Cigna to buy Express Scripts for $67 billion, including debt

Deborah Baic  The Globe and Mail

Health insurer Cigna will spend about $52 billion to acquire the pharmacy benefits manager Express Scripts, the latest in a string of proposed buyouts and tie-ups in a rapidly shifting landscape for the health services industry. In December, CVS Health, a major PBM, announced it would acquire the insurer Aetna. It comes as Express Scripts is set to lose its biggest client. Barclays Capital maintained Express Scripts Holding Company (NASDAQ:ESRX) on Wednesday, July 27 with "Overweight" rating. Cigna has 15.9 million medical members across the globe. A deal between the two companies would follow the $69 billion acquisition of Aetna by CVS Health.

After the closing, the combined company will be led by Cordani as CEO and president. Separately, the patient may become depressed and be prescribed psychotropic medications, unbeknownst to her primary care doctor. The deal is created to give Cigna a competitive advantage-or at least a fighting chance-amid a series of big moves in the PBM market by heavy-hitters looking to rein in rising costs as the healthcare industry's landscape keeps shifting.

As CNBC reports, the wave of consolidation in the health care sector also reflects changes in the Affordable Care Act, rising drug prices, and the threat of competition from Amazon, which is planning to combine with Berkshire Hathaway and JPMorgan Chase to cut health costs for hundreds of thousands of their employees.

"The savings may not always be passed along to employers or consumers", Gottlieb said. The White House, in a recent report, criticized their market power and the opacity of their contracts.

The companies said the combination will save $600m due to administrative efficiencies.

"We should be skeptical of the wisdom of vertical integration", said Craig Garthwaite, associate professor of strategy and director of the Health Enterprise Management Program at Northwestern University's Kellogg School of Management, in a tweet Thursday. OptumRx, a division of UnitedHealth Group Inc.

CVS acquired pharmacy benefit manager Caremark in 2006. The loss of Anthem threatened Express Scripts ability to continue as one of the last standalone PBMs. Upon the announcement, $30 billion in collective market value was wiped from the 10 largest publicly traded health insurance and pharmacy stocks in the U.S. "This is all about if we end up with cheaper drugs as a result" of the deal.

Cigna previous year terminated a merger agreement with Anthem Inc. after a federal judge, citing worries that market competition would be undermined, blocked the Indianapolis insurer's proposed $48 billion purchase.

In 2015, Cigna attempted to merge with Anthem, but regulators blocked the deal.

If the merger is finalized, the combined companies will operate under the name Cigna and be based at Cigna's current corporate headquarters in Bloomfield, Connecticut.

US grocery store chain Albertsons announced last month it would enter into the health care industry as well, buying drugstore chain Rite Aid in a deal that would create a company worth about $24 billion, with annual revenues of $83 billion in its first year.

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