- David Grogan / CNBC
- Cigna is set to officially close its deal to acquire pharmacy benefits manager Express Scripts.
- The deal was announced in March but took some time clearing regulatory hurdles from state insurance agencies as well as the Department of Justice.
- The deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs in the form of rebates on behalf of health plans.
Cigna is about to close on its deal to acquire healthcare giant Express Scripts.
The two companies got the go-ahead from the Department of Justice for their $67 billion deal in October, but still needed key state insurance agencies to sign off. On December 18, Cigna and Express Scripts got the final approval from New Jersey to close the deal, which is taking place on Thursday.
The deal, announced back in March, will redraw the healthcare industry by combining a health insurer with a company that manages prescription drug benefits. A similar deal, CVS Health’s $70 billion acquisition of health insurer Aetna, was completed on November 28.
In the case of Cigna and Express Scripts, the deal combines a health insurer and a company that helps negotiate lower prices for prescription drugs (in the form of rebates) on behalf of health plans.
Express Scripts is one of three massive pharmacy benefit managers in the industry and the only standalone one. The deal officially ends the days of big standalone PBMs. The other PBMs are CVS Caremark and UnitedHealth Group’s OptumRx.
Cigna specializes in selling the health insurance that companies offer to their workers. The company covers about 16.3 million people. Express Scripts handled about 709 million prescriptions in the first nine months of this year.
In addition to regulatory scrutiny, the deal also looked less certain when billionaire Carl Icahn took a stake in Cigna in August and wrote in a letter to shareholders that the deal “may well rival the worst acquisitions in corporate history.”
But a week later, after proxy advisory companies Glass Lewis & Co and Institutional Shareholder Services said they’d support the deal alongside Glenview Capital Management, Icahn reversed course. The merger ultimately passed its shareholder vote.
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