Cigna will spend $200 million next year to integrate its pharmaceutical services into Centene’s business book, executives announced during the insurer’s third-quarter earnings call today. Thursday.
Last month, the company announced that its pharmaceutical benefits management subsidiary Express Scripts had won a competition to administer prescription drugs to Centene’s more than 20 million policyholders, which Cigna estimates represent for $40 billion in annual drug spending. The for-profit insurer beat CVS Caremark, Cetene’s current PBM.
CEO David Cordani said the $200 million pre-tax integration cost will create a big windfall for Cigna in 2023. He said the contract will provide a revenue boost in 2024 and Cigna aims to strengthen its partnership with Centene over time.
Growth in pharmacy services lifted Cigna’s net income 70.1% to $2.76 billion on revenue of $45.2 billion in the third quarter. The $1.4 billion after-tax profit from the sale of the Asia-Pacific and Turkey accident and health business to Chubb also contributed to the increase in earnings.
Cigna’s membership grew 5.5% to 17.9 million, fueled by growth in the commercial segment and partly offset by a decline in government subscribers, which The company alleges it canceled its Texas Medicaid business last year.
The company remains open to acquisitions, especially those supporting government-funded pharmaceutical and insurance businesses, but is not interested in joining the bidding wars that have attracted competitors like CVS and UnitedHealth Group, Cordani said. “We are still quite open to M&A,” he said. “We don’t see it as a silver bullet; it’s part of a growth support strategy. ”
Cordani says that introducing biosimilars to AbbVie’s Humira next year will save Cigna money. Rheumatoid arthritis treatment is the highest-grossing drug of all time and the biggest cause of drug price inflation, according to a congressional investigation. A year-long course of a brand-name biologic can be worth more than $84,000. There are still some payers and patients who may be hesitant to use lower-cost biotubes because of questions of interchangeability.
Cordani declined to say whether biosimilars for Humira will be included in Cigna’s country list for 2023, the company will reveal later this month.
Despite recent lawsuits against Cigna’s commercial and government-funded health plans, the legal status facing the company has remained unchanged, Cordani said. The Justice Department sued Cigna last month, accusing the company of exaggerating the illnesses of Medicare Advantage members to generate more revenue.
The Justice Department has sued several Medicare Advantage carriers for the same reason. In September, the American Medical Association and the New Jersey and Washington state medical associations joined a class-action lawsuit accusing Cigna of underpaying providers and exposing patients to bills. inappropriately balanced.
“Given the strategic position of our franchise as more service-based, I would make the argument that the regulatory exposure footprint – on a relative basis to the space – is lighter.” Cordani said. “But without a doubt, it’s an activity space. It was, is and will continue to be.”
