Full Description

Express Scripts, Inc., incorporated in September 1986, is a pharmacy benefit management (PBM) company in North America. The Company provides a range of services to its clients, which include health maintenance organizations (HMOs), health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’ compensation plans and government health programs. The Company operates in two segments: Pharmacy Benefit Management Services (PBM) and Specialty and Ancillary Services (SAAS). Its PBM services include retail network pharmacy management; retail drug card programs; home delivery pharmacy services; benefit design consultation; drug utilization review; drug formulary management programs, and compliance and therapy management programs for its clients. SAAS segment consists of the specialty operations of CuraScript, Inc. (CuraScript), and its Specialty Distribution Services (SDS) and Phoenix Marketing Group LLC (PMG) lines of business. On April 4, 2008, the Company completed the sale of Custom Medical Products, Inc. On June 30, 2008, the Company completed the sale of CuraScript Infusion Pharmacy, Inc. On July 22, 2008, it completed the acquisition of the Pharmacy Services Division of Medical Services Company.

Pharmacy Benefit Management Services

The Company’s PBM services involve the management of outpatient prescription drug use to foster pharmaceutical care. Express Scripts, Inc. offers its PBM services to the clients in the United States and Canada. During the year ended December 31, 2008, 82.9% of its revenues were derived by its PBM operations. As of December 31, 2008, Express Scripts, Inc. operated three home delivery pharmacies to dispense prescription drugs located in Maryland Heights, Missouri; Bensalem, Pennsylvania, and Tempe, Arizona. In addition to the order processing that occurs at these home delivery pharmacies, the Company also operate five non-dispensing order processing facilities in Troy, New York; Harrisburg, Pennsylvania; Bensalem, Pennsylvania; Albuquerque, New Mexico; and Tempe, Arizona. In addition, the Company operated eight contact centers located in Bloomington, Minnesota; Farmington Hills, Michigan; Harrisburg, Pennsylvania; St. Mary’s, Georgia; Tempe, Arizona; Orlando, Florida; St. Louis, Missouri, and Pueblo, Colorado.

The Company offers consultation and financial modeling to assist its clients in selecting benefit plan designs. The benefit design options offered to its clients include financial incentives and reimbursement limitations on the drugs covered by the plan, including drug formularies, tiered co-payments, deductibles or annual benefit maximums; generic drug utilization incentives; incentives or requirements to use only certain network pharmacies or to order certain maintenance drugs (therapies for diabetes and high blood pressure) only for home delivery; reimbursement limitations on the amount of a drug, which can be obtained in a specific period; utilization management programs, such as step therapy and prior authorization that focus the use of medications according to clinically developed algorithms, and behavior-centric programs that drive adoption of generics, therapy adherence and greater use of home delivery.

The Company provides formulary compliance services to its clients. The Company develops, manages and administers rebate programs that allow pharmaceutical manufactures to provide rebates and administrative fees based on utilization of their products by members of its clients’ benefit plans. Its electronic claims processing system enables the Company to implement intervention programs to assist in managing prescription drug utilization. The Company maintains a Website, www.DrugDigest.org, to help consumers make informed decisions about using drugs. The information on DrugDigest.org includes a drug interaction checker; a drug side effect comparison tool; tools to check for less expensive generic and alternative drugs; audible drug name pronunciations; comparisons of different drugs used to treat the same health condition; information on health conditions and their treatments; instructional videos showing administration of specific drug dosage forms; monographs on drugs and dietary supplements; photographs of pills and capsules, and interactive care pathways and health risk assessments.

Specialty and Ancillary Services

Express Scripts, Inc.’s SAAS segment includes the specialty operations of CuraScript, and its SDS and PMG lines of business. Through its SAAS segment the Company provides specialty services, including delivery of injectible drugs to patient homes, physician offices and certain associated patient care services; distribution of pharmaceuticals and medical supplies to providers and clinics, and bio-pharma services, including reimbursement and customized logistics solutions. The SAAS segment also includes distribution of specialty pharmaceuticals requiring special handling or packaging; distribution of pharmaceuticals to low-income patients through manufacturer-sponsored branded and Company-sponsored generic patient assistance programs, and distribution of sample units to physicians and verification of practitioner licensure. During 2008, 17.1% of its revenues were derived from SAAS services.

Collectively, under the CuraScript name, the Company operates four integrated brands that service the patient through multiple paths: Payors, Providers and Pharma. CuraScriptSP operates specialty pharmacies in eight states with primary operations located in Orlando, Florida. These locations provide patient care and direct specialty home delivery to its patients. CuraScriptSD provides specialty distribution of pharmaceuticals and medical supplies direct to providers and clinics, and operates a Group Purchasing Organization (GPO) for many of its clients. The Company operates CuraScriptSD, a specialty distribution centers located in Grove City, Ohio. FreedomFP provides fertility services to both providers and patients, and is located in Byfield, Massachusetts. Finally, HealthBridge provides Bio-Pharma services, including reimbursement and customized logistics solutions.

Express Scripts, Inc. offers health plan providers and their members customized disease-specific treatment programs, which cover both pharmacy and medical benefits. Through its CuraScriptSD business unit the Company provides distribution services primarily to office and clinic-based physicians treating chronic disease patients. For biopharmaceuticals being launched, it provides biotech manufacturers product distribution management services. Express Scripts, Inc. also provides a range of centralized supply chain services, which can include sampling programs, patient assistance programs, and clinical trial assistance, as well as specialized shipping and storage and customized dosing.

The Company provides specialty distribution services, consisting of the distribution of, and creation of a database of information for, products requiring special handling or packaging, products targeted to a specific physician or patient population, and products distributed to low-income patients. Its services include eligibility, fulfillment, inventory, insurance verification/authorization and payment. Express Scripts, Inc. also administer sample card programs for certain manufacturers, where the ingredient costs of pharmaceuticals dispensed from retail pharmacies are included in revenues, as well as costs of revenues. These services are provided from its Maryland Heights, Missouri facility.

The Company competes with Catalyst RX, Medco, MedImpact, Aetna Inc., CIGNA Corporation, Prime Therapeutics, Wellpoint Health Networks Inc., Caremark (owned by CVS), Rite Aid Health Solutions, Walgreens Health Initiatives, Wal-Mart Stores, Inc., Argus and SXC Health Solutions.