Cigna to Buy Express Scripts in $52 Billion Health Care Deal

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“That is the way forward for the stand-alone” pharmacy profit supervisor, mentioned Tim Wentworth, the chief government of Categorical Scripts, who would function president of the Categorical Scripts enterprise below the deal. The 2 corporations mentioned that they might proceed to supply pharmacy companies to different insurers and to employers that don’t use Cigna.

The deal would make sure that all the main pharmacy profit managers would have ties to large insurers. CVS Well being, which additionally owns pharmacies, not too long ago introduced a merger settlement with the well being insurer Aetna. OptumRx is owned by the insurance coverage big UnitedHealth Group. Anthem, which operates for-profit Blue Cross plans in a number of states, mentioned it had plans to create its personal pharmacy enterprise.

With no different giant impartial pharmacy managers left for smaller insurers, federal and state officers may very well be reluctant to approve the Cigna-Categorical Scripts deal, mentioned David A. Balto, an antitrust lawyer who labored on the Federal Commerce Fee and the Justice Division who’s a fierce critic of mergers of insurers and pharmacy managers. The CVS-Aetna deal may face the identical downside, he mentioned.

“Historical past has proven the place there are a number of mergers occurring in a single business, the Justice Division goes on excessive alert,” Mr. Balto mentioned.

Different antitrust specialists mentioned it was unclear how the mix of Cigna and Categorical Scripts would reshape the market. “It’s not almost as apparent an antitrust threat as different offers,” mentioned Leemore S. Dafny, a enterprise professor at Harvard. The deal may make the insurance coverage business extra aggressive by giving Cigna, which isn’t a significant participant in some markets, a technique to problem the dominant corporations, she mentioned.

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The settlement between Cigna and Categorical Scripts is the most recent in a flurry of offers prior to now 12 months.

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Michael Nagle/Bloomberg

Well being insurers, thwarted by federal regulators of their makes an attempt to mix with each other, have been looking for potential acquisitions. Thursday’s deal got here little over a 12 months after a choose blocked a proposed $48 billion merger of Cigna and Anthem. A choose additionally blocked a $37 billion deal between Aetna and one other well being insurer, Humana, final 12 months.

The insurance coverage corporations now say they should combine the supply of care and pharmacy advantages into their very own operations to be able to deal with excessive medical prices. UnitedHealth, for instance, has been buying medical doctors’ practices and surgical procedure facilities.

“We’re seeing numerous vertical integration,” mentioned Brian Marcotte, chief government of the Nationwide Enterprise Group on Well being, which represents giant employers. With insurers trying to function their very own pharmacy managers, “it appeared like this was the following logical shoe to drop.”

Frustration over the rising prices of well being care is mounting amongst employers — who insure most working Individuals — and shoppers, who’re being requested to pay extra out of pocket.

In January, Amazon, JPMorgan Chase and Berkshire Hathaway introduced plans to group as much as handle spiraling well being care prices. Berkshire’s founder, the billionaire investor Warren Buffett, described these prices as a “rising tapeworm on the American financial system.”

Adam J. Fein, chief government of the Drug Channels Institute, which research the drug business, mentioned the latest mergers could result in higher coordination as a result of the businesses will likely be taking a look at well being care from a number of angles.

“When you’ve got a hammer, all the pieces seems to be like a nail,” he mentioned. “If all the pieces you’re desirous about is pharmacy prices, all the pieces seems to be like a drug pricing downside.”

Some specialists, although, see the mixtures as doubtlessly dangerous. George Slover, senior coverage counsel for Customers Union, which additionally raised issues concerning the Aetna-CVS merger, mentioned in an announcement that these offers “may end in restricted selections all through , in the end resulting in greater prices and doubtlessly poorer protection and look after shoppers.”

Craig Garthwaite, a well being economist with Northwestern College’s Kellogg Faculty of Administration, mentioned that whether or not shoppers in the end profit “will hinge completely on the quantity of competitors within the medical insurance market.”

Lately, the mannequin of a pharmacy profit supervisor has additionally come below scrutiny. The pharmaceutical business, amongst others, argues that profit managers are cashing in on greater drug costs by conserving a share for themselves. The Trump administration made an identical argument in February, noting that the highest three advantages managers managed 85 % of the market.

On Wednesday, the commissioner of the Meals and Drug Administration, Dr. Scott Gottlieb, mentioned in a speech that the state of affairs had created “misaligned incentives,” because the reductions that producers negotiate “could not at all times be handed alongside to employers or shoppers.”

Mr. Wentworth, the Categorical Scripts government, mentioned the corporate was “totally clear about how the cash flows and the contracts we do.”

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