Express Scripts 2013 Annual Report Download - page 6

Express Scripts 2013 Annual Report 6
Information included in or incorporated by reference in this Annual Report on Form 10-K, other filings with the
Securities and Exchange Commission (the “SEC”) and our press releases or other public statements, contains or may
contain forward-looking statements. Please refer to a discussion of our forward-looking statements and associated risks in
“Part I — Item 1 — Business — Forward-Looking Statements and Associated Risks” and “Part I — Item 1A — Risk
Factors” in this Annual Report on Form 10-K.
PART I
THE COMPANY
Item 1 — Business
Industry Overview
Prescription drugs play a significant role in healthcare today and constitute the first line of treatment for many
medical conditions. For millions of people, prescription drugs provide the hope of improved health and quality of life.
Total medical costs for employers continue to outpace the rate of overall inflation. National health expenditures as
a percentage of Gross Domestic Product are expected to increase to 19.9% in 2022 from an estimated 18.0% in 2013 according
to the Centers for Medicare & Medicaid Services (“CMS”). In response to cost pressures being exerted on health benefit
providers such as managed care organizations, health insurers, employers and unions, pharmacy benefit management (“PBM”)
companies work to develop innovative strategies designed to keep medications affordable.
PBM companies combine retail pharmacy claims processing, formulary management, utilization management and
home delivery pharmacy services to create an integrated product offering to manage the prescription drug benefit for payors.
Some PBMs also offer specialty medication services that deliver a more effective solution than many retail pharmacies in
providing treatments for diseases that rely upon high-cost injectable, infused, oral or inhaled drugs. PBMs have also broadened
their service offerings to include compliance programs, outcomes research, drug therapy management programs, sophisticated
data analysis and other distribution services.
Company Overview
On April 2, 2012, Express Scripts, Inc. (“ESI”) consummated a merger (the “Merger”) with Medco Health
Solutions, Inc. (“Medco”) and both ESI and Medco became wholly-owned subsidiaries of Express Scripts Holding Company
(the “Company” or “Express Scripts”). “We,” “our” or “us” refers to Express Scripts Holding Company and its subsidiaries.
The consolidated financial statements (and other data, such as claims volume) reflect the results of operations and financial
position of ESI for all periods prior to April 1, 2012. However, references to amounts for periods after the closing of the Merger
on April 2, 2012 relate to Express Scripts.
We are the largest PBM company in the United States, offering a full range of services to our clients, which include
managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’
compensation plans and government health programs. We help health benefit providers address access and affordability
concerns resulting from rising drug costs while helping to improve healthcare outcomes. We manage the cost of the drug
benefit by performing the following functions:
• evaluating drugs for price, value and efficacy in order to assist clients in selecting a cost-effective formulary
• leveraging purchasing volume to deliver discounts to health benefit providers
• promoting the use of generics and low-cost brands
• offering cost-effective home delivery pharmacy and specialty services that result in drug cost savings for plan sponsors
and co-payment savings for members
We work with clients, manufacturers, pharmacists and physicians to increase efficiency in the drug distribution
chain, to manage costs in the pharmacy benefit chain and to improve members’ health outcomes and satisfaction.
Suboptimal prescription-related decisions by patients, caregivers and providers continue to cause adverse clinical
and financial results for plan sponsors and their members. Healthier outcomes require better decisions. Express Scripts supports
healthier outcomes by applying science to health decisions. Express Scripts offers a comprehensive array of solutions to
support better choices in four areas: benefit choices, drug choices, pharmacy choices and health choices. Health Decision
ScienceSM is the Company’s unique approach to understanding and improving the decisions that impact clinical and financial
outcomes and applies principles and advanced knowledge from three key disciplines: behavioral sciences, clinical
specialization and actionable data. These disciplines form a powerful combination that seeks to increase the likelihood of