Cigna CFO says push to control specialty drug costs drove Express Scripts acquisition

PILLS MONEY cost opioid
Cigna's CFO said the insurer's deal with Express Scripts will "meaningfully move the needle on affordability." (Pixabay)

Skyrocketing specialty drug costs were a primary reason behind Cigna’s decision to purchase Express Scripts, even though the insurer has an in-house pharmacy benefit manager, Cigna’s chief financial officer said on Tuesday.

Express Scripts offered the “single best capability to meaningfully move the needle on affordability,” in large part because of its experience with specialty pharmaceuticals, CFO Eric Palmer told investors at the Goldman Sachs Annual Global Healthcare Conference.

That includes Cigna’s in-house PBM, Catamaran, which Cigna supplements through a contract with OptumRx. Palmer said Express Scripts' ability to manage specialty drugs is “really a difference maker” in the transaction.

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“It’s not something that’s part of our arrangement with Optum,” he said. “Moving from our capability to Express Scripts’ capability is meaningful.”

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Cigna’s focus on specialty pharmacy costs is no surprise given the rapid rise in costs over the last several years. Projections indicate that cost growth isn’t slowing anytime soon.

“Express Scripts’ capability as it relates to specialty pharmacies are important now and even more important in the future,” Palmer said.

However, critics of the deal, valued at $67 billion, have raised concerns that the combined companies will stifle competition without a payoff for consumers. Palmer said the deal would ultimately improve affordability for consumers.

Cigna favors provider partnerships over acquisition

Meanwhile, Palmer noted that Cigna doesn’t plan to jump on the bandwagon when it comes to making provider acquisitions. The company’s main competitors—including UnitedHealth, Humana and Anthem—have purchased provider groups during the first half of 2018.

“Our orientation has been that we were able to be most effective in driving partnerships rather than owning the groups directly,” Palmer said. “We would expect to continue on that path.”