Express Scripts 2012 Annual Report Download - page 28

Express Scripts 2012 Annual Report26
Legislation and other regulations affecting drug prices are discussed in more detail under “Part I — Item 1 —
Business — Government Regulation and Compliance — Legislation and Regulation Affecting Drug Prices” above.
Pending and future litigation or other proceedings could subject us to significant monetary damages or penalties and/or
require us to change our business practices, either of which could have a material adverse effect on our business and
results of operations.
We are subject to risks relating to litigation, enforcement action, regulatory proceedings, and other similar actions
in connection with our business operations, including without limitation the dispensing of pharmaceutical products by our
home delivery pharmacies, services rendered in connection with our disease management offering and our pharmaceutical
services operations. A list of the significant proceedings pending against us is included under “Part I — Item 3 — Legal
Proceedings,” including certain proceedings that purport to be class action lawsuits. These proceedings seek unspecified
monetary damages and/or injunctive relief. While we believe these proceedings are without merit and intend to contest
them vigorously, we cannot predict with certainty the outcome of any such proceedings. If one or more of these
proceedings has an unfavorable outcome, we cannot provide any assurance that it would not have a material adverse effect
on our business and results of operations, including our ability to attract and retain clients as a result of the negative
reputational impact of such an outcome. Further, while certain costs are covered by insurance, we may incur uninsured
costs that are material to our financial performance in the defense of such proceedings.
Commercial liability insurance coverage continues to be difficult to obtain for companies in our business sector, as
such insurance can cause unexpected volatility in premiums and/or retention requirements dictated by insurance carriers.
We have established certain self-insurance accruals to cover anticipated losses within our retained liability for previously
reported claims and the cost to defend these claims. However, there can be no assurance that such accruals will cover actual
losses or that general, professional, managed care errors and omissions, and/or other liability insurance coverage will be
reasonably available in the future or such insurance coverage, together with our self-insurance accruals, will be adequate to
cover future claims. A claim, or claims, in excess of our insurance coverage could have a material adverse effect on our
business and results of operations.
We face significant competition in attracting and retaining talented employees. Further, managing succession and
retention for our Chief Executive Officer and other key executives is critical to our success, and our failure to do so could
have an adverse impact on our future performance.
We believe that our ability to attract and retain a qualified and experienced workforce is essential to meet current
and future goals and objectives. There is no guarantee that we will be able to attract and retain such employees or that
competition among potential employers will not result in increased salaries or other benefits. An inability to retain existing
employees or attract additional employees could have a material adverse effect on our business and results of operations.
Our failure to adequately plan for succession of our Chief Executive Officer, senior management and other key
employees could have a material adverse effect on our business and results of operations. While we have succession plans
in place and employment arrangements with certain key executives, these do not guarantee that the services of these
executives will continue to be available to us.
Our international operations subject us to certain regulatory, compliance, competition, tax and other risks, which could
have a material adverse effect on our business.
UBC operates in various countries throughout the world and our other international operations include operations
in Canada and nursing and other clinical services provided in Europe. The clinical research services provided by UBC
depend on the willingness of companies in the pharmaceutical and biotechnology industries to continue to outsource
clinical development and our reputation for independent, high-quality scientific research and evidence development. In
addition, there are risks inherent in our international operations, including, without limitation (1) vigorous regulation of the
biotechnology and pharmaceutical industries; (2) compliance with a variety of ever-changing foreign laws and regulations,
some of which may conflict with one another; (3) difficulty of enforcing agreements, intellectual property rights and
collection of receivables abroad; (4) tax rates, withholding requirements, the imposition of tariffs, exchange controls or
other restrictions, including restrictions on repatriation; (5) complexities of managing a multinational organization; (6)
general economic and political conditions or terrorist activities in foreign countries; (7) exchange rate fluctuations; and (8)
longer payment cycles of foreign customers. Further, there can be no assurance that foreign governments will not enact
legislation, impose restrictions or adopt interpretations of existing laws, rules or regulations that could have a material
adverse effect on our business and results of operations.