A Prescription forHealthcare Reform
David B. Snow, Jr.David B. Snow, Jr.Chairman and Chief Executive OfficerChairman and Chief Executive Officer
Presentation to Citi Private Client GroupPresentation to Citi Private Client Group
April 17, 2008April 17, 2008
2© 2008 Medco Health Solutions, Inc. All rights reserved.
Forward-Looking StatementsForward-Looking Statements
This presentation contains “forward-looking statements” as that term is defined in the Private This presentation contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. No forward-may cause results to differ materially from those set forth in the statements. No forward-looking statement can be guaranteed, and actual results may differ materially from those looking statement can be guaranteed, and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. The forward-looking whether as a result of new information, future events or otherwise. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the pharmacy assumptions and projections about the business and future financial results of the pharmacy benefit management (“PBM”) and specialty pharmacy industries, and other legal, regulatory benefit management (“PBM”) and specialty pharmacy industries, and other legal, regulatory and economic developments. We use words such as “anticipates,” “believes,” “plans,” and economic developments. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance” and similar expressions to identify these forward-looking “potential,” “continue,” “guidance” and similar expressions to identify these forward-looking statements. Medco’s actual results could differ materially from the results contemplated by statements. Medco’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors.these forward-looking statements due to a number of factors.
Forward-looking statements in this presentation should be evaluated together with the risks Forward-looking statements in this presentation should be evaluated together with the risks and uncertainties that affect our business, particularly those mentioned in the Risk Factors and uncertainties that affect our business, particularly those mentioned in the Risk Factors section of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and section of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the Securities and Exchange Commission. other documents filed from time to time with the Securities and Exchange Commission.
3© 2008 Medco Health Solutions, Inc. All rights reserved.
A Prescription for Healthcare ReformA Prescription for Healthcare Reform
The Urgent Imperative The Urgent Imperative
A Roadmap to ReformA Roadmap to Reform
Medco’s Contribution to Healthcare ReformMedco’s Contribution to Healthcare Reform
4© 2008 Medco Health Solutions, Inc. All rights reserved.
U.S. Healthcare Costs are Highest U.S. Healthcare Costs are Highest “Paying More Doesn’t Deliver More”“Paying More Doesn’t Deliver More”
0
1000
2000
3000
4000
5000
6000
7000
0 20 40 60 80 100
Perceived Health Status Scale (1-100)
Pe
r C
ap
ita
He
alt
h S
pe
nd
ing
($
)
U.S.U.S.
JapanJapan ItalyItaly CanadaCanada
SwitzerlandSwitzerland
FranceFrance
SwedenSwedenU.K.U.K.
GermanyGermany
Source: Organization for Economic Cooperation and Development (OECD) Health Data, 2007 *Graph shows per capita health spending and perceived health status for 2005
5© 2008 Medco Health Solutions, Inc. All rights reserved.
U.S. Life Expectancy is Lowest Among U.S. Life Expectancy is Lowest Among Most Industrialized NationsMost Industrialized Nations
82.0
80.6
80.6
80.6
80.3
79.9
79.0
78.7
78.0
Japan
Switzerland
Sweden
France
Canada
Italy
Germany
United Kingdom
United States
Life Expectancy at BirthLife Expectancy at BirthLife Expectancy at BirthLife Expectancy at Birth
Source: Central Intelligence Agency World Factbook 2007
6© 2008 Medco Health Solutions, Inc. All rights reserved.
Worldwide Healthcare Inflation:Worldwide Healthcare Inflation:A Shared ConcernA Shared Concern
Healthcare Spending Per Capita 1995-2005Healthcare Spending Per Capita 1995-2005Healthcare Spending Per Capita 1995-2005Healthcare Spending Per Capita 1995-2005
19951995 20052005Annualized Annualized Growth RateGrowth Rate
United KingdomUnited Kingdom $1,384$1,384 $2,724$2,724 7.01%7.01%
GermanyGermany $2,225$2,225 $3,287$3,287 3.98%3.98%
ItalyItaly $1,562$1,562 $2,532$2,532 4.95%4.95%
CanadaCanada $2,057$2,057 $3,326$3,326 4.92%4.92%
FranceFrance $2,065$2,065 $3,374$3,374 5.03%5.03%
SwedenSweden $1,733$1,733 $2,918$2,918 5.35%5.35%
SwitzerlandSwitzerland $2,571$2,571 $4,177$4,177 4.97%4.97%
JapanJapan $1,546$1,546 $2,348$2,348 4.31%4.31%
AverageAverage $1,893$1,893 $3,087$3,087 5.07%5.07%
United States $3,656 $6,401 5.76%
Source: Organization for Economic Cooperation and Development (OECD) Health Data, 2007
7© 2008 Medco Health Solutions, Inc. All rights reserved.
The ChallengeThe Challenge
Baseline U.S healthcare spending must Baseline U.S healthcare spending must be reduced by $1 trillion annually to be reduced by $1 trillion annually to move toward achieving per capita cost move toward achieving per capita cost parity versus other developed nationsparity versus other developed nations
Unchecked U.S. healthcare costs will rise from Unchecked U.S. healthcare costs will rise from 16 percent of GDP today to 49 percent of GDP in 16 percent of GDP today to 49 percent of GDP in 20822082
““Current financial incentives encourage expensive Current financial incentives encourage expensive treatments and procedures even if evidence about their treatments and procedures even if evidence about their effectiveness is limited.”effectiveness is limited.”
-- Congressional Budget Office-- Congressional Budget Office
8© 2008 Medco Health Solutions, Inc. All rights reserved.
Snow’s Principles for ReformSnow’s Principles for Reform
Keep It SimpleKeep It Simple
Think Evolutionary, Not RevolutionaryThink Evolutionary, Not Revolutionary
Clearly Define Government / Private Sector RolesClearly Define Government / Private Sector Roles
~Government: Promulgates and RegulatesGovernment: Promulgates and Regulates
~Private Sector: Operates and InnovatesPrivate Sector: Operates and Innovates
9© 2008 Medco Health Solutions, Inc. All rights reserved.
Radical Healthcare Reform is Not a Radical Healthcare Reform is Not a Government StrengthGovernment Strength
““HillaryCare 1994”HillaryCare 1994”““HillaryCare 1994”HillaryCare 1994”
10© 2008 Medco Health Solutions, Inc. All rights reserved.
