1. 24th Annual Healthcare Conference
JP Morgan
24th Annual Healthcare Conference
January 9, 2006

2. Forward-Looking Statements
Statements included in this presentation or in the oral comments made as part of this presentation may contain forward-looking statements, including but not limited to statements of the Company’s plans, objectives, expectations or intentions, that involve risk and uncertainties.
The Company’s actual results may differ significantly from those projected or suggested in any forward-looking statement due to a variety of factors, which are discussed in detail in the Company’s filings with the Securities and Exchange Commission.

3. Today’s Challenging Environment:
Maintaining Access to Safe and Affordable Drugs

4. Unmanaged Prescription Drug Trend
Source: Drug Trend Report
Plan sponsors will likely increase the use of PBM tools to manage drug spend

5. Our Value Proposition: Complete Alignment
To reduce pharmacy costs, without compromise to health outcomes, while maximizing patient satisfaction

6. Alignment - Building a Formulary
Evaluate relative clinical value
Determine net cost
Drug A
Drug B
Relative clinical value
Drug C
TALKING POINTS
A key element in how PBMs interact with manufacturers is the formulary development process. This slide shows how we develop formularies at Express Scripts.
We develop our formulary class by class. That is, we start with a list of chemically similar drugs used for one or more related health conditions.
The first step is to rank each drug by its relative clinical value. In this case, relative clinical value relates to the number conditions for which each drug has been approved.
These rankings are made based on the best available scientific data as to whether or not a drug can achieve the goal of therapy using published literature.
Agents are distinguished through attributes such as side-effect profiles, potential toxicities, and drug interactions.
Costs are not a consideration in determining clinical benefit.
The second step in building our formulary is to account for cost.
Net Cost – measured as AWP per rx minus the rebate – is shown along the horizontal axis. Here, the drugs position includes the effects of rebates. We’re looking for affordability. This cost doesn’t, however, include the effects of copays.
Ideally, we’d like the drugs to end up in the top left corner, with high clinical value and low cost. What we see here is more typical, however.
When a class includes generics, we include those on the chart as well. Considering generics when making formulary decisions is important, because some brand products might not be cost effective when compared to the generic (as opposed to when they are compared to other brands).This class currently doesn’t include generics, so none are plotted.
Costs are NOT included by the P&T in their assessment of relative clinical value.
The final step is to account for rebates. Rebate reduces the cost per rx for the drugs on the formulary (i.e., shifts the green dots to the left).
Marketshare and net costs are often considered by clients when evaluating clinically equivalent products. For instance, if a drug having a high negotiated discount is non-formulary in favor of a drug that is lower costs, but also has low marketshare, costs for the therapy class may actually increase depending on MS movement.
$60
$50
$70
$80
Cost per prescription

7. Alignment - Building a Formulary
Drug A
Drug B
Drug C
Most cost effective
Evaluate relative clinical value
Determine net cost
Account for market share
Drug A
Drug B
Relative clinical value
TALKING POINTS
Now we account for market share. Market share is the fraction of rxs “captured” by each different agent. Market share varies from group to group; we use book-of-business averages when we build the formulary.
The bigger the dot, the greater the market share. For example, Fosamax is the biggest dot; it has the biggest market share.
We account for market share because most of our plan sponsors are concerned about member disruption. All else being equal, we prefer to keep big circles on the formulary.
Why worry about marketshare?
Eliminating a widely used drug (one with high marketshare) from a formulary may create unacceptable levels of disruption among physicians, patients, and pharmacies.
Marketshare and net costs are often considered by clients when evaluating clinically equivalent products. For instance, if a drug having a high negotiated discount is non-formulary in favor of a drug that is lower costs, but also has low marketshare, costs for the therapy class may actually increase depending on MS movement.
Drug C
$50
$60
$70
$80
Cost per prescription

