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Cigna’s $52bn acquisition of Express Scripts is approved by the Department of Justice

Health insurer Cigna’s proposed $52bn acquisition of Pharmacy Benefit Manager (PBM) Express Scripts has recently been approved by federal officials, where it has been stated that a merger will provide a number of advantages to consumers in both insurance and PBM markets.

The news follows on from previous horizontal deals, such as Anthem’s acquisition of Cigna and Aetna’s of Humana being blocked due to this threat.

Traditional healthcare players are having to transform outdated business models in order to attract and retain customers, who want increased control over their healthcare, at competitive prices and can ensure high quality.

The emergence of players such as Amazon, Berkshire Hathaway and JP Morgan, amongst others, as well as the Trump Administration placing increased pressure on the industry, has led healthcare companies to look at further ways to reduce escalating healthcare costs and remain competitive.

“We are pleased that the Department of Justice has cleared our transaction and that we are another step closer to completing our merger and delivering greater affordability, choice and predictability to our customers and clients as a combined company,” said David Cordani, President and Chief Executive Officer of Cigna.

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“The value that we deliver together will help put our society on a far more sustainable path – one that helps health care professionals’ close gaps in care and supports our customers along their health journey.”

“Together, we believe we will be able to do even more to reduce health care costs, expand choice, and improve patient outcomes,” added Tim Wentworth, chief executive of Express Scripts.

"The Cigna-Scripts and CVS-Aetna deals are doing what everyone else in the healthcare space is doing right now, just on a grander scale – reacting to continued cost pressures from market forces like the Affordable Care Act, consumerism, and other industry players building scale against each other," commented Brad Haller, director of West Monroe Partners.

"The vertical integration we are seeing with retailers buying payers and health plans buying prescription benefit plan providers is the way the industry is going. Now that the DOJ has approved and provided certainty, one would expect others to follow suit."

As the combined company, led by Cordani will gain the ability to share patient data and negotiate lower prices, providing great transparency. The deal will also enable the business to gain greater traction within the Medicare programme.  

The deal is expected to be completed by the end of 2018.

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