HMO’s Effectively Reduced Costs;HMO’s Effectively Reduced Costs; But Were Demonized, Scapegoated But Were Demonized, Scapegoated
US NewswireHMO Denies Cancer
Patient Treatment That Doctors Say Would
Have Saved Him, Says Law Firm
HMO Denies Teen Critical
Surgery
In America;Torture
by H.M.O.
SOME WILL WAIT, SOME WILL DIE, WITH HEALTH-
CARE RATIONING
Plan Could Turn Health
Care Into Federal Crime
THE HMO HORROR SHOW
From 1994 to 1999, annual growth in healthcare costs never exceeded 2.8%From 1994 to 1999, annual growth in healthcare costs never exceeded 2.8%
Managed care plan enrollment / excess capacity amplified negotiating leverageManaged care plan enrollment / excess capacity amplified negotiating leverage
Politicians caved to populist pressuresPoliticians caved to populist pressures
From 1994 to 1999, annual growth in healthcare costs never exceeded 2.8%From 1994 to 1999, annual growth in healthcare costs never exceeded 2.8%
Managed care plan enrollment / excess capacity amplified negotiating leverageManaged care plan enrollment / excess capacity amplified negotiating leverage
Politicians caved to populist pressuresPoliticians caved to populist pressures
11© 2008 Medco Health Solutions, Inc. All rights reserved.
The Government Can Make a DifferenceThe Government Can Make a Difference
““Brain on Drugs”Brain on Drugs”CampaignCampaign
““Brain on Drugs”Brain on Drugs”CampaignCampaign
““Smokey Bear” Smokey Bear” Wildfire CampaignWildfire Campaign““Smokey Bear” Smokey Bear”
Wildfire CampaignWildfire Campaign
““Crying Native American”Crying Native American”Littering CampaignLittering Campaign
““Crying Native American”Crying Native American”Littering CampaignLittering Campaign
12© 2008 Medco Health Solutions, Inc. All rights reserved.
A Prescription for Healthcare ReformA Prescription for Healthcare Reform
The Urgent Imperative The Urgent Imperative
A Roadmap to ReformA Roadmap to Reform
Medco’s Contribution to Healthcare ReformMedco’s Contribution to Healthcare Reform
13© 2008 Medco Health Solutions, Inc. All rights reserved.
Government Must Lead ‘Wired’ HealthcareGovernment Must Lead ‘Wired’ Healthcare
Wiring Healthcare Wiring Healthcare Potential Cost Potential Cost
SavingsSavings
$162 Billion/year$162 Billion/year
Wiring Healthcare Wiring Healthcare Potential Cost Potential Cost
SavingsSavings
$162 Billion/year$162 Billion/year
ElectronicElectronicHealth RecordsHealth Records
(EHRs)(EHRs)
Payors
Hospitals
Laboratories
Pharmacy
Ambulatory CentersPhysician Office
Consumers
ROI: 20X / year ROI: 20X / year for each dollar investedfor each dollar invested
Source: RAND Corporation study, 2005
14© 2008 Medco Health Solutions, Inc. All rights reserved.
Medicare Financials in ‘Critical’ ConditionMedicare Financials in ‘Critical’ Condition
0
5
10
15
1980 1990 2000 2010 2020 2030 2040 2050Projection
41.9
5.13.4 2.1
1945 1960 2000 2040
Workers per RetireeWorkers per RetireeWorkers per RetireeWorkers per RetireeMedicare Spend as % of GDPMedicare Spend as % of GDPMedicare Spend as % of GDPMedicare Spend as % of GDP
Source: Congressional Budget Office/ Dow Jones Source: Social Security Trustees Report
Medicare’s Hospital Insurance Trust Fund Expected to Be Bankrupt in 2019Medicare’s Hospital Insurance Trust Fund Expected to Be Bankrupt in 2019Medicare’s Hospital Insurance Trust Fund Expected to Be Bankrupt in 2019Medicare’s Hospital Insurance Trust Fund Expected to Be Bankrupt in 2019
15© 2008 Medco Health Solutions, Inc. All rights reserved.
Medicare’s Actuarial Reality Has ChangedMedicare’s Actuarial Reality Has Changed
Today, 40,000 Today, 40,000 U.S. citizens are U.S. citizens are over 100 years over 100 years old; by 2050 old; by 2050 there could bethere could be1 million1 million
Source: National Institute of AgingCDC National Center for Health Statistics
““If I’d known I was gonna live this long, I’d have taken better care of myself.” – If I’d known I was gonna live this long, I’d have taken better care of myself.” – Eubie Blake at age 100Eubie Blake at age 100
““If I’d known I was gonna live this long, I’d have taken better care of myself.” – If I’d known I was gonna live this long, I’d have taken better care of myself.” – Eubie Blake at age 100Eubie Blake at age 100
46 48
74
88
1900 2000
MaleFemale
“Retirement Age”
Problems Will Continue to CompoundProblems Will Continue to CompoundProblems Will Continue to CompoundProblems Will Continue to Compound
16© 2008 Medco Health Solutions, Inc. All rights reserved.
Final Year of Life Expenditures Account Final Year of Life Expenditures Account for Nearly 30% of Medicare Spendfor Nearly 30% of Medicare Spend
~$130 B~$130 B
Spent on Spent on Last Year Last Year
of Lifeof Life
~30%~30%
Medicare Expenditures Total $432 BillionMedicare Expenditures Total $432 BillionMedicare Expenditures Total $432 BillionMedicare Expenditures Total $432 Billion
$25,358$25,358National average to treat chronically ill National average to treat chronically ill Medicare patients during the final six Medicare patients during the final six months of lifemonths of life
1414Number of medical specialists seen in Number of medical specialists seen in the final six months of lifethe final six months of life
40 Percent40 PercentNumber of New Jersey Medicare Number of New Jersey Medicare patients who died or spent time in ICU patients who died or spent time in ICU during the final months of life during the final months of life
Source: Centers for Medicare and Medicaid Services (CMS), Office of the ActuaryDepartment of Health and Human Services (HHS)
Source: The Dartmouth Atlas of Healthcare Study 2008
17© 2008 Medco Health Solutions, Inc. All rights reserved.
The $200 Billion Cost of The $200 Billion Cost of Defensive MedicineDefensive Medicine
Sources: Adapted from Centers for Medicare & Medicaid Services, National Health Accounts, 2005 and Midwest Business Group on Health, April 2003.
