Cigna to buy Express Scripts in $67 billion deal

Stephen Singer, The Hartford Courant on

Published in Business News

Cigna Corp. and Express Scripts Holding Co. announced Thursday a $67 billion purchase by the Bloomfield, Conn., health insurer in a deal that could help control health care costs as consolidation picks up in the insurance and pharmacy benefits management industries.

The combination will "drive greater affordability," improve links within health care and prescriptions, while simplifying health care for customers, the companies said Thursday.

Objectives of the deal resemble the $69 billion purchase of Aetna Inc. by CVS Health Corp., announced last December. Executives of Aetna and CVS touted their deal for linking health care, prescription coverage and CVS's Minute Clinics that broaden -- at potentially lower costs -- patient access to health care.

David Cordani, chief executive officer of Cigna, told investor analysts on a conference call that the deal with Express Scripts combines the pharmacy company's experience negotiating lower drug costs with Cigna's relationships with doctors. The result will be to expand health care access for consumers at home, the doctor's office and centers that provide infusion services.

"We love the expansion of choice," Cordani said.

The two companies said the tie-up will lead to expanded consumer choice with medical, behavioral, specialty pharmacy and other health services.

The combined company will use a network of "delivery system partnerships" to connect individuals and their health care providers, "providing a more coordinated approach to an individual's health care," the companies said.

Leerink Research analyst Ana Gupte said in a client note that stand-alone pharmacy benefit management businesses "had no future as outsourced service providers" to large managed care organizations because controlling spending on drugs "has become a strategic imperative with rising health care costs."

Analyst Spencer Perlman of Veda Partners said the deal "makes sense strategically" for Cigna and the U.S. health care system. The industry should be better able to control costs with a merging of the management of drug and medical benefits, he said.

In early trading Express Scripts shares soared 12 percent, to $82.41, while Cigna shares fell 9 percent, to $176.40.


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