Investor Information

ST. LOUIS, JANUARY 13, 2004 – Congressional passage of the Medicare bill, wrangling over Canadian drug reimportation, the over-the-counter (OTC) availability of Claritin and Prilosec, as well as the introduction of several new generic drugs were among the top pharmaceutical developments in 2003, according to Express Scripts' fifth annual year-end report on events and trends influencing prescription drug costs and utilization. Express Scripts is one of the nation's largest pharmacy benefit managers.

Capping five years of efforts to add a prescription drug benefit to Medicare, Congress narrowly approved, and President Bush subsequently signed into law, legislation that encompasses the most sweeping changes to Medicare in its nearly 40-year history.

Beginning in the spring of 2004, Medicare will establish an interim drug discount card program to provide savings to seniors in advance of the broader funded benefit. Endorsed discount card vendors, which may include PBMs and other entities, are expected to provide discounts of 10%-25% off the undiscounted retail price of drugs, at a cost of up to $30 per year for seniors who purchase the card.

“The Medicare legislation is a significant step toward making medications more affordable for seniors and paves the way for a quicker uptake of electronic prescribing,” said Barrett Toan, chairman and chief executive officer of Express Scripts.

Over the course of 2003, generic drugs played a starring role in slowing the rate of cost increases in prescription drug benefits.

“We're in the midst of the biggest patent-expiration cycle in history with as many as 40 key drugs — worth more than $30 billion — slated to lose patent protection by 2007,” said Toan. “Express Scripts has vigorously promoted generic use, and we've seen the percentage of prescriptions filled with generic drugs surpass 47% by the end of 2003, giving Express Scripts the highest generic dispensing rate among the nation's largest pharmacy benefit managers. This is great news for plan sponsors, in that Express Scripts statistics show savings of 1.2% in plan drug costs for every 1% increase in generic dispensing rate.”

Several significant generic drugs entered the market in 2003, including paroxetine (Paxil®) and mirtazapine (Remeron®), used to treat depression; tamoxifen (Nolvadex®), used to treat breast cancer, and metformin XR (Glucophage XR®) and glipizide XL (Glucotrol XL®) for type-2 diabetes.

Looking ahead, generic versions of Wellbutrin SR®, an anti-depressant; Cipro®, an antibiotic; Rebetol®, used to treat respiratory syncytial virus (RSV); and Ortho Tri-Cyclen®, an oral contraceptive, may be on the market early in 2004, resulting in additional cost savings.

“Now available without a prescription” was a frequent message to consumers in 2003, as Claritin, an allergy-fighting antihistamine, and Prilosec, a proton pump inhibitor commonly used to treat heartburn, became widely available as over-the-counter products. Both OTC products entered the market priced significantly lower than their prescription counterparts. In the case of Prilosec, the availability of generics further drove down spending on prescription proton pump inhibitors.

Plan sponsors saw their drug expenses for antihistamines decline significantly in 2003. Initial results of an Express Scripts study on antihistamine use showed a decline in spending on antihistamine drugs of between 11% and 32%, depending on the type of benefit design in place.

Claritin and Prilosec may only be the tip of the OTC iceberg if the FDA has its way. In 2003, the agency showed a new willingness to discuss possible OTC approval for drugs in some categories previously regarded as off-limits. With the approvals of Claritin and Prilosec, it is likely that additional antihistamines and proton pump inhibitors will eventually be sold as OTC products.

For a full report visit: http://www.express-scripts.com/other/news_views/ind_rep.htm

Express Scripts, Inc. (Nasdaq: ESRX) is one of the largest PBM companies in North America providing PBM services to over 50 million members through facilities in eight states and Canada. Express Scripts serves thousands of client groups, including managed care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans.

Express Scripts provides integrated PBM services, including network pharmacy claims processing, mail pharmacy services, benefit design consultation, drug utilization review, formulary management, disease management, medical and drug data analysis services, and medical information management services. The Company also provides distribution services for specialty pharmaceuticals through its Specialty Distribution subsidiary. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com, which includes expanded investor information and resources.