Prescription Drugs
Other Medical
Cost of Liability Cost of Liability & Defensive & Defensive MedicineMedicine
$200 billion$200 billion
Consumer Services, Provider Support & Marketing
Insurance Industry Profit
Government Payments, Compliance, Claims Processing & Other Administration
Physician Services
Hospital Inpatient
Outpatient (Free-standing
& Hospital)
15%15%
5%
10%
5%5%
3%3%6%
21%21%
17%17%
18%
1%
1%1%
4%
1%1%
3%3%
Prescription Drugs
Other Medical
Outpatient
Hospital Inpatient
Physician Services
Estimated Breakdown of Insurance Premiums withEstimated Breakdown of Insurance Premiums with Medical Liability and Defensive Medicine Extracted, 2005Medical Liability and Defensive Medicine Extracted, 2005
Estimated Breakdown of Insurance Premiums withEstimated Breakdown of Insurance Premiums with Medical Liability and Defensive Medicine Extracted, 2005Medical Liability and Defensive Medicine Extracted, 2005
18© 2008 Medco Health Solutions, Inc. All rights reserved.
2008 2009 2010 2011 2012 2013 2014 2015
Strong Pipeline of Off-Patent Branded Strong Pipeline of Off-Patent Branded Drugs Provides Some Relief Drugs Provides Some Relief
RisperdalRisperdal®®
LamictalLamictal®®
FosamaxFosamax®®
ImitrexImitrex®®
PrevacidPrevacid®®
TopamaxTopamax®®
ValtrexValtrex®®
AciphexAciphex®®
FlomaxFlomax®®
LipitorLipitor®®
Effexor XREffexor XR®®
ActosActos®®
ProtonixProtonix®(2)®(2)
ZyprexaZyprexa®®
LevaquinLevaquin®®
AriceptAricept®®
PlavixPlavix®®
SingulairSingulair®®
SeroquelSeroquel®®
LexaproLexapro®®
DiovanDiovan®®
CrestorCrestor®®
AvandiaAvandia®®
$91.9 Billion in Brand Drugs Off-Patent $91.9 Billion in Brand Drugs Off-Patent from 2008–2015from 2008–2015
$91.9 Billion in Brand Drugs Off-Patent $91.9 Billion in Brand Drugs Off-Patent from 2008–2015from 2008–2015
(1) Limited supply of Protonix is not included in 2008 spend(2) 2011 reflects the off patent date for Protonix; limited product released in 2008Source: U.S. Drug spend estimates are based on IMS Health data for 2007. Brand drug expirations based on expected patent expiration dates current as of February 2008. Changes may occur due to litigation, patent
challenges, etc.
$9.7(1)$10.5
$3.6
$20.9$21.7
$6.1
$15.6
$3.8CymbaltaCymbalta®®
CelebrexCelebrex®®
NexiumNexium®®
VytorinVytorin®®
ZetiaZetia®®
LyricaLyrica®®
NasonexNasonex®®
AbilifyAbilify®®
Off-Patent Compounding EffectOff-Patent Compounding Effect($ Billions, prorated)($ Billions, prorated)
Off-Patent Compounding EffectOff-Patent Compounding Effect($ Billions, prorated)($ Billions, prorated)
Source: U.S. Drug spend estimates are based on IMS Health data for 2007 and 2006, compounded amounts prorated for mid-term expirations. Brand drug expirations based on expected patent expiration dates current as of February 2008. Changes may occur due to litigation,patent challenges, etc.
2007 2008 2009 2010 2011 2012 2013 2014 2015
$6.5$6.5
$16.7$16.7
$25.7$25.7
$35.1$35.1
$46.9$46.9
$69.1$69.1
$80.1$80.1
$95.0$95.0
$103.1$103.1
Approx. $35 Billion in Total Savings from GenericsApprox. $35 Billion in Total Savings from GenericsApprox. $35 Billion in Total Savings from GenericsApprox. $35 Billion in Total Savings from Generics
19© 2008 Medco Health Solutions, Inc. All rights reserved.
53
47
54
47
53
47
52
48
50
51
47
53
43
57
39
61
37
63
1999 2000 2001 2002 2003 2004 2005 2006 MAT2006/2007
88
12
89
11
90
10
89
11
88
12
88
12
87
13
85
15
84
16
1999 2000 2001 2002 2003 2004 2005 2006 MAT2006/2007
Source: New England Journal of Medicine, November 15, 2007MAT denotes moving annual total; MAT 06/07 represents the 12 months ending in June 2007. Data are from IMS Health,National Prescription Audit Plans, National Sales Perspective, June 2007.
Brand Name Generic
Total Prescriptions Dispensed (%)Total Prescriptions Dispensed (%)Total Prescriptions Dispensed (%)Total Prescriptions Dispensed (%) Total Expenditures on Prescription Drugs (%)Total Expenditures on Prescription Drugs (%)Total Expenditures on Prescription Drugs (%)Total Expenditures on Prescription Drugs (%)
37% of Prescriptions Dispensed are Brand 37% of Prescriptions Dispensed are Brand Name Drugs, Accounting for 84% of SpendName Drugs, Accounting for 84% of Spend
Drug Mix Trend (%)Drug Mix Trend (%)Drug Mix Trend (%)Drug Mix Trend (%) Drug Spend Mix Trend (%)Drug Spend Mix Trend (%)Drug Spend Mix Trend (%)Drug Spend Mix Trend (%)
20© 2008 Medco Health Solutions, Inc. All rights reserved.
Government Must Government Must Increase Access To GenericsIncrease Access To Generics
generic drug applications generic drug applications are backloggedare backlogged
Source: Office of Generic Drugs
1,2001,200More thanMore than
Cost SavingsCost SavingsCost SavingsCost Savings
IncreaseIncreaseCompetitionCompetition
IncreaseIncreaseCompetitionCompetition
Clear Clear BacklogBacklog
Clear Clear BacklogBacklog
ImproveImproveResourcesResources
ImproveImproveResourcesResources
IncreaseIncreaseFundingFundingIncreaseIncreaseFundingFunding
21© 2008 Medco Health Solutions, Inc. All rights reserved.
