Cigna CEO David Cordani shared more details with investors about two upcoming partnerships for the company with Prime Therapeutics and Oscar Health.
Cigna is betting big on its partnerships going into 2020. A year after its $54 billion acquisition of Express Scripts, the insurer announced in December that it had struck a three-year partnership with Prime Therapeutics, a PBM jointly owned by a group of Blue Cross and Blue Shield plans. Cigna also will test a partnership with insurance startup Oscar Health, starting with four unannounced markets.
The company touted those deals in front of investors after it released its 2019 financial results on Thursday. In an earnings call, CEO David Cordani said that partnerships would be a “key point of differentiation and a growth driver” for Cigna in 2020.
“At a philosophical level, we view that the notion of partnering and beyond partnering, striving to be the undisputed partner choice is a competitive advantage and something we want to build on,” he said.
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With the partnership between Express Scripts and Prime Therapeutics, Cigna has said the deal would help both companies lower drug costs, though it didn’t specify by how much.
Express Scripts has been a powerhouse for Cigna since the company acquired it in December. In the last year, Cigna saw its pharmacy customers increase from 73.2 million to 75.9 million, with most of that chalked up to organic growth.
Prime Therapeutics, which has 28 million members under 23 health plans, will be able to use Express’ Scripts’ retail pharmacy network and pharmaceutical contracts starting in April of 2020 as part of the deal. Both companies will still negotiate independently with pharmaceutical managers and value-based contracting. But analysts puzzled over why Cigna would help a competitor in the first place.
Cordani said he wasn’t worried about losing customers to Prime Therapeutics.
“And actually, we view the opposite of the risk that you identified. This further broadens our reach and our opportunity to serve more lives, both individual customers and patients and a broader portfolio of health plans as we go forward,” Cordani said. “It’s a dynamic marketplace and those who create the most value win. Those who try to preserve or regress to control value will lose over time.”
Cigna is also partnering with Oscar Health, an insurance startup offering plans through the ACA exchanges, as well as small group insurance and Medicare Advantage plans. Together, the two companies plan to offer small group insurance in four locations later this year, before further expanding.
Cordani said the partnership would be interesting for Cigna because the company historically hasn’t participated in the smallest end of the employer marketplace.
With Oscar Health, Cordani said he sees an opportunity to combine the startup’s technology with Cigna’s value based-networks and pharmacy capabilities.
“We believe that’s an underserved marketplace with less choice and less leverage of some of the most innovative solutions,” he said.
Cigna plans to finish integrating Express Scripts into its business in 2020. It also expects to close the sale of its group disability and life business to New York Life in the third quarter of this year.
The company brought in $153.56 billion in 2019 and reported a net income of $5.1 billion. Cigna’s medical customers increased from 16.9 million to 17.1 million, and it reported a medical cost ration of 80.8%. Cigna’s stock was valued at $211.86 at market close on Thursday.
Source: MedCity News