In addition to adding to the insurance industry's wave of consolidation, the news of Anthem's deal to acquire Cigna also reinforced how much value the largest health insurers place in the pharmacy benefit management (PBM) business.
In a call with shareholders to discuss their deal, Anthem CEO Joseph Swedish and Cigna CEO David Cordani hinted that the companies' merger likely will change the game regarding their current PBM arrangements.
Anthem believes "there's significant value and opportunity for the combined company and our customers from a better pharmacy contract," Swedish said, adding that the companies will explore their options while they await the approval of their deal and won't make any decisions until it closes.
"That said, we think the timing couldn't be better for us related to our Express Scripts agreement coming to close in 2019, some key decisions to be made related to that and then the Catamaran consideration," he said.
UnitedHealth recently acquired Catamaran--which signed a 10-year agreement with Cigna in 2013--in a $12.8 billion deal. Express Scripts is currently the nation's largest PBM, followed by CVS Health, which has a contract with Aetna that expires in 2019. After that point, an Aetna-Humana combined company may choose not to renew the contract due to its leaders' desire to create the nation's fourth-largest standalone PBM.
For his part, Cordani said Cigna has "expanded talent in our PBM technology, clinical programs and services" of late through its growing, wholly owned PBM business. "We have meaningful optionality relative to the program as it stands, and you should think about that optionality as being preserved and further expanded," he said.
Acquiring PBM clout represents a key strategy to help health insurers negotiate lower drug prices with pharmaceutical companies, FierceHealthPayer has reported.
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