Government Action Required toGovernment Action Required toProvide a Pathway for BiogenericsProvide a Pathway for Biogenerics
418418418418 Biologic products in the pipelineBiologic products in the pipeline
$10B$10B$10B$10B Off-patent products by 2010Off-patent products by 201022
$12B$12B$12B$12B Specialty drug spend with expired patentsSpecialty drug spend with expired patents11
Sources: 1. Associated Press. “FDA cites challenges of generic biotech.” March 26, 2007 2. Coalition for a Competitive Marketplace
22© 2008 Medco Health Solutions, Inc. All rights reserved.
The Cost of Non-Compliance and The Cost of Non-Compliance and Medication Errors is HighMedication Errors is High
in total U.S. annual direct medical and indirect in total U.S. annual direct medical and indirect productivity costs from non-complianceproductivity costs from non-compliance11$177 B$177 B$177 B$177 B
worldwide compliance by patients withworldwide compliance by patients withchronic illnesschronic illness2250%50%50%50%
U.S. deaths each year due to medication U.S. deaths each year due to medication errorserrors3,43,47,0007,0007,0007,000
of U.S. hospitalizations are caused by adverse of U.S. hospitalizations are caused by adverse drug eventsdrug events553-7%3-7%3-7%3-7%
Sources: 1. Institute for Health and Productivity Management (IHPM) 4. To Err is Human, Wash. DC, 19992. World Health Organization 5. Lundkvist. Fundamental and clinical Pharmacology 20043. Alliance for Aging Research. Wash. DC, 1998
23© 2008 Medco Health Solutions, Inc. All rights reserved.
Costly Knowledge Gaps/Delays Costly Knowledge Gaps/Delays In Medical PracticeIn Medical Practice
Clinical ProcedureClinical Procedure Landmark TrialLandmark Trial Current Rate of UseCurrent Rate of Use
Flu vaccineFlu vaccine 19681968 55.0%55.0%
Thrombolytic therapyThrombolytic therapy 19711971 20.0%20.0%
Pneumococcal therapyPneumococcal therapy 19771977 35.6%35.6%
Diabetic eye examDiabetic eye exam 19811981 38.4%38.4%
Beta blockers after MIBeta blockers after MI 19821982 61.9%61.9%
MammographyMammography 19821982 70.4%70.4%
Cholesterol screeningCholesterol screening 19841984 65.0%65.0%
Fecal occult blood testFecal occult blood test 19861986 17.0%17.0%
Diabetes foot careDiabetes foot care 19931993 20.0%20.0%
Adoption in Clinical Practice Lags Behind Adoption in Clinical Practice Lags Behind Evidence by Many YearsEvidence by Many Years
Adoption in Clinical Practice Lags Behind Adoption in Clinical Practice Lags Behind Evidence by Many YearsEvidence by Many Years
Source: Balas EA, Boren SA: Managing clinical knowledge for health care Improvement. Yearbook of Medical Informatics 2000, pp65-70
24© 2008 Medco Health Solutions, Inc. All rights reserved.
Wellness is Not a Top Priority TodayWellness is Not a Top Priority Today
9.1% of total U.S. medical expenditures are attributed to being 9.1% of total U.S. medical expenditures are attributed to being overweight and obesityoverweight and obesity11
$75.5 billion in healthcare costs directly related to smoking$75.5 billion in healthcare costs directly related to smoking11
~ Healthcare costs for smokers are 40% higher than costs for non-Healthcare costs for smokers are 40% higher than costs for non-smokerssmokers
Annual healthcare expenditures for drug and alcohol related Annual healthcare expenditures for drug and alcohol related problems amount to $38.3 billionproblems amount to $38.3 billion2,32,3
$314 Billion of Healthcare Costs $314 Billion of Healthcare Costs Are a Result of Unhealthy LifestylesAre a Result of Unhealthy Lifestyles
$314 Billion of Healthcare Costs $314 Billion of Healthcare Costs Are a Result of Unhealthy LifestylesAre a Result of Unhealthy Lifestyles
““The major cause of chronic disease is behavior.”The major cause of chronic disease is behavior.”
– – Dr. James Prochaska, Director of Cancer Prevention Research Center, who Dr. James Prochaska, Director of Cancer Prevention Research Center, who estimates changing behaviors can reduce healthcare costs by as much as 60%estimates changing behaviors can reduce healthcare costs by as much as 60%
““The major cause of chronic disease is behavior.”The major cause of chronic disease is behavior.”
– – Dr. James Prochaska, Director of Cancer Prevention Research Center, who Dr. James Prochaska, Director of Cancer Prevention Research Center, who estimates changing behaviors can reduce healthcare costs by as much as 60%estimates changing behaviors can reduce healthcare costs by as much as 60%
Sources: 1. Centers for Disease Control and Prevention (CDC)2. Office of National Drug Control Policy3. Association of American Physicians, 1999
25© 2008 Medco Health Solutions, Inc. All rights reserved.
The Estimated Savings from The Estimated Savings from Foundational ReformFoundational Reform
$1.033 Trillion$1.033 Trillion$1.033 Trillion$1.033 Trillion
Wiring HealthcareWiring Healthcare11 $162 Billion$162 Billion
Medicare:Medicare: Last Year of LifeLast Year of Life2,32,3 $130 Billion$130 Billion
Eliminating Medical Liability and Defensive MedicineEliminating Medical Liability and Defensive Medicine4,54,5 $200 Billion$200 Billion
Generics OpportunityGenerics Opportunity66 $35 Billion$35 Billion
Creating a Biogeneric PathwayCreating a Biogeneric Pathway7,87,8 $15 Billion*$15 Billion*
Increasing Compliance EffortsIncreasing Compliance Efforts99 $177 Billion$177 Billion
Uninsured Uninsured $0$0
Promoting Healthy LifestylesPromoting Healthy Lifestyles10,11,1210,11,12
(Overweight & Obesity, Smoking, Drugs & Alcohol)(Overweight & Obesity, Smoking, Drugs & Alcohol) $314 Billion$314 Billion
Sources: 1. RAND Corporation study, 2005; 2. CMS, Office of the Actuary; 3. Department of Health and Human Services; 4. CMS, National Health Accounts, 2005; 5. Midwest Business Group on Health, April 2003; 6. Medco data; 7. Associated Press. “FDA cites challenges of generic biotech.” March 26, 2007; 8. Coalition for a Competitive Marketplace; 9. Institute for Health and Productivity Management; 10. Centers for Disease Control and Prevention (CDC); 11. Office of the National Drug Policy; 12. Association of American Physicians
*Medco estimate of savings from products with already expired patents and approaching off-patent products
26© 2008 Medco Health Solutions, Inc. All rights reserved.
