Cigna Corporation has struck a deal to buy pharmacy benefits manager Express Scripts Holding Co today in a deal that is reportedly worth $53 billion. The deal comes on the heels of another mega-merger – a $69 billion deal between other larger insurer Aetna and a major competitor of Express Scripts’, CVS Health Corp. That deal was announced in December.
The companies say the merger can potentially save up to $600 million a year through administrative efficiencies. It can also cut costs as pharmacy and medical claims are better coordinated and through increased leverage in price negotiations with drug makers.
Pharmacy benefits firms administer prescription drug programs for health insurers, self-insured companies and government agencies. They negotiate deals with drug manufacturers, working with pharmacies and they also process claims.
Cigna had been expected to sign another deal after its proposed merger, an acquisition by Anthem Inc, was blocked by antitrust regulators last year. Experts believe that this deal will receive scrutiny as well, especially coming right after the Aetna-CVS merger, which experts also believe will receive renewed attention.
Having two significant mergers announced almost simultaneously raises the risk for both deals, it’s said. The merging companies are not direct competitors, but the newly-formed companies do the raise the risk of coordination in the industry as well as entry barriers.
The new company will be led by Cigna CEO David Cordani, while Express Scripts CEO Tim Wentworth will continue to run the company’s Express Scripts division.