Profile: Medco Health Solutions, Inc. (MHS)

Medco Health Solutions, Inc. (Medco) is a health care company. Medco provides clinically-driven pharmacy services designed to lower total health care costs for private and public employers, health plans, labor unions and government agencies of all sizes, and for individuals served by the Medicare Part D Prescription Drug Plans. The Company provides pharmacy benefit management (PBM) services through its national networks of retail pharmacies and its own mail-order pharmacies, as well as through its Specialty Pharmacy segment, Accredo Health Group. In April 2008, the Company acquired a majority interest in Europa Apotheek Venlo, a privately held company providing clinical healthcare and mail-order pharmacy services in Germany. In February 2010, the Company announced the acquisition of DNA Direct, Inc.

Plan Design

The Company’s client teams take a consultative approach to assisting clients in their development and implementation of plan designs that suit their specific needs. As an integral part of its consultative approach, Medco’s account teams use software tools that it has developed to model the effects of different plan designs based on historical data. One such tool is Medco’s EXPERxT Advisor, which provides real-time plan design modeling capability for its clients. Clients can use the output from these models to judge the impact of specific plan design elements before they are implemented.

Clinical Management

The Company offers utilization management, including drug utilization review (DUR), which is a systematic evaluation of individual and population use of prescription drugs, to identify and address over-use, under-use, and misuse of prescription drugs. The Company has introduced a range of clinical programs. One of these is its RationalMed service, a patient safety program designed to improve patient care and lower total healthcare costs. RationalMed analyzes patients’ available prescription, inpatient and outpatient medical and laboratory records to detect gaps and errors in care, and engage physicians, pharmacists and patients in making appropriate changes in care. It offers RationalMed to health plans and plan sponsors, regardless of whether they are clients of its PBM business. Optimal Health is Medco’s health and care support solution, offered through its alliance with Healthways, Inc. Optimal Health offers health plans and plan sponsors health improvement solutions across the entire population, including chronic and complex.

Clinical Services, Specialty Pharmacy

Where appropriate, Medco works with the patient and the patient’s physician to implement the prescribed plan of care. Each patient is assigned to a team consisting of a pharmacist, a customer service representative and a reimbursement specialist, and with certain therapies, a registered nurse. It assists patients and their families in coping with a range of difficult and emotional social challenges presented by their diseases, and in some cases participate in patient advocacy organizations, assist in the formation of patient support groups, advocate legislation to advance patient interests and publish newsletters for patients.

Pharmacy Management

The Company dispensed approximately 105.8 million prescriptions, during fiscal year ended December 27, 2008, through its mail-order pharmacies. Its mail-order pharmacy operations consist of its two highly automated dispensing pharmacies in Willingboro, New Jersey and Las Vegas, Nevada and seven mail-order pharmacies that are located throughout the United States. Medco Therapeutic Resource Centers, located within its mail-order pharmacy operations, are designed around the theory that specialization leads to better pharmacy care for members with chronic and complex conditions. Accredo Health Group provides personalized service to patients taking specialty medicines.

Accredo Health Group’s specialty pharmacies typically dispense a 30- to 90-day supply of biopharmaceutical medications with ancillary supplies directly to the patient or the patient’s physician with appropriate packaging. The package contains all of the supplies required for administration in the patient’s home or in other alternate sites. It has contractual relationships covering approximately 60,000 independent and chain retail pharmacies that have agreed to participate in one or more of its retail network options. The Company operates call center pharmacies, each of which is licensed as a pharmacy in the state, in which it is located and is staffed by service representatives and pharmacists. It also manages managing reimbursement issues related to the patient’s condition and treatment program.

Physician Services

Motivating physicians to prescribe medications is a key objective of a number of Medco’s initiatives, including its Physician Service Center, integrated generics strategy featuring its education and sampling programs, Physicians Practice Summary Program and e-Prescribing Connectivity Program. The Company works with a range of handheld and personal computer-based technology providers in recruiting new physician users.

Web-based Services

Medco’s Internet capabilities are focused on keeping members informed about their prescription drug coverage while encouraging them to use safe, effective therapies that comply with their plan’s provisions. Its member Internet also supports pre-enrollment and post-enrollment activities. Its client Website provides clients with online access to Medco’s tools for reporting, analyzing and modeling data, clinical- and decision-support, plan administration, including eligibility and claims reviews, the latest industry news, and easy submission and tracking of service requests. Its Pharmacist Resource Center is an online service for retail pharmacies that participate in its national networks.