Express Scripts 2012 Annual Report Download - page 43

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Express Scripts 2012 Annual Report 41
When we earn rebates and administrative fees in conjunction with formulary management services, but do not
process the underlying claims, we record rebates received from manufacturers, net of the portion payable to customers, in
revenue.
We distribute pharmaceuticals in connection with our management of patient assistance programs and earn a fee
from the manufacturer for administrative and pharmacy services for the delivery of certain drugs free of charge to doctors
for their low-income patients.
We earn a fee for the distribution of consigned pharmaceuticals requiring special handling or packaging where we
have been selected by the pharmaceutical manufacturer as part of a limited distribution network.
MEDICARE PRESCRIPTION DRUG PROGRAM
Our revenues include premiums associated with our Medicare prescription drug program (“PDP”) risk-based
product offerings. These products involve prescription dispensing for beneficiaries enrolled in the Centers for Medicare &
Medicaid Services (“CMS”)-sponsored Medicare Part D Prescription Drug Program (“Medicare Part D”) prescription drug
benefit. In addition to PDP premiums, there are certain co-payments and deductibles (the “cost share”) due from members
based on prescription orders by those members, some of which are subsidized by CMS in cases of low-income
membership. Our cost of revenues includes the cost of drugs dispensed by our home delivery pharmacies or retail network
for members covered under our Medicare PDP product offerings and is recorded at cost as incurred.
SPECIALTY REVENUES
Discounts and contractual allowances related to our specialty revenues are estimated based on historical
collections over a recent period for the sales that are recorded at gross amounts. The percentage is applied to the applicable
accounts receivable balance that contains gross amounts for each period. Any differences between the estimates and actual
collections are reflected in operations in the period payment is received or as a better estimate becomes available.
Differences may result in the amount and timing of revenues for any period if actual performance varies from estimates.
Allowances for returns are estimated based on historical return trends. The discounts, contractual allowances, allowances
for returns and any differences between estimates and actual amounts do not have a material effect on our consolidated
financial statements.