Cigna CEO: Express Scripts' new transparent PBM model in the works for nearly 2 years

Last month, pharmacy benefit management giant Express Scripts unveiled its new, more transparent model, called ClearCareRx.

The company's top brass told investors on Friday morning that the model has been in the works for some time, as the company worked with some of its most "sophisticated" employer clients to develop the program.

"That was two years in design and we worked with about a dozen sophisticated large employers to design those programs to work for them and work for us and how we can roll those out and scale," CEO David Cordani said. "And as we sit here today, we have hundreds of clients together with our Evernorth team and our Express Scripts team talking about future innovation."

Though the program was in development before the recent legislative activity around PBMs and drug pricing, Cordani said that ClearCareRx is a clear example of Express Scripts' willingness to adapt to change.

Multiple bills under consideration in Congress take aim at PBMs as well as other parts of the pharmaceutical supply chain as legislators seek solutions for rising drug prices. Pharmaceutical manufacturers have pointed the finger at PBMs as the main villain behind higher costs, while PBMs blame the pharma industry.

Cordani said Evernorth has "ample flexibility to flex rapidly" to changes that may come down the pike.

"We can pivot, we will pivot, we will continue to offer choice and the tools exist today as exemplary with our ClearCareRx program to provide further choice that use different financing mechanisms," he said. "So we are confident that we will be able to flex rapidly, if necessary."

"But we want to also ensure that we are a voice for employers to still work to preserve choices for them as how they want to finance their programs, how they want to manage their overall cost and predictability from that standpoint," Cordani added.

The Cigna Group rounded out earnings for the large national insurers Friday morning when it reported $1.3 billion in profit for the first quarter of 2023.

That's on par with the prior-year quarter, where the company reported $1.2 billion in profit, and with the fourth quarter of 2022, where Cigna also reported $1.2 billion in profit.

Revenues also grew year over year, reaching $46.5 billion. The company reported $44 billion in revenue for the first quarter of 2022. The results for both revenue and profit surpassed Wall Street analysts' projections, according to Zacks Investment Research.

"Our strong results in the first quarter demonstrate how our company continues to execute well, while also introducing innovative, market-leading solutions that improve clinical outcomes, affordability and transparency for the benefit of those we serve," said Cordani in the release.

The earnings call is the first under the rebranded Cigna Group, which the company unveiled earlier this year to better reflect the growth in its portfolio. Within that corporate structure, the company operates Evernorth Health Services, which includes all of its healthcare services businesses including Express Scripts and Cigna Healthcare, its core health plan.

Revenues at Evernorth were $36.2 billion for the quarter, up 8% from $33.6 billion in the first quarter of 2022. Cigna said that growth was driven by specialty pharmacy as well as its care delivery and management tools.

Cigna Healthcare's revenues jumped 12% year over year, reaching $12.7 billion, growth that was backed by higher membership in government and commercial plans. It added nearly 1.5 million new members in the first quarter, according to the earnings report.

On the back of the quarterly performance, Cigna is boosting its guidance for the year to at least $24.70 in earnings per share. The company also expects to bring in at least $188 billion in revenue for 2023.