Express Scripts 2012 Annual Report Download - page 11

Express Scripts 2012 Annual Report 9
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employers offering eligible prescription drug coverage for their Medicare-eligible members to receive a subsidy payment
by enrolling in the Retiree Drug Subsidy (“RDS”) program. In order to claim the subsidy, the beneficiaries claimed by the
employer cannot be enrolled in a PDP or MA-PDP.
Mergers and Acquisitions
On July 20, 2011, ESI entered into the Merger Agreement with Medco, which was amended by Amendment No. 1
thereto on November 7, 2011. The Merger was consummated on April 2, 2012. For financial reporting and accounting
purposes, ESI was the acquirer of Medco. The consolidated financial statements reflect the results of operations and
financial position of ESI for the years ended December 31, 2011 and 2010 and for the period beginning January 1, 2012
through April 1, 2012. References to amounts for periods after the closing of the Merger on April 2, 2012 relate to Express
Scripts.
See Note 3 – Changes in business for further discussion of our merger and acquisition activity.
We regularly review potential acquisitions and affiliation opportunities. We believe available cash resources, bank
financing or the issuance of additional common stock or other securities could be used to finance future acquisitions or
affiliations. There can be no assurance we will make new acquisitions or establish new affiliations in 2013 or thereafter (see
“Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations —
Liquidity and Capital Resources — Acquisitions and Related Transactions”).
Company Operations
General. As of December 31, 2012, our U.S. PBM segment operated five high-volume automated dispensing
home delivery pharmacies, one non-automated dispensing home delivery pharmacy, several non-dispensing order
processing centers, patient contact centers, specialty drug pharmacies and fertility pharmacies, and one non-dispensing
home delivery pharmacy maintained for business continuity purposes.
At our Canadian facilities we provide a full range of integrated PBM services to insurers, third-party
administrators, plan sponsors and the public sector, to facilitate better health decisions and lower costs. These services
include health-claims adjudication and processing services, benefit-design consultation, drug-utilization review, formulary
management and medical and drug-data analysis services. In December 2011, we launched an active PBM service in
Canada, which included home delivery of maintenance prescription medications from a Member Contact Center and
regional dispensing pharmacies four locations.
Sales and Marketing. In the United States, our sales managers and directors market and sell PBM services and are
supported by a team of client-service representatives, clinical pharmacy managers, and benefit analysis consultants. This
team works with clients to make prescription drug use safer and more affordable. In addition, sales personnel dedicated to
our Other Business Operations segment use direct marketing to generate new customers and solidify existing customer
relationships. In Canada, marketing and sales efforts are conducted by our staff based in Mississauga, Ontario and
Montreal, Quebec.
Supply Chain. Our Supply Chain pharmacy contracting group is responsible for contracting and administering our
pharmacy networks. To participate in our retail pharmacy networks, pharmacies must meet certain qualifications, including
the requirement that all applicable state credentialing and/or licensing requirements are being maintained. Pharmacies can
contact our pharmacy help desk toll free or access our online pharmacy portal 24 hours a day, 7 days a week, for
information and assistance in filling prescriptions for our clients’ members. In addition, our Fraud, Waste & Abuse Services
team audits pharmacies in our retail pharmacy networks to determine compliance with the terms of their contracts.
Clinical Support. Our staff of highly trained pharmacists and physicians provides clinical support for our PBM
services. These healthcare professionals are responsible for a wide range of activities including tracking the drug pipeline;
identifying emerging medication-related safety issues and notifying physicians, clients, and patients (if appropriate);
providing drug information services; formulary management; development of utilization management, safety (concurrent
and retrospective drug utilization review) and other clinical interventions; and/or contacting physicians, pharmacists or
patients.
Our clinical staff works closely with the P&T Committee during the development of our formulary and selected
utilization management programs. The P&T Committee’s goal is to ensure our decisions are evidence-based, clinically
sound and aligned with the current standard of medical practice. The P&T Committee’s guidance is designed to ensure
decisions are clinically appropriate and not superseded by financial considerations.