““The biggest problem with the American healthcare system isThe biggest problem with the American healthcare system isthat it costs too much. …Businesses and families pay more and that it costs too much. …Businesses and families pay more and more every year to get what they consider inadequate attentionmore every year to get what they consider inadequate attentionor poor care.”or poor care.”
““Senator Clinton believes the only way to achieve universal Senator Clinton believes the only way to achieve universal healthcare is to force everybody to purchase it. And my belief is, healthcare is to force everybody to purchase it. And my belief is, the reason people don’t have it is not because they don’t want it, the reason people don’t have it is not because they don’t want it, but because they can’t afford it. And so I emphasize reducing but because they can’t afford it. And so I emphasize reducing costs.”costs.”
““While I will require all Americans to have healthcare, I will beWhile I will require all Americans to have healthcare, I will becalling on employers to do their part as well. …The government calling on employers to do their part as well. …The government will provide tax credits to insure that every single American can will provide tax credits to insure that every single American can afford health insurance.”afford health insurance.”
U.S. Government Leadership Void U.S. Government Leadership Void Keeps an Inefficient System HealthyKeeps an Inefficient System Healthy
27© 2008 Medco Health Solutions, Inc. All rights reserved.
A Prescription for Healthcare ReformA Prescription for Healthcare Reform
The Urgent ImperativeThe Urgent Imperative
A Roadmap to ReformA Roadmap to Reform
Medco’s Contribution to Healthcare ReformMedco’s Contribution to Healthcare Reform
~ Efforts toward wiring healthcareEfforts toward wiring healthcare
~ An efficient provider of genericsAn efficient provider of generics
~ Advancing new scienceAdvancing new science
~ Focus on complianceFocus on compliance
28© 2008 Medco Health Solutions, Inc. All rights reserved.
Medco Health Solutions: Medco Health Solutions: Leading Pharmacy Benefit Manager Leading Pharmacy Benefit Manager
Fortune 100 Company with 2007 Revenues of $44.5 BillionFortune 100 Company with 2007 Revenues of $44.5 BillionFortune 100 Company with 2007 Revenues of $44.5 BillionFortune 100 Company with 2007 Revenues of $44.5 Billion
Industry Leading Drug Trend ManagementIndustry Leading Drug Trend Management
Leader in Clinical InnovationLeader in Clinical Innovation
Most Sophisticated Specialty PharmacyMost Sophisticated Specialty Pharmacy
Largest Mail-Order PharmacyLargest Mail-Order Pharmacy
Largest Independent PBM Drug Spend Under ManagementLargest Independent PBM Drug Spend Under Management
29© 2008 Medco Health Solutions, Inc. All rights reserved.
* Excludes first-quarter 2006 legal settlements charge; see reconciliation to GAAP financial tables in the appendix.
Strong EBITDA Per Adjusted Script TrendStrong EBITDA Per Adjusted Script Trend
CAGR 15.5%CAGR 15.5%
$1.50
$1.83 $1.89
$2.24
$2.67
2003 2004 2005 2006* 2007
30© 2008 Medco Health Solutions, Inc. All rights reserved.
2003 2004 2005 2006* 2007
CAGR 19.9%CAGR 19.9%
Strong Earnings Per Share GrowthStrong Earnings Per Share Growth
$0.79$0.88
$1.03
$1.63
$1.21
* Excludes first-quarter 2006 legal settlements charge; see reconciliation to GAAP financial tables in the appendix.
35%35%
31© 2008 Medco Health Solutions, Inc. All rights reserved.
Record Low Drug TrendRecord Low Drug Trend
6.9%
11.6%
13.8%14.9%15.9%
11.4%
20.6% 20.0%
16.9%
14.4%
12.9%
10.2%8.5%
5.4%
2.8% 2.0%
0%
5%
10%
15%
20%
25%
2002 2003 2004 2005 2006 2007
PBMs Health Insurers Medco
Sources: Buck Consultants National Healthcare Trend Survey, 14th Edition
Tre
nd
32© 2008 Medco Health Solutions, Inc. All rights reserved.
2008 2009 2010 2011 2012 2013 2014 2015
Strong Pipeline of Off-Patent Branded Strong Pipeline of Off-Patent Branded Drugs Provides Some Relief Drugs Provides Some Relief
RisperdalRisperdal®®
LamictalLamictal®®
FosamaxFosamax®®
ImitrexImitrex®®
PrevacidPrevacid®®
TopamaxTopamax®®
ValtrexValtrex®®
AciphexAciphex®®
FlomaxFlomax®®
LipitorLipitor®®
Effexor XREffexor XR®®
ActosActos®®
ProtonixProtonix®(2)®(2)
ZyprexaZyprexa®®
LevaquinLevaquin®®
AriceptAricept®®
PlavixPlavix®®
SingulairSingulair®®
SeroquelSeroquel®®
LexaproLexapro®®
DiovanDiovan®®
CrestorCrestor®®
AvandiaAvandia®®
$91.9 Billion in Brand Drugs Off-Patent $91.9 Billion in Brand Drugs Off-Patent from 2008–2015from 2008–2015
$91.9 Billion in Brand Drugs Off-Patent $91.9 Billion in Brand Drugs Off-Patent from 2008–2015from 2008–2015
(1) Limited supply of Protonix is not included in 2008 spend(2) 2011 reflects the off patent date for Protonix; limited product released in 2008Source: U.S. Drug spend estimates are based on IMS Health data for 2007. Brand drug expirations based on expected patent expiration dates current as of February 2008. Changes may occur due to litigation, patent
challenges, etc.
$9.7(1)$10.5
$3.6
$20.9$21.7
$6.1
$15.6
$3.8CymbaltaCymbalta®®
CelebrexCelebrex®®
NexiumNexium®®
VytorinVytorin®®
ZetiaZetia®®
LyricaLyrica®®
NasonexNasonex®®
AbilifyAbilify®®
Off-Patent Compounding EffectOff-Patent Compounding Effect($ Billions, prorated)($ Billions, prorated)
Off-Patent Compounding EffectOff-Patent Compounding Effect($ Billions, prorated)($ Billions, prorated)
Source: U.S. Drug spend estimates are based on IMS Health data for 2007 and 2006, compounded amounts prorated for mid-term expirations. Brand drug expirations based on expected patent expiration dates current as of February 2008. Changes may occur due to litigation,patent challenges, etc.
