Express Scripts 2011 Annual Report Download - page 9

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Express Scripts 2011 Annual Report 7
2
Our PBM segment primarily consists of the following services:
• retail network pharmacy management and retail drug card programs
• home delivery services
• specialty benefit 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
• administration of a group purchasing organization
• consumer health and drug information
• bio-pharma services including reimbursement and customized logistics solutions
• improved health outcomes through personalized medicine and application of 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
• 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 99.4% of revenues in 2011, 99.4% in 2010, and 98.9% in 2009. Revenues
from services, such as the fees associated with the administration of retail pharmacy networks contracted by certain clients,
medication counseling services, and certain specialty distribution 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 home delivery fulfillment pharmacies, specialty
drug pharmacies and fertility pharmacies we operated as of December 31, 2011. More than 60,000 retail pharmacies, which
represent over 95% of all United States retail pharmacies, participated in one or more of our networks at December 31,
2011. The top ten retail pharmacy chains represent approximately 50% of the total number of stores in our largest network.
As of January 1, 2012, Walgreen Co. (―Walgreens‖) was no longer part of our retail pharmacy networks, reducing the
number of pharmacies participating in our networks to approximately 55,000, representing approximately 85% of all
United States retail pharmacies. Excluding Walgreens, the remaining top ten retail chains represent approximately 38% of
the total number of stores in our largest network.
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 utilization to foster high
quality, cost-effective pharmaceutical care. We consult with our clients to assist them in selecting plan design features that
balance clients’ 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 pharmaceutical manufacturer rebates. Other clients receive a greater discount on pricing in the retail
pharmacy network or home delivery pharmacy in exchange for a smaller share of pharmaceutical manufacturer rebates.
During 2011, 97.2% of our revenue was derived by our PBM operations, compared to 97.4% and 95.6% during 2010 and
2009, respectively.
Retail Network Pharmacy Administration. We contract with retail pharmacies to provide prescription drugs to
members of the pharmacy benefit plans we manage. In the United States, we negotiate with pharmacies to discount the
price at which they will provide drugs to members and manage national and regional networks that are responsive to client
preferences related to cost containment, convenience of access for members and network performance. We also manage