatments.

Non-FDA approved compounded BHRT represents a significant share of thecurrent HRT market. inThought estimates the current BHRT market forcombination product (17 Estradiol and Progesterone) for the treatment ofmenopausal symptoms (not including sales for anti-aging) at $845 million at anaverage cash price of approximately $47 for 30 days paid to compoundingpharmacies. This translates to a $2.4 billion market at an equivalent FDA-approved branded product WAC price of $135 (the expected price of an FDA

approved combination HRT, see chart of Products & WAC below). inThoughtexpects the compounded BHRT market for the treatment of menopausalsymptoms 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 ina future report.


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By 2016, the major catalyst for the field of HRT for menopause will be the resultsof clinical trials testing new HRT formulations, most notably a low-dosecombination of bio-identical estrogen and progesterone, such as that beingdeveloped by TherapeuticsMD. If a combination of low-dose bio-identical HRTdemonstrates non-inferiority to current treatments, with a similar safety profile, itwill be a strong competitor to both FDA approved and especially to compoundedHRT. We model FDA approved bio-identical combinations entering the U.S.

market in 2016, with revenue increasing to $800 million by 2020.


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Introduction and Overview

Each year in the United States, approximately 11 million women reach the age fornatural menopause. Several naturally occurring hormones are considered femalehormones because of the role they play in a womans wellbeing. These includeestrogen and progesterone, which are produced in the ovaries and adrenalglands. Menopause is associated with cessation of ovarian function due to aging,

resulting in lower levels of these hormones and signifying the end of fertility. Onaverage, menopause begins at age 47 and is characterized by irregular menstrualcycles, hormonal fluctuations, and related symptoms that include hot flashes,night sweats, sleep disturbances, changes in mood, and vaginal dryness. Up to85% of post-menopausal women report symptoms associated with menopause.

There are several options for management of menopausal symptoms, includinghormone replacement therapy (HRT), which has been used by women since the1940s. According to experts who treat menopause, estrogen therapy is thepreferred and most efficacious option to treat these symptoms. For women whomaintain their uterus, which represents the majority of menopausal women,

progesterone therapy is also required in combination with estrogen to preventcancer of the uterus. HRT is available in the following two classes of hormones:

(1) Bio-identical (Natural)hormones (BHRT). Bio-identical hormones arethe same molecular-chemical as those naturally produced andcirculating in the human body. A number of U.S. Food and Drug

Administration (FDA) approved hormones, such as 17-estradiol (i.e.Estrace) and micronized progesterone (i.e. Prometrium) are consideredbio-identical. However, currentlythere are no FDA-approved productsthat contain the combination both of the bio-identical/natural 17-estradiol and progesterone together.

(2)Synthetic Hormones. Synthetic hormones are non-identical inmolecular-chemical structure to hormones naturally occurring in thebody. Examples of these include conjugated equine and other syntheticestrogen derivatives (i.e. Premarin) and progestins, such asmedroxyprogesterone acetate (MPA) [i.e. Provera] or norethindroneacetate (NETA).

Currently, all of the FDA-approved combination products of estrogen andprogesterone (Prempro, Premphase, Activella, FemHRT, Angeliq, Prefest) usesynthetic progestins to mimic the effect of progesterone. As these syntheticprogestins have a different molecular-chemical structure than progesterone, they

bind to other steroid receptors (i.e. Mineralocorticoid, Glucocorticoid andAndrogen sites) in addition to the progesterone receptors, resulting in a number ofnegative 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 ofapproximately $6 billion annually. Starting in 2001, several factors significantlychanged the market for the treatment of menopausal symptoms. The mostdramatic impact resulted from the Womens Health Initiative (WHI) that called into


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question the safety of HRT for menopausal symptoms, leading to over a 50% dropin the number of women taking HRT between 2001 and 2005. The estrogen andprogestins used in the WHI study were not bio-identical hormones, rather thesynthetic hormones Premarin and Prempro, the most commonly prescribedtherapies 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 bio-identical hormones as a more natural and safer option (Smith et al, JAMA InternMed; online September 30, 2013). Both the press and celebrities havepopularized the use of bio-identical hormones produced in combination bycompounding pharmacies. According to the FDA, compounded hormonetherapies safety and effectiveness have not been supported by clinical trials andare considered experimental drugs and the cost is not typically reimbursed byinsurance companies, resulting in higher costs and risks to the patients.

