Express Scripts 2013 Annual Report Download - page 25

25 Express Scripts 2013 Annual Report
• risk adjustments, risk corridors and reinsurance requirements that affect certain of our clients
• closing of the so-called donut hole under Medicare Part D by lowering beneficiary coinsurance amounts
• elimination of the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments
• mandated changes to client plan designs
• changes to certain healthcare fraud and abuse laws
The scope and ultimate effect of such provisions on our business remains uncertain and we cannot predict the impact that
any interim or final implementation will have on our business and results of operations.
We face risks associated with general economic conditions.
The state of the economy can have a significant impact on our business and results of operations. An unfavorable
or uncertain economic environment could significantly and adversely affect our businesses and profitability and generate the
following risks to our business:
• clients, employers and 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
• 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
• 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
• 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.
Our ability to conduct operations depends on the security and stability of our technology infrastructure as well as the
effectiveness of, and our ability to execute, business continuity plans across our operations. A failure in the security of our
technology infrastructure or a significant disruption in service within our operations could materially adversely affect our
business and results of operations.
We maintain, and are dependent on, a technology infrastructure platform that is essential for many aspects of our
business operations. We have many different information systems and it is imperative that we securely store and transmit
confidential data, including personal health information, while maintaining the integrity of our confidential information. Any
failure to protect against a security breach or a disruption in service could negatively impact our reputation and materially
adversely impact our business operations and results of operations. Our technology infrastructure platform requires significant
resources to maintain and enhance systems in order to keep pace with rapid technological change as well as evolving industry
and regulatory standards. Emerging and advanced security threats, including coordinated attacks, require additional layers of
security which may disrupt or impact efficiency of operations. From time to time, we may obtain significant portions of our
systems-related or other services or facilities from independent third parties, which may make our operations vulnerable to such
third parties’ failure to adequately perform or protect against a security breach or service disruption. In the event we or our
vendors experience:
• a malfunction in business processes
• security breaches (including from cyber- or phishing-attacks)
• failure to maintain effective and up-to-date information systems or
• otherwise experience unauthorized or non-compliant actions by any individual
We could incur disruptions to our business operations or negative impacts to patient safety, customer and member
disputes, damage to our reputation, exposures to risk of loss, litigation or regulatory violations, increased administrative
expenses or other adverse consequences.