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September 20, 2018

Cigna’s $67 billion acquisition of pharmacy benefits manager (PBM), Express Scripts, was approved by federal officials this week.

The Council Perspective: Express Scripts is one of the last standalone PBMs. This, and other pending mergers like CVS Health and Aetna, signals a desire to lower costs and prevent any disturbance from startups and new industry players, like the recent Amazon Berkshire Hathaway JP Morgan venture. At the same time, PBMs have been criticized for their role in negotiating drug prices, leaving many questioning if mergers like this will help or hinder efforts to align incentives throughout the drug supply chain to reduce costs for end payers. To succeed, the new Cigna-Express Scripts will mostly likely need to think about its PBM arm as a value-focused component of its insurance business.