Nonetheless, since there is no FDA approved drug that contains the combinationof both the bio-identical 17-estradiol and the bio-identical Progesterone (Bio-

identical Hormone Replacement Therapy BHRT), physicians often prescribeBHRT from compounding pharmacies despite the associated costs and risks.

Market Analysis and Forecast

The different sources and reporting of FDA approved products and compoundedproducts makes the U.S. market for HRT for the treatment of symptomsassociated with menopause complex and challenging to quantify. inThought hasused various historical and current market data, physician and patient surveysand qualitative analysis of market drivers to arrive at its Market Analysis andForecasts specifically for the use of HRT for the treatment of menopausal

symptoms.

FDA Approved HRTAll Products

The total U.S. market for HRT for menopause is currently close to $3.5 billion.Pfizers Premarin and Prempro dominate the branded pharmaceutical market withapproximately $1 billion in U.S. sales in 2012, down from a peak of nearly $2billion in 2001. In 2002, WHI (specifically the Estrogen Plus Progestin Trial)suggested that combination estrogen-progesterone (Prempro) of conjugatedequine estrogens (Premarin) and medroxyprogesterone acetate (Provera) couldincrease womens risk for cancer, heart disease and other health issues. Before

2002, more than 90% of women who underwent a hysterectomy were treated withsome type of hormone therapy to help manage symptoms related to earlymenopause caused by the operation. As a result of the WHI, the number ofwomen choosing to receive any type of hormone treatment post-hysterectomydropped dramatically.

Due to subsequent revaluation of the results of the WHI study, both physiciansand patients are becoming comfortable with the safety profile of HRT for treating


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compounded drug potency is often lower than claimed leading consumers toquestion claims from compounders, and to recognize that that many of the claimsmade 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 andregulations, and major new safety issues. The Drug Quality and Security Act (HR3204), which prohibits the compounding of FDA-approved drugs, was approvedby the House of Representatives in October 2013 and by the Senate in November2013. inThought believes that this new law will have a dramatic impact on theCompounding market with respect to HRT, shifting product back to FDA-approvedproducts.

Another likely driver to positively impart the HRT market by 2016 would be newHRT formulations, most notably a FDA-approved low-dose combination of body-identical estrogen and progesterone. TherapeuticsMD is currently in phase III

clinical trials of such a product. inThought believes a low-dose, combination bio-identical HRT product with similar safety and efficacy profiles to the currenttreatment modalities will be a strong competitor to both FDA approved andespecially to compounded HRT.


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Menopause Overview

Menopause is a natural event, defined as the final menstrual period and is usuallyconfirmed after 12 consecutive months of cessation of a woman's menstrual cyclein the absence of other causes. Menopause is associated with reduced

functioning of ovaries due to aging,resulting in lower levels of estrogen and

other hormones and signifies thepermanent end of fertility. Most womenin the U.S. experience naturalmenopause between the ages of 40 and58 and 78% experience symptoms.

Peri-menopause is the transition time of6 years or more immediately prior to theoccurrence of menopause and includes1 year after menopause. On average, itbegins at age 47 and it is characterized

by irregular menstrual cycles, hormonalfluctuations, and other symptoms suchas hot flashes, night sweats, change inmood, 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, womendescribe them as night sweats. They usually start as the feeling of heat centeredon the upper chest and face that becomes generalized. This sensation laststypically lasts from two to four minutes, is often associated with sweating and

occasionally palpitations, and is sometimes followed by chills and shivering and afeeling of anxiety.Hot flashes canoccur severaltimes per day.

Most women willcontinue to havehot flashes for ayear or more.Untreated, hot

flashes usuallystopspontaneouslyfive years aftertheir onset, andmost women donot seektreatment.

BASE: Women aged 45-60 years (n=1,099) harris INTERACTICE July 2013S10.Are you currently going through or have you ever experienced

menopause?

Prevalence of Menopause Symptoms

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Approximately 20%-30% of women seek medical treatment for menopausalsymptoms.

In addition to the symptoms of menopause, estradiol production from the ovarystops after menopause as a result of ovarian follicular depletion. The long-termeffects of estrogen deficiency include osteoporosis, cardiovascular disease, anddementia.

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 Womens Health Initiative (WHI) toaddress major health issues concerning cardiovascular disease, cancer andosteoporosis in postmenopausal women. A component of the WHI clinical trialwas to evaluate the benefits of combined estrogen and progestin in healthymenopausal women. However, the WHI Estrogen Plus Progestin Trial studied thecombination of conjugated equine estrogens as its estrogen component withmedroxyprogesterone acetate as its progestin.

