Express Scripts 2009 Annual Report Download - page 21

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Express Scripts 2009 Annual Report
19
Our PBM segment primarily consists of the following services:
• retail network pharmacy management and retail drug card programs
• home delivery services
• specialty pharmacy services
• patient care contact centers
• benefit plan design and consultation
• drug formulary management, compliance and therapy management programs
• information reporting and analysis programs
• rebate programs
• electronic claims processing and drug utilization review
• consumer health and drug information
• bio-pharma services including reimbursement and customized logistics solutions
• medication therapy and safety through pharmacogenomics
• assistance programs for low-income patients
The EM segment primarily consists of the following services:
• distribution of pharmaceuticals and medical supplies to providers and clinics
• distribution of fertility pharmaceuticals requiring special handling or packaging
• distribution of sample units to physicians and verification of practitioner licensure
• healthcare account administration and implementation of consumer-directed healthcare solutions
Our revenues are generated primarily from the delivery of prescription drugs through our contracted network of
retail pharmacies, home delivery and specialty pharmacy services and EM services. Revenues from the delivery of
prescription drugs to our members represented 98.8% of revenues in 2009, 98.7% in 2008, and 98.6% in 2007. Revenues
from services, such as the fees associated with the administration of retail pharmacy networks contracted by certain clients,
medication counseling services, certain specialty distribution services, and sample fulfillment and sample accountability
services, comprised the remainder of our revenues.
Prescription drugs are dispensed to members of the health plans we serve primarily through networks of retail
pharmacies that are under non-exclusive contracts with us and through the five home delivery fulfillment pharmacies and
eight specialty drug pharmacies we operated as of December 31, 2009. Approximately 60,000 retail pharmacies, which
represent more than 95% of all United States retail pharmacies, participate in one or more of our networks. The top ten
retail pharmacy chains represent approximately 50% of the total number of stores in our largest network.
In December 2009, we completed the acquisition of certain subsidiaries of WellPoint, Inc. (“WellPoint”),
representing WellPoint’s NextRx PBM business, for total consideration of $4.675 billion. The NextRx PBM Business is a
national provider of PBM services, and we believe the acquisition will enhance our ability to achieve cost savings,
innovations, and operational efficiencies which will benefit our customers and stockholders.
We were incorporated in Missouri in September 1986, and were reincorporated in Delaware in March 1992. Our
principal executive offices are located at One Express Way, Saint Louis, Missouri, 63121. Our telephone number is (314)
996-0900 and our web site is www.express-scripts.com. Information included on our web site is not part of this annual
report.
Products and Services
Pharmacy Benefit Management Services
Overview. Our PBM services involve the management of outpatient prescription drug use to foster high quality,
cost-effective pharmaceutical care. We consult with our clients to assist them in selecting plan design features that balance
the client’s requirements for cost control with member choice and convenience. For example, some clients receive a
smaller discount on pricing in the retail pharmacy network or home delivery pharmacy in exchange for receiving all or a
larger share of the pharmaceutical manufacturer rebates. Other clients receive a greater discount on pricing at the retail
pharmacy network or home delivery pharmacy in exchange for a smaller share of the pharmaceutical manufacturer rebates.
During 2009, 94.8% of our revenue was derived by our PBM operations, compared to 93.6% and 93.0% during 2008 and
2007, respectively.