Cigna and Express Scripts Merger Earns New York, California Regulatory Approval

December 18, 2018
Samantha DiGrande

Last week, Insurer Cigna and pharmacy benefit manager (PBM) Express Scripts overcame 2 hurdles to completing their $67 billion merger as New York and California insurance regulators signed off on the deal.

Last week, Insurer Cigna and pharmacy benefit manager (PBM) Express Scripts overcame 2 hurdles to completing their $67 billion merger as New York and California insurance regulators signed off on the deal.

The deal, which was approved by the US Justice Department in September 2018, was approved by the insurance regulators with conditions. One of the conditions stipulated by the California Department of Managed Health Care was that the combined company not raise premiums to pay for the merger for 5 years and keep premium prices “to a minimum.”

Additionally, Cigna and Express Scripts have agreed to invest $60 million in California’s healthcare system through Cigna’s accountable care organizations as well as funding scholarships and loan repayment programs to increase the number of healthcare providers in underserved areas. These funds will also go towards supporting programs that address social determinants of health and the opioid epidemic.

Another condition, required by New York regulators, was that the combined company wouldn’t increase premiums for New York plan members to pay for the acquisition, as well as providing preferential pricing from Express Scripts or excluding independent pharmacies from its network.

Such factors are a concern because they would give Cigna an “artificial competitive advantage that would draw policyholders away from other insurers and create an even larger market share for the enterprise,” according to the December 13, 2018 filing. Finally, the regulator also required the insurer to report the pharmacy rebates it receives, and the amount returned to customers.

New York’s financial services department had a public hearing scheduled to discuss the merger on January 10, 2019, but later decided it wasn’t necessary after Cigna agreed to the terms presented.

As of now, the final state that has yet to grant approval of the merger is New Jersey. “We continue to work with regulators in New Jersey, the [1] outstanding state where approval is required, and continue to expect that the transaction will close by the end of 2018, subject to the satisfaction of all closing conditions,” read the filing.