In July 2002, the clinical trial was halted early because interim monitoring of thesecombined estrogen-progestin treatment group showed increased risk of coronaryheart disease, stroke, invasive breast cancer, and pulmonary embolism comparedto women taking placebo pills. There were noteworthy benefits of estrogen plusprogestin, including fewer cases of hip fractures and colon cancer, but the riskoutweighed the benefit.

Before the WHI findings, many physicians suggested that women usesupplemental hormone treatments to restore levels of estrogen and progesteroneafter menopause. Hormone treatments provided relief of menopausal symptoms

including hot flashes. Additionally, the general medical consensus was thathormone supplementation would lower a womans risk of cancer and heartdisease.

While the hormone treatments did provide relief of menopausal symptoms, theWHI found that the risks of HRT did not justify long-term use for the prevention ofother chronic conditions. Specific study findings for the combination of conjugatedequine 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)


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Taking estrogen alone without the co-administration of medroxyprogesteroneacetate in women who have had a hysterectomy demonstrated a slightlylower risk of breast cancer.

Figure 3: Results from the WHI Trial

Source: National Institutions of Healthhttp://www.nhlbi.nih.gov/whi/update_ht2002.pdf

The WHI transformed the understanding of the health effects of HRT. Follow-upstudies have expanded and refined the original findings, but many questionsremain.

Are different forms of estrogen and progesterone safer and moreeffective than those tested in the WHI trial?

Are different delivery methods more favorable than those studied inthe 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. Asustained decline in postmenopausal hormone use: results from the NationalHealth and Nutrition Examination Survey, 1999-2010. Obstet Gynecol. 2012Sep;120(3):595-603) in 1999-2000, the prevalence of oral postmenopausalhormone use was 22.4% - 13.3% for estrogen alone, and 8.3% for estrogen plusprogestin. A sharp decline in use of all formulations occurred in 2003-2004, whenthe overall prevalence decreased to 11.9%. Hormone use continued to declinethrough 2009-2010 across all patient demographic groups, with the currentprevalence now at 4.7% overall, 2.7% for estrogen alone, and 1.7% for estrogenplus progestin.

This report quantifies the past and current use of HRT in the U.S., and forecaststhe use of HRT through 2021, looking at various different forms and sources of
http://www.nhlbi.nih.gov/whi/update_ht2002.pdfhttp://www.nhlbi.nih.gov/whi/update_ht2002.pdf


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HRT, the catalysts that will determine their future use, and the attitudes of patientsand physicians that are the drivers for that use.

Bio-Identical Hormone Therapy

In recent years, interest in use of bio-identical hormone therapy for menopausalwomen 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 thathave the same chemical formula as those made naturally in the body (identicalmolecular structure). The hormones are created in a laboratory by alteringcompounds derived from naturally-occurring plant products. While the activepharmaceutical ingredient (API) for these hormone preparations are U.S. FDA-approved and manufactured by drug companies, the combination and preparationof the API are made at compounding pharmacies. Compounded products do notgo through the FDA approval process and unlike FDA-approved drugs, theseproducts are not verified for quality, safety, purity, and effectiveness.

In 2012, The American College of Obstetricians and Gynecologists Committee onGynecologic Practice and the Practice Committee of the American Society forReproductive Medicine made the following conclusions and recommendationswith regard to compounded HRT:

Evidence is lacking to support superiority claims of compounded bio-identical hormones over conventional menopausal hormone therapy.

Customized compounded hormones pose additional risks. Thesepreparations have variable purity and potency, and lack efficacy and safetydata.

Because of variable bio-availability and bio-activity of compoundedproducts, both under dosage and over dosage are possible.

Conventional hormone therapy is preferred over compounded hormonetherapy given the available data.

Despite claims to the contrary, evidence is inadequate to support increasedefficacy or safety for individualized compounded hormone therapyregimens based on salivary, serum, or urinary testing.

The North American Menopause Society (NAMS) and the Endocrine Society haveissued similar statements.

A population study of 384 postmenopausal women published recently in Lancet

Internal Medicinesuggests a lower risk of cardiovascular events associated withbio-identical estrogen compared to equine estrogen (Smith et al, published onlineSeptember 30, 2013). This study is likely the first of several studies that willvalidate the hypothesis that bio-identical hormones are superior to current FDAapproval estrogen products.