8. Alignment - Building a Formulary
Drug A
Drug B
Drug C
Most cost effective
Evaluate relative clinical value
Determine net cost
Account for market share
Account for rebates
Drug B
Drug A
Relative clinical value
TALKING POINTS
Now we account for market share. Market share is the fraction of rxs “captured” by each different agent. Market share varies from group to group; we use book-of-business averages when we build the formulary.
The bigger the dot, the greater the market share. For example, Fosamax is the biggest dot; it has the biggest market share.
We account for market share because most of our plan sponsors are concerned about member disruption. All else being equal, we prefer to keep big circles on the formulary.
Why worry about marketshare?
Eliminating a widely used drug (one with high marketshare) from a formulary may create unacceptable levels of disruption among physicians, patients, and pharmacies.
Marketshare and net costs are often considered by clients when evaluating clinically equivalent products. For instance, if a drug having a high negotiated discount is non-formulary in favor of a drug that is lower costs, but also has low marketshare, costs for the therapy class may actually increase depending on MS movement.
Drug C
$50
$60
$70
$80
Cost per prescription

9. Alignment - Building a Formulary
Most cost effective
Cost per prescription
Relative clinical value
$50
$60
$70
$80
Drug A
Drug B
Drug C
Most cost effective
Evaluate relative clinical value
Determine net cost
Account for market share
Account for rebates
Select formulary products
Exception: Market dynamics might “trump” net cost
TALKING POINTS
Now we account for market share. Market share is the fraction of rxs “captured” by each different agent. Market share varies from group to group; we use book-of-business averages when we build the formulary.
The bigger the dot, the greater the market share. For example, Fosamax is the biggest dot; it has the biggest market share.
We account for market share because most of our plan sponsors are concerned about member disruption. All else being equal, we prefer to keep big circles on the formulary.
Why worry about marketshare?
Eliminating a widely used drug (one with high marketshare) from a formulary may create unacceptable levels of disruption among physicians, patients, and pharmacies.
Marketshare and net costs are often considered by clients when evaluating clinically equivalent products. For instance, if a drug having a high negotiated discount is non-formulary in favor of a drug that is lower costs, but also has low marketshare, costs for the therapy class may actually increase depending on MS movement.
Impact on Client
Impact on Patient
Impact on ESI
Lower drug cost
More choice
Lower co payment
Higher Profit/Rx
More Flexibility

10. Alignment - Retail Network Management
Greater Management
States
Available Pharmacies
Most Inclusive Network
Most Restrictive Network
TRICARE Access Minimum CA
5,644
5,071
3,881
283 NY
4,444
4,224
1,829
300 TX
4,236
3,821
1,827
579 FL
4,020
3,670
1,966
469 PA
2,970
2,825
1,687
432
Higher Profit/Rx
More Flexibility
Lower co payment
More choice
Lower drug cost
Impact on ESI
Impact on Patient
Impact on Client

11. Alignment – Clinical Programs
Plan Designs Encourage Greater Use of
Generics and Preferred Low-cost Brands
Impact on Client
Impact on Patient
Impact on ESI
Lower drug cost
Lower co payment
Higher Profit/Rx
Clients using step therapy realize on average a
2 percentage point increase in generic utilization

12. Alignment – Home Delivery
We Offer Highly Efficient, Cost-effective
Home Delivery
Impact on Client
Impact on Patient
Impact on ESI
Lower drug cost
Choice
Lower co payment
Higher profit/Rx

13. Alignment – Growing Demand for Home Delivery
Increased home delivery penetration
Excludes UHC claims
* Represents network claims plus 3 times home delivery claims –home delivery claims are 90 days vs. 30 days in the network.
** Twelve months ended Sept 2005
Home Delivery Helps Manage the Cost of Maintenance Drugs

14. Alignment – Generic Utilization
Express Scripts Leads in Generic Utilization
Impact on Client
Impact on Patient
Impact on ESI
Lowest drug cost
Lowest co payment
Highest profit/Rx
Source: From public filings

15. Alignment – Growing Generic Opportunity
ESI Analysis
Our Clients and Members Will Benefit From a Growing Generic Opportunity

