Health insurer Cigna buying Express Scripts for $52 billion
Health insurer Cigna is buying the nation’s biggest pharmacy benefit manager, Express Scripts, the latest in a string of proposed tie-ups as health care’s bill payers attempt to get a grip on rising costs.
The $52 billion deal announced Thursday follows the drugstore chain CVS Health Corp.’s roughly $69 billion bid to buy the insurer Aetna Inc., an acquisition the companies detailed in December.
Insurers and pharmacy benefit managers — which run drug plans for insurers and employer-based plans — have struggled to keep costs under control for clients like big companies that provide coverage to their workers. They are pushing to shift health care from a system that treats the sick to one that essentially tries to prevent you from getting sick in the first place or keeps you out of an expensive hospital.
They’re not the only ones hunting for solutions. Amazon said earlier this year that it will collaborate with billionaire Warren Buffett and JPMorgan Chase to create a company that provides their employees with high-quality, affordable care. No one knows what that means yet, but it sent a shudder through the industry.
Insurers and others say they want to get more involved in patient care, to supplement what a regular doctor provides and keep people healthy and on their medications. They are especially focused on those with chronic conditions, like a diabetic who needs regular blood sugar monitoring and care to stave off heart attacks or other serious illnesses.
“They want to be the consumer’s partner in managing their health through data and services that help them take charge of their own health,” said health economist Paul Keckley.
Aetna and CVS have said they hope to create “front doors” to care through CVS drugstores. That deal could turn many of the chain’s more than 9,800 locations into one-stop shopping for an array of health care needs like blood work and eye or hearing care, in addition to their traditional role of filling prescriptions.
UnitedHealth Group Inc., which runs the nation’s largest insurer, is spending almost $5 billion to buy nearly 300 primary and specialty care clinics and some urgent care and surgery centers. That push will help the company steer patients away from hospitals and cut down on unnecessary emergency room visits.
Another insurer, Humana Inc., is making a separate deal to better manage the care of its Medicare Advantage patients.
Cigna already uses Express Scripts’ Accredo business, which manages prescriptions for complex specialty drugs. The companies said Thursday that expanding their relationship will help improve service, personalize care and give doctors a more complete picture of the patient.
A key element will involve how the combined company uses the massive amounts of patient data and information it collects. For instance, if a doctor prescribes an antidepressant, that data may show that the medicine won’t work well for that person. Cigna could then tell the doctor and recommend an alternative treatment, said Keckley, the health economist.
The acquisition will combine an insurer that covers around 16 million people with a drug plan manager that processes more than a billion prescriptions a year.
Bloomfield, Connecticut-based Cigna Corp. will pay $48.75 in cash and a portion of stock in the combined company for each share of St. Louis-based Express Scripts Holding Co. Cigna shareholders will wind up owning about 64 percent of the company, which Cigna CEO David Cordani will lead. His Express Scripts counterpart, Tim Wentworth, will stay on as a president.
The boards of both companies have approved the deal, which is expected to close at the end of this year.
Shares of both companies careened in opposite directions after the deal was announced early Thursday. Cigna’s stock was down nearly 11 percent, or $21.09, to $173.16 in afternoon trading. Express Scripts had climbed about 9 percent, or $6.42, to $79.48 while broader indexes were largely flat.