Medco 2015 Annual Report Download - page 31

29 Express Scripts 2015 Annual Report
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.
Item 1B — Unresolved Staff Comments
There are no unresolved written comments received from the SEC Staff 180 days or more before the end of our fiscal
year relating to our periodic or current reports under the Securities Exchange Act of 1934.
Item 2 — Properties
We operate our PBM and Other Business Operations segments out of leased and owned facilities throughout the
United States, Canada and Europe. As of December 31, 2015, we owned or leased the following:
PBM
Other Business
Operations
Domestic 93 15
Foreign 75
Our existing facilities comprise approximately 6.0 million square feet in aggregate.
Our St. Louis, Missouri facility houses our corporate headquarters and accommodates our executive and corporate
functions. Our PBM home delivery pharmacy operations consist of eight order processing pharmacies located throughout the
United States, as well as eight contact centers and five mail order dispensing pharmacies. We also have seven Specialty
Pharmacy home delivery pharmacies and 35 specialty branch pharmacies. We believe our facilities generally have been well
maintained, are in good operating condition and have adequate capacity to meet our current business needs.
Item 3 – Legal Proceedings
We and/or our subsidiaries are defendants in a number of lawsuits. We cannot ascertain with any certainty at this time
the monetary damages or injunctive relief that any of the plaintiffs may recover. We also cannot provide any assurance the
outcome of any of these matters, or some number of them in the aggregate, will not be materially adverse to our financial
condition, results of operations, cash flows or business prospects. In addition, the expenses of defending these cases may have a
material adverse effect on our financial results. See further discussion at Note 11 - Commitments and contingencies to our
consolidated financial statements included in “Part II — Item 8” of this Annual Report on Form 10-K.
These matters are:
• Jerry Beeman, et al. v. Caremark, et al. (United States District Court for the Central District of California, Case
No.021327) (filed December 2002). A complaint was filed against Express Scripts, Inc. (for purposes of this Item 3,
“ESI”), NextRX LLC f/k/a Anthem Prescription Management LLC, Medco Health Solutions, Inc. (for purposes of
this Item 3, “Medco”) and several other pharmacy benefit management companies by several California pharmacies
as a putative class action, alleging rights to sue as a private attorney general under California law. Plaintiffs allege ESI
and the other defendants failed to comply with statutory obligations under California Civil Code Section 2527 to
provide California clients with the results of a bi-annual survey of retail drug prices, and seek money damages. In July
2004, the case was dismissed with prejudice due to lack of standing. In June 2006, the United States Court of Appeals
for the Ninth Circuit reversed the district court’s opinion on standing and remanded the case. The district court’s
denial of defendants’ motion to dismiss on first amendment constitutionality grounds was appealed to the Ninth
Circuit as discussed further below. Plaintiffs have also filed a motion for class certification, but that motion has not
been briefed to date.
In July 2011, the Ninth Circuit affirmed the district court’s denial of defendants’ motion to dismiss. In June 2012, the
Ninth Circuit en banc panel issued a decision certifying the question of constitutionality of California Civil Code
Section 2527 to the California Supreme Court, requesting consideration of the issue and a ruling. In December 2013,
the California Supreme Court held that California Civil Code Section 2527 does not infringe upon state constitutional
free speech protections.
In January 2014, the Ninth Circuit en banc panel issued a ruling vacating the prior panel opinion and remanded the
case to the original Ninth Circuit three-judge panel to either consider the federal constitutional issues or remand the
case to the district court. In March 2014, the Ninth Circuit entered an order lifting the stay and remanded the case to
the district court for further proceedings. Defendants’ objections based on plaintiffs’ lack of standing and the