DOJ Approves $52 Billion Merger Between Cigna and Express Scripts

As reported by the National Association of Health Underwriters:

The New York Times  (9/17, Abelson) reports that on Monday, the federal government “gave the go-ahead to the proposed merger between Cigna, one of the nation’s largest health insurers, and Express Scripts, a major pharmacy benefit manager.” The article says this deal, valued at $52 billion, “is one of two proposed transactions involving pharmacy companies before the Justice Department.” Aetna also announced plans to acquire CVS Health in a $69-billion deal. The DOJ is still reviewing “the deal between Aetna and CVS, although the two companies are also expected to receive a green light soon.” The Times adds that these deals “are occurring as established players in the health care sector are frantically searching for ways to fend off potential interlopers like Amazon, whose tentative forays into the pharmacy business has already shaken up the industry.”

On its website, CNBC  (9/17, Chappell, Coombs) reports Cigna and Express Scripts say that by joining forces, “they can improve care for patients and lower health-care costs. Their rivals are growing and pursuing deals of their own as the industry faces increasing costs and growing political pressure and braces for Amazon’s entry.” According to the article, the DOJ’s “antitrust division found that after the Cigna- Express Scripts merger, there will still be at least two large pharmacy benefit management firms and several smaller PBMs in the market.” In addition, “DOJ said it would be hard for Cigna to increase PBM costs for other insurers because of competition from other integrated insurer-PBM players.”

Reuters  (9/17, Humer) reports that Wall Street analysts had anticipated the deal would be approved given that the two “companies have little overlap in their businesses.” Commenting on the matter, Cigna Chief Executive David Cordani said, “We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger.”

Politico  (9/17, Demko) reports that two years ago, the Obama Administration “blocked a major proposed consolidation in the health insurance industry over concerns about diminished competition. DOJ successfully sued in 2016 to halt Anthem’s proposed acquisition of Cigna and Aetna’s merger with Humana.” The article adds that recently, PBMs have “come under heightened scrutiny for” their “role in influencing drug prices, facing questions about whether the companies profit too much from rebates passed on by drugmakers.” The Trump Administration has criticized “PBMs as it works to bring down drug prices.”

The Hill (9/17, Weixel) reports that the new entity created by the combination of these two giant companies “could reshape the health industry, as Cigna would encompass both health insurance and pharmacy benefits.” The deal is expected to close by year’s end.