Cigna, Express Scripts merger may have limited effect on comp sectorReprints
Cigna Corp.’s $52 billion proposed acquisition of Express Scripts Holding Co. may eventually lead to lower drug costs for workers compensation payers, but it’s too early to tell how big those savings might be, experts say.
The health insurer’s announcement Thursday that it would buy the pharmacy benefits manager is part of an overall trend of health insurers attempting to align their business goals with those of PBMs.
The deal follows the $69 billion merger of insurer Aetna Inc. and one of Express Scripts’ biggest rivals, CVS Health Corp., announced last December.
The merger of St. Louis-based Express Scripts and Bloomfield, Connecticut-based Cigna will save $600 million annually due to improved administrative efficiencies, better coordination between pharmacy and medical claims and increased leverage in price negotiations with pharmaceutical companies, according to a statement by the companies. Neither company returned calls seeking comment.
The overall savings could trickle into workers comp, said Gerry Glombicki, Chicago-based director at Fitch Ratings Inc.
“When vertical integration takes off and you are a part of it, you could be looking at cheaper medications for a specific subset of people … In aggregate, it is not going to move the needle much,” he said.
Joe Paduda, Skaneateles, New York-based president of CompPharma L.L.C., said it’s too soon to tell what the merger could do for workers comp, which is already seeing its drug spend down by double digits in recent years.
“(PBMs) have continued to demonstrate to payers that they effectively manage drugs,” he said. “My strong sense is that they will continue to emphasize strong medical management and reduced opioids use.”
The latest merger comes nearly a year after Express Scripts announced its purchase of Tampa, Florida-based Matrix Healthcare Services Inc., which does business as MyMatrixx. That smaller PBM was touted as a market leader for workers comp clients, Express Scripts President and CEO Tim Wentworth said in a statement at the time of the purchase.