Cigna Completes $67 Billion Acquisition of Express Scripts, Marking a Key Milestone in Healthcare Transformation

VCBeat (WeChat: vcbeat) has learned that on December 20, 2018, Cigna officially announced its acquisition of Express Scripts, the largest pharmacy benefit manager (PBM) in the United States, for $67 billion. It is reported that the two parties had already signed an agreement in March of this year to merge through a combination of cash and stock swaps. Amid the trend of insurers acquiring PBMs or being acquired by them, this deal has given Cigna a significant advantage in the market. With the support of Express Scripts, Cigna has joined CVS, UnitedHealth, Humana, and Anthem as a major force in the vertical integration of the insurance industry.

Image source: Cigna official website

As one of the largest commercial insurers in the United States, Cigna acquired a total of seven companies between 2005 and 2018. In a statement, David M. Cordani, President and Chief Executive Officer of Cigna, said, “This merger marks a significant milestone in Cigna’s efforts to transform the healthcare system for our customers, partners, and communities.”

Cigna is not just a health insurance company, but a global health services company. The company works closely with brokers and advisors to develop innovative programs that help individuals and families improve their health, well-being, and sense of security while reducing their medical costs. In addition, Cigna provides a global network of local doctors and hospitals, as well as 24/7/365 customer service.

“We have jointly developed a blueprint for personalized, whole-person healthcare, further enhancing our ability to place customers at the center of all our work by creating a flexible, open, and interconnected model, thereby improving affordability, choice, and predictability,” said Cordani. “By treating each individual as a whole—integrating mind and body—we empower customers to take control of their overall health and well-being.”

In fact, the acquisition process was not as smooth as anticipated. Although Cigna emphasized the value-driving potential of its new findings, the two companies did not always see eye to eye. Earlier this year, executives from both sides disagreed on value-based drug contracts. Steve Miller, Chief Medical Officer, stated that the current system was not built for this type of model. Nevertheless, the parties ultimately reached an agreement and signed the contract.

The company also pledged to increase its investment in its charitable foundation by $200 million and launched a community engagement initiative titled “For Our Future, Making Children Healthier.”

In related reports, Express Scripts refuted external criticism of pharmacy benefit managers (PBMs), stating that its performance “would be strong” even without drug price rebates.

The company will also have to face ongoing regulatory threats, as the Trump administration has identified pharmacy benefit managers (PBMs) as the primary culprits behind high drug prices. A pending rule could disrupt the industry’s rebate structure. Meanwhile, demands for greater PBM transparency are intensifying, prompting some companies, such as CVS, to launch new products focused on net pricing rather than rebates. Some analysts suggest this may represent the future of the PBM model.

However, the two companies argued that the merged entity would enhance affordability by offering a broader portfolio of consumer-oriented services.

Express Scripts enables tens of millions of consumers to access prescription medications more safely and affordably through thousands of employers, government agencies, labor unions, and health plans, fostering a simpler and more sustainable healthcare system. Uniquely positioned within the broader healthcare ecosystem, it identifies opportunities, takes action, advances healthcare delivery, and delivers better outcomes.

Pharmacy Benefit Management (PBM) refers to pharmacy benefit management. According to the American Pharmacists Association, “PBMs are primarily responsible for developing and maintaining formularies, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. In most cases, they collaborate with self-insured companies and government programs, striving to maintain or reduce pharmacy expenditures within these plans while working to improve healthcare outcomes.”