2007 2008 2009 2010 2011 2012 2013 2014 2015
$6.5$6.5
$16.7$16.7
$25.7$25.7
$35.1$35.1
$46.9$46.9
$69.1$69.1
$80.1$80.1
$95.0$95.0
$103.1$103.1
33© 2008 Medco Health Solutions, Inc. All rights reserved.
2003 2004 2005 2006 2007 2008E
CAGR 6.1%CAGR 6.1%
Medco Mail-Order Volume GrowthMedco Mail-Order Volume Growth
~105
95
10.5%10.5%
89878878
Vol
ume
in m
illio
nsV
olum
e in
mill
ions
34© 2008 Medco Health Solutions, Inc. All rights reserved.
Video Clip of Technology Innovations Video Clip of Technology Innovations with Our Back-End Pharmacy with Our Back-End Pharmacy
35© 2008 Medco Health Solutions, Inc. All rights reserved.
Specialty Pharmacy Spend on the Rise Specialty Pharmacy Spend on the Rise
Source: HealthStrategiesGroupSource: HealthStrategiesGroup*Source: PhRMA *Source: PhRMA 2005 Survey: Medicines in Development2005 Survey: Medicines in Development, Oct. 2006, Oct. 2006Some medicines are listed in more than one category.Some medicines are listed in more than one category.
18
4
4
6
7
910
13
14
15
17
22
22
44
50
210Cancer/Related ConditionsInfectious Diseases
Autoimmune DisordersAIDS/HIV
Cardiovascular DiseaseNeurologic Disorders
Diabetes/Related Digestive Disorders
Respiratory DisordersBlood Disorders
Genetic DisordersSkin DisordersEye Conditions
Growth DisordersTransplantation
Other
$62
$111
2006 2010E
CAGR 16%CAGR 16%
Specialty Pharmacy Drug SpendSpecialty Pharmacy Drug Spend($ in billions)($ in billions)
Specialty Pharmacy Drug SpendSpecialty Pharmacy Drug Spend($ in billions)($ in billions)
More Than 400 DrugsMore Than 400 Drugsin Development Pipeline*in Development Pipeline*
More Than 400 DrugsMore Than 400 Drugsin Development Pipeline*in Development Pipeline*
36© 2008 Medco Health Solutions, Inc. All rights reserved.
Medco: Forging The Future of PharmacyMedco: Forging The Future of Pharmacy
Medco Therapeutic Resource Centers™ (TRCs)Medco Therapeutic Resource Centers™ (TRCs)
~ Full-service platform with specialized pharmacists to deliver superior clinical and Full-service platform with specialized pharmacists to deliver superior clinical and financial outcomes for clients and membersfinancial outcomes for clients and members
~ Focuses on chronic and complex conditions accounting for over 96 percent of Focuses on chronic and complex conditions accounting for over 96 percent of prescription and 75 percent of healthcare spending prescription and 75 percent of healthcare spending
~ Complements the retail acute-care model, which addresses less than 4 percent of Complements the retail acute-care model, which addresses less than 4 percent of overall drug spendingoverall drug spending
Pharmacogenomics (“Personalized Medicine”)Pharmacogenomics (“Personalized Medicine”)
~ Leveraging the TRC platform, Medco launched two pilots using genetic tests to Leveraging the TRC platform, Medco launched two pilots using genetic tests to personalize with precision drug selection/delivery/dosingpersonalize with precision drug selection/delivery/dosing• Collaboration with The Mayo Clinic for CoumadinCollaboration with The Mayo Clinic for Coumadin• Collaboration with LabCorp for TamoxifenCollaboration with LabCorp for Tamoxifen
~ New Indiana automated dispensing facility includes a world-class research center for New Indiana automated dispensing facility includes a world-class research center for personalized medicinepersonalized medicine
37© 2008 Medco Health Solutions, Inc. All rights reserved.
1%3%
80%
16%
% Rx Cost
96% Rx Cost
34%
17%
46%
~3%
% Members
50% of Members with Chronic & Complex 50% of Members with Chronic & Complex Conditions Account for 96% of Rx CostsConditions Account for 96% of Rx Costs
~ 50% Members
WellWell
Acute Acute
ChronicChronic
ComplexComplexComplexComplex
38© 2008 Medco Health Solutions, Inc. All rights reserved.
Medco Therapeutic Resource CentersMedco Therapeutic Resource Centers™™
Hematology/Hematology/OncologyOncology
CardiovascularCardiovascularHypertensionHypertension
ColumbusColumbus
DiabetesDiabetesHigh RiskHigh Risk
FairfieldFairfield
Neurology/Neurology/PsychiatryPsychiatry
DiabetesDiabetes
GastrointestinalGastrointestinal
TexasTexas
PulmonaryPulmonary
SpokaneSpokaneCardiovascularCardiovascularHigh CholesterolHigh Cholesterol
TampaTampaCardiovascularCardiovascular
High RiskHigh Risk
N. VersaillesN. Versailles
Specially Trained PharmacistsSpecially Trained Pharmacists
PatientsPatientsPhysiciansPhysiciansHealth Care Health Care
Value Value MapMap
Best Practice RulesBest Practice RulesBest Practice RulesBest Practice RulesAppropriate CoverageAppropriate CoverageFormulary ManagementFormulary ManagementRationalMedRationalMed®®
Appropriate UtilizationAppropriate UtilizationAppropriate CoverageAppropriate Coverage
Disease Management
Models & AnalyticsModels & AnalyticsModels & AnalyticsModels & AnalyticsClinical Appropriateness – DrugClinical Appropriateness – DrugEpisode GroupersEpisode GroupersPatient Stratification AlgorithmsPatient Stratification Algorithms
Patient & Patient & Physician ProfilingPhysician Profiling
Financial OpportunitiesFinancial Opportunities
Integrated DataIntegrated DataIntegrated DataIntegrated DataPatient eligibility | Patient self-reported data | Pharmacy claims | Medical claims | Lab resultsPatient eligibility | Patient self-reported data | Pharmacy claims | Medical claims | Lab results
Case Management
AccredoAccredo
Autoimmune diseasesAutoimmune diseases~ Primary Primary
Immunodeficiency Immunodeficiency SyndromeSyndrome
~ Autoimmune Autoimmune disordersdisorders
Nursing servicesNursing services
31 Branches31 Branches(ATX/HHS)(ATX/HHS)
Pulmonary hypertensionPulmonary hypertensionAlpha 1 deficiencyAlpha 1 deficiencyAutoimmune diseasesAutoimmune diseases
~ Primary Primary Immunodeficiency Immunodeficiency SyndromeSyndrome
Autoimmune disordersAutoimmune disorders
Warrendale, PAWarrendale, PA(Accredo Therapeutics)(Accredo Therapeutics)
Enzyme deficienciesEnzyme deficienciesMultiple SclerosisMultiple SclerosisRSVRSVGrowth Hormone Growth Hormone
defectsdefects
Memphis, TNMemphis, TN(Nova Factor)(Nova Factor)
Rheumatoid ArthritisRheumatoid ArthritisOsteoarthritisOsteoarthritisPsoriasisPsoriasis
Irving, TXIrving, TXHepatitis CHepatitis CMultiple SclerosisMultiple SclerosisOncologyOncologyInfertilityInfertilityAnemia/NeutropeniaAnemia/Neutropenia
Columbus, OHColumbus, OH
HemophiliaHemophilia
Nashville, TNNashville, TN(Hemophilia Health Services)(Hemophilia Health Services)
39© 2008 Medco Health Solutions, Inc. All rights reserved.