16. Alignment – Specialty Pharmacy
Traditional Spend
$210 Billion
Specialty Spend
$35 Billion
2004 Total Outpatient Pharmacy Spend $190 Billion
Specialty Spend
$73 Billion
18%
26%
2008 Projected Outpatient Pharmacy Spend
$283 Billion
Traditional Spend
$155 Billion
Sources:
IMS Data through November 2004
Wall Street Equity Research, 2004
CMS National Healthcare Expenditure
Projection: 2003 – 2013
Data on file: CuraScript.
As we look across the pharmaceutical market, a key contributing factor to its change is the growth of the specialty market segment.
As a definition, the specialty pharmacy market consists of high cost oral, injectable and infused medications that are used to manage complex diseases such as Multiple Sclerosis, Hepatitis and Rheumatoid Arthritis.
(Top graph)
In 2004, Specialty spend accounted for 18% (or 35 billion) of all Outpatient Pharmacy spend throughout the US. Over the next 4 years, the specialty market is projected to more than double in cost to 73 billion dollars. This represents a growth rate 3xs that of your traditional pharmacy spend.
(Bottom graph)
There are several key components fueling this specialty growth.
First, new drug development – in just the last 5 years, 105 specialty drugs have entered the market, for a total of 197 drugs on the market in In addition, 250 more drugs have entered the pipeline (currently, there are 600 drugs in the pipeline). Today’s issue is how to manage the growth of the 105 new drugs in market…tomorrow’s issue is managing the ever increasing pipeline. (Examples of new drugs brought to market are Raptiva, Tysabri, Sensipar)
Second, new indications for existing drugs – manufacturers are constantly seeking new indications for their drugs to continue product growth. (Examples of these medications are Enbrel, Remicade)
Our recommendation for controlling your specialty growth is CuraScript…ESI’s specialty solution.
Impact on Client
Impact on Patient
Impact on ESI
Lower drug cost
Lower co payment
Higher profit/Rx
Improved reporting
Improved quality of care
Higher client satisfaction
Clients are Seeking Solutions for High-cost Specialty Drugs

17. CuraScript Penetration into Express Scripts
Percentage of Plan Costs
Source: Express Scripts Analysis.
Express Scripts’ specialty penetration has increased from 2% to 30%
in the first 5.5 quarters of our CuraScript acquisition.

18. Priority Acquisition - Strategic Rationale
Creates one of the largest specialty franchises in the U.S.
$3+ billion annual specialty revenues
One of the fastest growing sectors in healthcare
Sector remains fragmented and market structure continues to emerge (greenfield opportunities)
Fills key therapy classes within CuraScript portfolio – “one-stop shopping for clients”
Infertility (number one fertility franchise)
Pulmonary Fibrosis
Pulmonary Hypertension
Home Infusion
Offers additional capabilities
Specialty distribution capabilities
Supply chain services
Leverages PBM core competencies (payor and manufacturer relationships, mail order pharmacies, clinical and trend management expertise)
Synergy potential
Increased value proposition for clients (single vendor, integrated reporting)

19. What Are the Savings? C O S T
Retail, Clinical.
Formulary
And Rebate
Savings 24%
Paid by
Cash Customer
at Pharmacy
Home Delivery Savings 6%
Retail Pharmacy Cash Price
Express Scripts Client Savings
Express Scripts Client Costs C O S T
Paid by
Express Scripts
Clients
Total Savings 30%
Availability of Proven PBM Cost Management Tools
Will Produce 20%–25% Savings (CBO)

20. Alignment – A Win-Win-Win Proposition
Retail Non-pref. Brand
Retail Pref. Brand
Generics
Mail Pharmacy
Increased Savings
Opportunities:
Client
Member
Increased
Profit
Express Scripts
Moving to preferred brands, home delivery and generics
Moving to preferred brands, home delivery and generics
Moving to preferred brands, home delivery and generics
We make money by saving clients and members money

21. We Deliver Against Client and Patient Expectations:
To make the use of prescription drugs safer and more affordable

22. Client/Patient Focus Why Express Scripts? Alignment With Clients
Generics
Specialty
By membership
Health Plan Sponsors Recognize Express Scripts Single
Focus on Making Prescription Drugs More Affordable

23. 2006 Upsell Pipeline is Strong
10,000
Significant potential to continue to manage client trends in key product categories
New products continue
to be developed and
rolled out
Strong track record of success
Sold
Weighted Pipeline
9,000
8,000
7,000
6,000
('000 Lives)
5,000
4,000
3,000
2,000
1,000
Home Delivery
Three Tier
Generic Enforcement
Narrowing Formularies
New Clinical Products
Specialty/CuraScript
As of April 2005

