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Express Scripts Is One of the Most Powerful Players in Healthcare

The PBM has unparalleled supplier pricing power and scale advantages.

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The delivery of pharmaceuticals to consumers involves many firms along the supply chain, and  Express Scripts (ESRX) is a dominant participant. The critical role it plays has given the company significant competitive advantages. We believe Express Scripts’ positioning will remain steady for years to come as demand for its cost-saving services grows.

Express Scripts’ core pharmacy benefit manager service assists pharmaceutical benefit payers with the fulfillment of member prescriptions. This entails processing prescription claims made by a client’s members and ensuring the claims comply with benefit plan parameters. Additionally, the PBM is responsible for paying the retail pharmacy on behalf of the client. Originally, PBMs would charge a fee per claim processed; however, the revenue structure for the industry has morphed into spread retention.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.