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Harris Interactive - Survey

A survey fielded by Harris Interactive in July of 2013, quantified HRT use in 801women of menopausal age. The survey showed that:

Roughly one in seven women ages 45-60 that have experiencedmenopause 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 self-

recommended 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 discontinuedusers

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 i nThought Model

Commissioned by TherapeuticsMD, inThought has modeled the hormonereplacement therapy (HRT) market from 1998 to 2021. The market includes useof estrogens and its derivatives, progesterone and its derivatives, andcombinations of these. We also include use of estrogen plus testosterone for theearly years of the model, although use of this combination for menopausalsymptoms 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 variousforms and dosages. Prempro is Premarin in combination with the brandedprogestin Provera)

Estrace Vivelle-DOT (a transdermal estrogen and has recently become available as

a generic ) Climara (a transdermal estrogen)


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Prometrium (an oral progesterone that has recently become available as ageneric)

We combine all other estrogen and progesterone formulations into an Other FDAApproved HRT model that consists primarily of generics.

The second major category is compounded HRT. These formulations are not FDAapproved, but have the perceived advantage of using bio-identical estrogen andprogesterone is flexible dosing tailored to each patient. As opposed to FDAapproved HRT, compounded HRT is typically not covered by insurance in theU.S.

The third category is FDA approved bio-identical combinations of estrogen andprogesterone, likely in a formulation that takes advantage of low doses of bothdrugs. Currently there are no FDA approved bio-identical combination therapiesavailable in the market. The lead drug in this category is being developed byTherapeuticsMD, which in September 2013, enrolled the first patient in its phaseIII trial. Our model assumes that FDA approved bio-identical HRT becomesavailable in the U.S. in 2016.

Data Sources

The primary source of data used to build the model is historical prescription datafrom Symphony Health Solutions. We triangulate those estimates with:

Published literature on the overall size of the HRT market, looking at bothnumbers of patients treated and revenue

Published data from IMS, which is similar in quality and conclusion to theSymphony 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 ofmenopausal age

Interviews with thought leading OB/GYN physicians and experts in thecompounded drug market

Position statements by various stakeholders such as the North AmericanMenopause Society.

Pricing data is from PriceRx, a service of Wolters Kluwer Health. This provideshistorical pricing data on all HRT products. Our modeling uses a discount towholesale acquisition cost (WAC) pricing of 20%. Discounts have been increasingover the last decade as drug companies increase nominal prices of drugs such as

HRT, while at the same time making increasingly favorable deals with insurancecompanies. Pricing data for compounded HRT comes from a survey of 134 U.S.compounding pharmacies conducted by TherapeuticsMD.


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Modeling Parameters

We have modeled the use of HRT solely for menopausal symptoms. For thepurposes of this report, we have grouped together various formulations of HRT,including oral, transdermal, injected, and vaginal. The model does not specificallybreak out any of these products, except for vaginal preparations. Use of vaginalHRT 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, asignificant market subset that is growing rapidly. The American Academy of Anti-

Aging Medicine (A4M) reports over 22,000 physicians as members worldwide.A4Ms position paper issued in September 2013 supports the judicious applicationof modern and advanced medical technologies to address the changes inchemical, hormonal, physical, and nutritional needs that occurs with aging. Suchrepletion includes the restoration of hormones to an optimal physiological statewhen deficiency is determined by objective assessment. Bioidentical Hormonereplacement 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 variousforms for a large percentage of its patients in conjunction with other treatments. Asignificant portion of this specialty is cash pay patients, so there is no reliable dataavailable for this market particularly in regards to the use of BHRT. A CNN reportestimates the worldwide market for anti-aging medicine to be $291 billion by 2015.Based on the number of physician members in A4M and other drivers (aging babyboomer 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 1998-2006

Using Symphony data as a primary source, our model shows that the number ofwomen treated with HRT in the U.S. increased from 7.6 million in 1998 to 10.3million in 2001, then fell to 5.2 million in 2005 due to the impact of the WHIfindings (Figure 4). The Symphony data are generally consistent with publishedliterature, although conclusions from that published literature are varied. We haveidentified two key studies:

(1)Stagnitti et al, November 2011, Medical Expenditure Panel Survey bythe Agency for Healthcare Research and Quality.

(2)Sprague et al, Obstet Gynecol120(3):595-603, Sep 2012.

Our estimate of the year 2000 of 9.2 million women treated with HRT is inbetween the Sprague estimate of 8.0 million and the 2001 Stagnitti estimate of17.9 million. For 2004, we estimate 5.2 million, between the Sprague estimate of4.2 million and the Stagnitti estimate of 9.2 million. All data sources agree that usedeclined by approximately a factor of two following the WHI study. We believe that


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the Symphony prescription data represents the most accurate historical measureof actual use.

