Express Scripts 2012 Annual Report Download - page 22

Express Scripts 2012 Annual Report20
We believe that we are operating our business in substantial compliance with all existing material legal
requirements applicable to us. However, significant uncertainties exist regarding the application of many of these legal
requirements to our business. From time to time, state and federal law enforcement agencies and regulatory agencies have
initiated investigations or litigation involving certain aspects of our business or our competitors’ businesses and,
consequently, we cannot provide any assurance that one or more of these agencies will not interpret or apply these legal
requirements in a manner adverse to our business, or, if there is an enforcement action brought against us, that our
interpretation would prevail. In addition, there are numerous proposed healthcare laws, rules and regulations at the federal
and state levels, many of which could materially affect aspects of our business or adversely affect our financial results. We
are unable to predict whether additional federal or state legislation or regulatory initiatives relating to our business or the
healthcare industry in general will be enacted in the future or what effect, if any, such legislation or regulations may have
on us. Due to these uncertainties, we may be required to spend significant resources in connection with any such
investigation or litigation or to comply with new or existing laws and regulations.
Various governmental agencies have conducted investigations and audits into certain PBM business practices.
Many of these investigations and audits have resulted in other PBMs agreeing to civil penalties, including the payment of
money and corporate integrity agreements. We cannot predict what effect, if any, such governmental investigations and
audits may ultimately have on us or on the PBM industry in general (see “Part I — Item 3 — Legal Proceedings”).
However, we may experience additional government scrutiny and audit activity related to Medco’s government program
services, including audits that Accredo Health Group face or may face which result in payment or offset of prior
reimbursement from the government.
The federal court in the District of Columbia recently overturned a previously enacted statute by the District of
Columbia that purports to declare that a PBM is a fiduciary with respect to its clients (see “Part I — Item 1 — Business —
Government Regulations and Compliance — State Fiduciary Legislation”). However, other states are considering but have
not yet enacted similar fiduciary statutes, and we cannot predict what effect, if any, these and similar statutes, if enacted,
may have on our business and financial results, nor can we predict how other courts may view such laws.
We face risks associated with general economic conditions.
Unfavorable and uncertain economic conditions may significantly and adversely affect our businesses and
profitability in a variety of respects including:
Q our clients, or employers or other benefit providers served by our clients, may reduce or slow the growth of their
workforce or covered membership, or may elect to discontinue or diminish provided benefits, which would result
in a reduction in the number of members we serve
Q consumers may be less willing or able to incur health care related expenses, whether due to personal economic
circumstances, reduction in the level of the health care benefit provided to the consumer or otherwise, which
would result in lower than anticipated utilization
Q our clients, or potential clients, may increase demands and expectations with respect to pricing, rebates or service
levels (including with respect to performance guarantees), which would impact margins, or our ability to obtain
new clients or retain existing clients
Q our clients, or potential clients, may be less willing to purchase additional products and services from us, which
would impact our financial performance
Unfavorable and uncertain economic conditions may also cause disruptions in the credit markets which could
increase our cost of borrowing or make credit unavailable on acceptable terms to the extent we need additional funds. Such
developments may adversely affect our business and results of operations.
Policies designed to manage healthcare costs or alter healthcare financing practices may adversely impact our business
and our financial results.
From time to time, certain legislative and/or regulatory proposals are made which seek to manage the cost of
healthcare, including prescription drug cost. Such proposals include “single-payer” government funded healthcare, changes
in reimbursement rates, restrictions on access or therapeutic substitution, limits on more efficient delivery channels, taxes
on goods and services, price controls on prescription drugs and other significant healthcare reform proposals. We are unable
to predict whether any such proposals will be enacted, or the specific terms thereof. Certain of these proposals, however, if
enacted, may adversely impact our business and results of operations.
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q