Quality Care is Delivered Through a Quality Care is Delivered Through a Unique Specialist Pharmacy ModelUnique Specialist Pharmacy Model
Cardio-Cardio-vascularvascularHigh RiskHigh Risk
HIV
Cardio-Cardio-vascularvascular
HypertensionHypertension
Cardio-Cardio-vascularvascular
High CholesterolHigh CholesterolGastro-
intestinal
Pulmonary Neurology& Psychiatry
OncologyOncology& Immunology& Immunology
DiabetesDiabetes
Rare &Specialty
Medco Therapeutic Resource Centers™
40© 2008 Medco Health Solutions, Inc. All rights reserved.
Cardio-Cardio-vascularvascularHigh RiskHigh Risk
HIV
Cardio-Cardio-vascularvascular
HypertensionHypertension
Cardio-Cardio-vascularvascular
High CholesterolHigh CholesterolGastro-
intestinal
Pulmonary Neurology& Psychiatry
OncologyOncology& Immunology& Immunology
Rare &Specialty
DiabetesDiabetes
Medco Therapeutic Resource Centers™
Liberty (PolyMedica)Liberty (PolyMedica)~ With Medco members, creates the largest diabetes With Medco members, creates the largest diabetes
center serving nearly 4 million livescenter serving nearly 4 million lives~ Opportunity to cross-sell pharmaceuticals and Opportunity to cross-sell pharmaceuticals and
suppliessupplies~ Ability to leverage well-known Liberty consumer brandAbility to leverage well-known Liberty consumer brand~ Lab CLIA certified in 49 statesLab CLIA certified in 49 states~ Opens Medicare Part B marketOpens Medicare Part B market
Optimal HealthOptimal Health
Specialist Pharmacists for peopleSpecialist Pharmacists for peoplewith diabeteswith diabetes
Specialized PracticeSpecialized Practiceof Pharmacyof Pharmacy
End-to-End End-to-End ServiceService
PersonalizedPersonalizedMedicineMedicine
CYP2C9 – oral hypoglycemicsCYP2C9 – oral hypoglycemics
Diabetes is a Leading Chronic Disease; Diabetes is a Leading Chronic Disease; Cases Growing at a Rate of 15% a YearCases Growing at a Rate of 15% a Year
41© 2008 Medco Health Solutions, Inc. All rights reserved.
Janet Woodcock InterviewJanet Woodcock Interview
42© 2008 Medco Health Solutions, Inc. All rights reserved.
Cardio-Cardio-vascularvascularHigh RiskHigh Risk
HIV
Cardio-Cardio-vascularvascular
HypertensionHypertension
Cardio-Cardio-vascularvascular
High CholesterolHigh CholesterolGastro-
intestinal
Pulmonary Neurology& Psychiatry
OncologyOncology& Immunology& Immunology
Rare &Specialty
DiabetesDiabetes
Mayo ClinicMayo Clinic~ Collaborative research study for Warfarin (CoumadinCollaborative research study for Warfarin (Coumadin®®) to ) to
demonstrate that genetic testing improves dosing accuracy, demonstrate that genetic testing improves dosing accuracy, thereby reducing hospitalization rates thereby reducing hospitalization rates
~ Genetic testing for Warfarin alone has been estimated to save Genetic testing for Warfarin alone has been estimated to save $1.15 billion per year in total healthcare costs$1.15 billion per year in total healthcare costs
Specialist Pharmacists for people with high risk Specialist Pharmacists for people with high risk cardiovascular conditions, using anticoagulants cardiovascular conditions, using anticoagulants and anti-platelet drugsand anti-platelet drugs
Specialized PracticeSpecialized Practiceof Pharmacyof Pharmacy
End-to-End End-to-End ServiceService
PersonalizedPersonalizedMedicineMedicine
Anticoagulation CenterAnticoagulation Centerfor Cardiovascular High Risk Membersfor Cardiovascular High Risk Members
Medco Therapeutic Resource Centers™
43© 2008 Medco Health Solutions, Inc. All rights reserved.
OncologyOncology& Immunology& Immunology
Cardio-Cardio-vascularvascularHigh RiskHigh Risk
HIV
Cardio-Cardio-vascularvascular
HypertensionHypertension
Cardio-Cardio-vascularvascular
High CholesterolHigh CholesterolGastro-
intestinal
Pulmonary Neurology& Psychiatry
Rare &Specialty
DiabetesDiabetes
LabCorpLabCorp~ A collaboration to study the drug Tamoxifen A collaboration to study the drug Tamoxifen
which was developed to reduce the recurrence which was developed to reduce the recurrence of breast cancerof breast cancer
~ It may not be effective for 10% of the women who are poor It may not be effective for 10% of the women who are poor metabolizers or non-metabolizersmetabolizers or non-metabolizers
~ A genetic test is available to determine if another therapy A genetic test is available to determine if another therapy would be better, yet very few doctors prescribe this life saving would be better, yet very few doctors prescribe this life saving testtest
Patient-centric platform ensures adherence to Patient-centric platform ensures adherence to evidence-based guidelines for erythropoietinsevidence-based guidelines for erythropoietins(i.e., Aranesp(i.e., Aranesp®®/Procrit/Procrit®®))
Specialist Pharmacists for patients with cancer Specialist Pharmacists for patients with cancer and disorders involving immune systemand disorders involving immune system
Specialized PracticeSpecialized Practiceof Pharmacyof Pharmacy
End-to-End End-to-End ServiceService
PersonalizedPersonalizedMedicineMedicine
Oncology & Immunology CenterOncology & Immunology Center
Medco Therapeutic Resource Centers™
44© 2008 Medco Health Solutions, Inc. All rights reserved.