Figure 4: Women Treated for Menopausal Symptoms with HRT in the U.S.,1998-2021

In order to model the impact of the WHI study, we modify the percent of womeneligible for HRT down from 90% in 2002 to 45% today. This adjustment reflectsthe current consensus that HRT is contraindicated in women with history of or riskof cancer, cardiovascular disease, thrombosis and other less commoncontraindications. We use the following step-down decrease in percent eligiblefrom 90% in 2002, 60% in 2003, 55% in 2004, and 45% in 2005.

The gold standard for drug revenue is company reported revenue. We foundcompany reported revenue for the Premarin family of products (from Wyeth andPfizer) and Estrace (from Warner Chilcott) to be consistent with Symphonyreported revenue. Symphony reports revenue based on reimbursement receivedby the pharmacy and does not necessarily take into account discounts. As such,we generally use 95% of Symphony reported revenue. We also note that IMSdata is similar (within 5%) of our model for revenue reported from FDA approvedHRT in 2009 and 2010.

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 monthsover the last three years. Our model estimates that FDA approved HRT costs atypical patient $285 in 1998, increasing to $420 in 2008 and $572 in 2013. Ourpricing is net of discounts negotiated by payors and assumes an average of 10months of use per patient per year (83% compliance) for menopausal symptoms.FDA approved HRT is generally covered by health insurance while compoundedHRT is generally not.


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Figure 5: Revenue from HRT Formulations in the U.S., 1998-2021 ($millions)

2007 - Present: Impact of Compounding Pharmacies

Our estimates of the FDA approved HRT products are likely to be within 5% of theactual number of patients treated and revenue. By contrast, the most difficultaspect of our HRT model is the estimation of the impact of compoundingpharmacies. No good data is available to quantify the U.S. compounding market.Prescriptions are not tracked, compounders do not report sales or financialresults, 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 representsapproximately 22% of the compounded drugs market.

Perhaps the most rigorous method to estimate the total use of compounded HRTfor menopausal symptoms is to subtract the number of women using FDAapproved products (estimated from company sales and Symphony prescriptiondata) from the total number of women using HRT (from surveys and populationestimates). Using this methodology, we estimate that approximately four millionwomen are using FDA approved HRT. From the Harris survey and otherestimates, we model approximately 6 million total women using HRT, leaving

approximately 2 million using compounded HRT (31%). The share of the HRTmarket 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 hasbeen promoted by celebrities and the popular press.

With over 30% of the market for HRT overall going to compounded product, weestimate that compounded HRT market for menopausal symptoms will generatenearly $850 million in the U.S. this year. Given the lower price of compounded


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HRT compared to branded FDA approved drugs, this represents a $1.7 billionopportunity if the market for compounded HRT were to be captured by a brandedFDA approved drug price premium.

The HRT Market in 2013-2015

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 2017. Growth isdriven by increasing physician acceptance that HRT has an acceptablerisk:benefit profile for symptomatic women. There is no argument amongphysicians about the efficacy of HRT. Further, current research along with therelated medical societies have been supportive of the renewed interest in HRTalong with its safety.

The HRT market has no major products expected through 2015. No major trialsare ongoing and little new clinical data are expected. While we may see additionalstudies where cancer, heart disease or other morbidities are associated withvarious HRT formulations, it is unlikely that this would negatively impact the

market.

Position papers from medical societies such as the North American MenopauseSociety, the American College of Obstetrics and Gynecology, the Society forWomens Health Researchand others will continue to support at least limited use(5 years or less) of HRT in healthy women. Several prominent gynecologistsexpect use of HRT to increase significantly over the next decade, and there isroom for upside to our estimates. However, physician behavior is slow to changeand the impact of such position papers and thought leader views likely will be slowand modest.

We expect celebrities to have relatively little impact on the HRT market in the nextfew 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 womenbecome better educated on the topic they will require clinical data to influencetheir behavior.

The Future of the Compounded HRT Market

The share of the market going to compounded HRT over the next few years islikely to decline significantly for two main reasons:

1. Public opinion is turning against compounded drugs2. The Drug Quality and Security Act passed by Congress in the last two

months will have a profound impact on the cost and prescription ofcompounded medicines.

