Health Insurance Carrier Cigna to buy Express Scripts

March 8, 2018 Posted by

Health Insurance Carrier Cigna said on Thursday it would buy pharmacy benefits manager Express Scripts for about $54 billion, the latest deal in the sector aimed at tackling soaring healthcare costs. The move follows the $69 billion merger of insurer Aetna and drugstore chain CVS Health announced last December, and highlights a sector-wide trend toward deals between companies that do not have directly overlapping operations. The deals seek to lower healthcare costs by bringing under one roof pharmacy and medical claims, and give the combined entities greater leverage in price negotiations with drugmakers.

Express Scripts is one of the three massive Pharmacy Benefits Managers (PBM) that help negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans. It was the only major PBM to stand on its own and its stock has been weathering news that Amazon is interested in getting into healthcare.

The move brings medical benefits and prescription benefits under one roof at a time when prescription costs for new medications are getting to be as high as some medical procedures.

“Adding our company’s leadership in pharmacy and medical benefit management, technology-powered clinical solutions, and specialized patient care model to Cigna’s track record of delivering value through innovation, we are positioned to transform healthcare,” Express Scripts CEO Tim Wentworth said in a news release Thursday.

What this means for healthcare

The boundaries of the healthcare business are changing. Instead of growing by acquiring other companies in the same business, companies have started to move into new lines of business, with no two combinations looking exactly the same.

It’s part of a push by healthcare companies to do two things: cut costs, and gain more control over the patients in need of their services. It’s coming at the same time large tech companies are eyeing ways to disrupt the healthcare industry as it faces entirely new medications that challenge the existing way we pay for treatments.

Should the deal go through, Cigna wouldn’t be alone in controlling both the insurer and PBM part of paying for prescriptions. UnitedHealthcare, for example, owns the PBM OptumRx, while Anthem, which owns a variety of Blue Cross Blue Shield health insurance firms, will be launching its own PBM called IngenioRx, and with the CVS Health-Aetna deal, CVS Caremark and Aetna would be under the same roof as well.

With the acquisition, Cigna could have more oversight into who’s paying for prescriptions.

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