Medco’s New Business & RetentionMedco’s New Business & Retention
$4.9B$4.9B$4.9B$4.9B 2008 annualized new2008 annualized newnamed drug spend named drug spend
$4.0B$4.0B$4.0B$4.0B 2008 net new business
98%98%98%98% 2008 client retention rate
*As of fourth-quarter 2007 earnings call
45© 2008 Medco Health Solutions, Inc. All rights reserved.
Innovation
1. Apple2. Nike3. Medco Health Solutions, Inc.
Long-Term Investment
1. Berkshire-Hathaway2. Medco Health Solutions, Inc.
People Management
1. Medco Health Solutions, Inc.
Medco Tops Fortune’s ListMedco Tops Fortune’s List
Most Admired in Health Care: Pharmacy and Other Services
1. Medco Health Solutions, Inc.
46© 2008 Medco Health Solutions, Inc. All rights reserved.
®
47© 2008 Medco Health Solutions, Inc. All rights reserved.
Reconciliation TablesReconciliation Tables
1) Includes PolyMedica’s and Critical Care System Inc.’s operating results commencing October 31, 2007 and November 14, 2007, the dates of acquisition, respectively2) 53-week fiscal year. All other fiscal years are comprised of 52 weeks. 3) Includes Accredo's operating results commencing August 18, 2005, the date of acquisition and for the subsequent periods. 4) 2003 excludes a one-time gain of $11 million from the sale of a minority equity investment in a nonpublic company. 5) 2006 includes a $20.0 million nonrecurring tax benefit reflected for the full year. 6) 2005 includes a $25.7 million non-recurring tax benefit reflected for the full year. 7) 2004 and 2003 include accelerated depreciation of $24.5 million and $13.3 million, respectively, associated with facility closures that took place in 2004. 8) This represents the pre-tax legal settlements charge of $162.6 million recorded in the first quarter of 2006. This charge reflected an agreement with the U.S. Attorney's Office for the Eastern District of Pennsylvania to settle three previously disclosed federal legal matters. 9) Adjusted prescription volume equals the majority of mail-order prescriptions multiplied by 3, plus retail prescriptions. These mail-order prescriptions are multiplied by 3 to adjust for the fact that they include approximately 3 times the amount of product days supplied compared
with retail prescriptions.
Medco Health Solutions, Inc.Medco Health Solutions, Inc.Selected Information (Unaudited)Selected Information (Unaudited)
(In millions, except for EBITDA per adjusted prescription data)(In millions, except for EBITDA per adjusted prescription data)
Medco Health Solutions, Inc.Medco Health Solutions, Inc.Selected Information (Unaudited)Selected Information (Unaudited)
(In millions, except for EBITDA per adjusted prescription data)(In millions, except for EBITDA per adjusted prescription data)
Full Years Ended Full Years Ended
EBITDA Reconciliation:EBITDA Reconciliation:December 29, December 29,
2007200711December 30, December 30,
2006 2006 December 31,December 31,
200520052, 32, 3December 25,December 25,
20042004December 27,December 27,
20032003
Net incomeNet income $912.0$912.0 $ 630.2 $ 630.2 $ 602.0 $ 602.0 $ 481.6 $ 481.6 $425.8 $425.8
Add:Add:
Interest and other (income) expense, netInterest and other (income) expense, net 99.899.8 65.965.9 39.9 39.9 59.9 59.9 23.723.744
Provision for income taxesProvision for income taxes 591.3591.3 381.6381.655 350.9350.96 6 324.7 324.7 302.9 302.9
Depreciation expenseDepreciation expense 168.9168.9 173.6 173.6 165.0 165.0 197.6197.677 189.0189.077
Amortization expenseAmortization expense 228.1 228.1 218.5 218.5 192.5 192.5 179.9 179.9 94.3 94.3
EBITDAEBITDA $2,000.1$2,000.1 $1,469.8 $1,469.8 $1,350.3 $1,350.3 $ 1,243.7 $ 1,243.7 $1,035.7 $1,035.7
Legal settlements charge Legal settlements charge 88 - - 162.6 162.6 - - - - - -
EBITDA, excluding the legal settlements charge $2,000.1 $1,632.4 $1,350.3 $ 1,243.7 $ 1,035.7
Adjusted prescriptions Adjusted prescriptions 99 748.3748.3 729.9729.9 714.1714.1 678.3678.3 688.2688.2
EBITDA per adjusted prescription $2.67 $2.01 $1.89 $1.83 $1.50
EBITDA per adjusted prescription, excluding the legal settlements charge $2.67 $2.24 $1.89 $1.83 $1.50
48© 2008 Medco Health Solutions, Inc. All rights reserved.
Reconciliation TablesReconciliation Tables
Medco Health Solutions, Inc.Medco Health Solutions, Inc.Selected Information (Unaudited)Selected Information (Unaudited)
Medco Health Solutions, Inc.Medco Health Solutions, Inc.Selected Information (Unaudited)Selected Information (Unaudited)
Full Years EndedFull Years Ended
Earnings Per Share ReconciliationEarnings Per Share ReconciliationDecember 29,December 29,
20072007December 30, December 30,
20062006
GAAP diluted earnings per shareGAAP diluted earnings per share $1.63$1.63 $1.04$1.04
Adjustment for the 2006 legal settlements chargeAdjustment for the 2006 legal settlements charge11 -- $0.17$0.17
Diluted earnings per share, excluding the legal charge $1.63 $1.21
1) This represents the pre-tax legal settlements charge of $162.6 million recorded in the first quarter of 2006. This charge reflected an agreement with the U.S. Attorney's Office for the Eastern District of Pennsylvania to settle three previously disclosed federal legal matters.