This month, the Senate passed H.R. 3204, which had already been passed by theHouse of Representatives. The bill will almost certainly be signed into law by thePresident. We believe it will have the following major impacts on the use ofcompounded HRT for menopausal symptoms:


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Increase price of compounded HRT by approximately 75% over thenext two years.Although registration of compounded products is voluntaryunder the new law, major compounders of HRT will likely be forced toregister because of liability risk and the misbranding provisions in the law.Compounders of HRT will be subject to lawsuits for any false andmisleading claims. Compounders will not be allowed to position their

products as lower cost to FDA branded products. For these reasons, thecost of operating in the compounded HRT space will mean thatcompounded 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 ofHRT, many doctors will shift their practices over to FDA approved products.Some of this trend will be a reaction to negative press and experience withcompounded products in general, but inThought believes a significantamount will be a reaction to the provisions of the new law that will callattention to physician liability for adversities associated with prescription of

compounded products. Many compounding pharmacies do not carryproduct liability insurance, and the realization that the physician themselvescould be liable is likely to have a significant dampening effect on theprescribing of compounded HRT.

Reimbursement of compounded HRT, already minimal, will becomemore of a barrier to use. The new law highlights that compoundedproducts are viewed as experimental medicines by the FDA, giving payorscover for not reimbursing their use. As the price of compounded HRTincreases, the lack of reimbursement becomes a more and more significantissue.

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 thatrevenue from this use will decrease from $845 million this year to $369 million by2021 (Figure 5).

Modeling 2016-2021

The data generated by clinical trials of one or more new HRT formulations arelikely to be the most important catalysts of HRT use in the 2016-2021 timeframe.

As doctors seek to find safe ways to use HRT for menopausal symptoms, nearlyall experts with whom we have spoken have expressed excitement for a trial oflow-dose bio-identical estrogen + bio-identical progesterone in combination suchas that being developed by TherapeuticsMD. If a phase III study were to showthat such a combination was as efficacious as currently approved HRT and saferdue to the lower doses of the hormones, such a product would significantlyexpand the HRT market.

Our model assumes that phase III data from a bio-identical low-dose combinationwill be released in 2015, leading to an FDA approved product in 2016. Further, we


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see the HRT overall expanding with an increase in the percent eligible from 45%to 51% in 2016-2017 and the number of treated women increasing from 6.4million in 2015 to 7.6 million in 2021 (Figure 4). FDA approved bio-identicalcombinations will account for $866 million in 2021 revenue in our model (Figure5).

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 anunequivocal benefit of the new product (bull case).

Although the compounded HRT market will be in significant decline prior to theFDA approval of a bio-identical combination HRT product, there will still be amarket need for the compounded product. Once an FDA approved combination isavailable, 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, butrather for treatment of vulvar and vaginal atrophy (VVA). VVA is a chroniccondition starting at menopause that often requires treatment for the duration of awomans life.

We calculate historical vaginal use primarily from Symphony Health prescriptiondata, which reports scripts and revenue by formulation. Premarins vaginalformulation accounts for approximately 26% of current revenue, increasing from13% in 2007. Estrace is currently 97% vaginal, an increase from 88% in 2008. Of

the drugs in the Other FDA Approved HRT model, vaginal formulations currentlyaccount for 31% of revenue.

Experts in HRT use have cited a significant unmet need that a vaginal formulationof bio-identical estrogen could address. We expect the vaginal HRT market tocontinue 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 ofthe HRT market. As with vaginal estrogen therapy, this subset will be the subjectof a future report.


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Conclusion

The HRT market for menopausal symptoms has been driven by two major factorsover the past decade (1) the WHI findings and (2) the popular trend to usecompounded bio-identical hormones. In the future, the major catalysts will be newclinical trial data, primarily from bio-identical low-dose HRT combinations, and theimpact 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, withthe total number of women treated reaching 7.6 million by 2021, compared to justover 10 million women treated in 2001 before the results of WHI. Revenue willgrow 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, includingpublic opinion about compounded HRT, new legislation/regulation, new safety andefficacy data, and physician attitudes and responses to position statements onproper use of HRT. Most important will be clinical trial data showing theeffectiveness of low-dose bio-identical HRT. If the new formulations are able toshow a risk/benefit profile on par with current therapies, new FDA approved bio-

identical(s) will likely capture $860 million of the HRT market. Demonstration ofsignificantly superior benefits of low-dose combination HRT could lead to evengreater revenue and additional expansion of the market.

Documents

Hormone Replacement Therapy Market in US (Dec 13)