24. Client Satisfaction Steadily Improving
Service and satisfaction metrics have increased consistently quarter over quarter since 2003 with an early spike in 2005
100%
95%
2003
90%
85%
2004
80%
1q05
75%
70%
65%
60%
ESI Performance
Exceed
Likelihood to
Likelihood to
Expectations
Recommend
Renew

25. Express Scripts has demonstrated a proven track record
Our Financial Results
Express Scripts has demonstrated a proven track record

26. Q Highlights
Adjusted EPS of $0.67*, up 34% from $0.50* last year
Cash flow from operations of $214.6 M vs. $150.0 M last year
Repurchased 4.0 million shares for $219.9 million
Generic drugs were 55% of total prescriptions vs. 51% last year
Gross profit of $293.2 M, up 25%
Gross profit per adjusted claim was $2.13, up 20%
EBITDA per adjusted claim was $1.32, up 19%
Raised EPS guidance for 2005
Provided 2006 EPS guidance of $3.10 to $3.22
*Excludes prior period tax benefit of $0.01 in Q and non recurring charge
of $0.10 for legal defense costs in Q – reconciliation of reported EPS to
adjusted EPS is included in Table 4 of the 3Q 2005 earnings release

27. Quality of Earnings (4) (1) (4) (3) (2)
Reflects a $70-$75 million reduction in Q due to one-time impact of implementing a new wholesale purchase agreement
Excludes a $0.04 per share charge for the early retirement of debt
Excludes a $0.10 charge to increase legal reserves for the cost of defense.
Excludes an $0.08 and $0.01 prior year tax benefit in Q2 and Q3, respectively
* Reflects a 12-month moving average of free cash flow (cash from operations less CapX)

28. Components of EPS Growth — 20046% 7% 8%
* Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received

29. Major PBM Prescription Growth
Note: Rx growth for Medco, Caremark reflect as configured today
* YTD

30. Claims Volume Vs. EPS Growth
Expanding Margins Supports Strong EPS Growth on More Modest Claims Growth
(3)
(2)
(1)
(4)
Excludes a $0.10 charge to increase legal reserves (4) Reflects the June 1st anniversary of the DoD retail contract
Excludes an $0.08 prior year tax benefit
Excludes a $0.01 prior year tax benefit

31. Profits Per Claim Growth
EBITDA* per adjusted claim
11% CAGR
Pricing can be lowered as clients tighten formulary compliance, increase home delivery, utilize generics and restrict retail networks. These changes result in lower prices to our clients and greater profits to Express Scripts.
* A reconciliation of EBITDA to net income and to net cash provided by operating activities can be found in the Investor Relations
section of Express Scripts’ Web site, under Presentations.
** Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received.

32. Gross Profit* / SG&A* / EBITDA per Adj. Rx
* Before depreciation and amortization
** Excluding $25 million charge to increase legal reserves for the cost of defense and $5.5 million termination payment received. Source: Express Scripts Analysis.
Future EBITDA per Adj. Rx Must Come From Gross Profit per Adj. Rx

33. Components Of EPS Growth

34. Focus on Return on Invested Capital (ROIC)
* Reflects operating income less tax divided by average invested capital, which consists of stockholder’s equity, plus interest
bearing liabilities plus long-term deferred income taxes, net.
** Excludes $25 million charge to increase legal reserves for the cost of defense and 5.5 million termination payment received
ROIC is our Preferred Performance Metric

35. Why Express Scripts? Industry-Leading ROIC
We Lead Our Peer Group in ROIC Performance
Source: Express Scripts Analysis

36. Peer Group Total Return - 2005
Peer group avg.
32.4%
ESI’s 119% return is more than 3.5 times our peer group

37. S&P Total Return – 2005 Only 2 companies in the S&P 500 exceeded ESI’s
total return to stockholders of 119% in 2005
Note: Returns reflect stock price increase plus dividend yield

38. Our Value Proposition Will Continue to Drive Growth
Making the use of drugs safer and more affordable is more
important than ever
Plan sponsors will increasingly deploy our tools
Express Scripts is well-positioned for sustainable growth
Strong market fundamentals/new business opportunities
Increased use of home delivery and generic drugs
Growth in management of specialty pharmacy
Productivity and capital structure improvements
We have taken a different approach
Alignment -- we make money by saving our clients money
Strategic acquisitions have enhanced our value proposition