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11 Express Scripts 2013 Annual Report
ship most products overnight within the United States as well as provide distribution capabilities to Puerto Rico and Guam.
CuraScript Specialty Distribution is also a contracted supplier with most major group purchasing organizations and can
leverage our distribution platform to operate as a third-party logistics provider for pharmaceuticals.
Payor Services. We provide a comprehensive case management approach to manage care by fully integrating pre-
certification, case management and discharge planning services for patients. We assist with eligibility review, prior
authorization coordination, re-pricing, utilization management, monitoring and reporting.
Segment Information
We report segments on the basis of services offered and have determined we have two reportable segments: PBM
and Other Business Operations. Our integrated PBM services include retail network pharmacy administration, home delivery
pharmacy services, benefit design consultation, drug utilization review, drug formulary management, clinical solutions to
improve health outcomes, Medicare Part D, Medicaid and Public Exchange offerings, specialty pharmacy services, fertility
services to providers and patients, administration of a group purchasing organization and consumer health and drug
information. Through our Other Business Operations segment, we provide services including distribution of pharmaceuticals
and medical supplies to providers and clinics and scientific evidence to guide the safe, effective and affordable use of
medicines. During the second quarter of 2012 we reorganized our other international retail network pharmacy administration
line of business (which was substantially shut down as of December 31, 2012) from our PBM segment into our Other Business
Operations segment. During the third quarter of 2011 we reorganized our FreedomFP line of business from our Other Business
Operations segment into our PBM segment. Information regarding our segments appears in Note 13 - Segment information of
the notes to our consolidated financial statements and is incorporated by reference herein.
Suppliers
We maintain an inventory of brand name and generic pharmaceuticals in our home delivery pharmacies and
biopharmaceutical products, including pharmaceuticals for the treatment of rare or chronic diseases, in our specialty
pharmacies and distribution centers to meet the needs of our patients. If a drug is not in our inventory, we can generally obtain
it from a supplier within one business day. We purchase pharmaceuticals either directly from manufacturers or through
authorized wholesalers. Generic pharmaceuticals are generally purchased directly from manufacturers.
Clients
We are a provider of PBM services to several market segments. Our clients include managed care organizations,
health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’ compensation plans and
government health programs. We also provide specialty services to customers, which include managed care organizations,
health insurers, third-party administrators, employers, union-sponsored benefit plans, government health programs, office-
based oncologists, renal dialysis clinics, ambulatory surgery centers, primary care physicians, retina specialists and others.
On July 21, 2011 Medco announced that its pharmacy benefit services agreement with UnitedHealth Group would
not be renewed, although it continued to provide service under an agreement which expired on December 31, 2012. A transition
agreement was in place throughout 2013, during which time patients moved in tranches off of the Medco platform.
In December 2009, ESI completed the purchase of 100% of the shares and equity interests of certain subsidiaries of
WellPoint, Inc. (“WellPoint”) that provide pharmacy benefit management services (“NextRx” or the “NextRx PBM Business”).
ESI also entered into a 10-year contract under which ESI provides pharmacy benefits management services to members of the
affiliated health plans of WellPoint (the “PBM agreement”). Subsequent to this acquisition, we integrated NextRx’s PBM
clients into our existing systems and operations.
Express Scripts provides pharmacy network services and home delivery and specialty pharmacy services to the
United States Department of Defense (“DoD”). The DoD’s TRICARE Pharmacy Program is the military healthcare program
serving active-duty service members, National Guard and Reserve members, and retirees, as well as their dependents. Under
the contract, we provide online claims adjudication, home delivery services, specialty pharmacy clinical services, claims
processing and contact center support, and other services critical to managing pharmacy trend.
Refer to Note 13 - Segment information for a discussion of client concentration.