Cigna’s New PBM Contract With Centene Brings Up-Front Capital Costs

Centene Corp. recently announced that it will shift the bulk of its pharmacy benefits business to Cigna Corp.’s Express Scripts PBM; while discussing Cigna’s latest quarterly results, the carrier’s executives told Wall Street analysts that the deal will likely be a drag on profitability in 2023. Health care insiders tell AIS Health, a division of MMIT, that regulatory compliance, temporarily elevated staffing needs, tech-related capital costs and manufacturer contracting transitions are the likeliest sources of overhead that the deal will generate.

Cigna executives told investors during a Nov. 3 conference call that the Centene deal, which analysts generally praised, would have some start-up costs. Centene Chief Financial Officer Drew Asher said during an Oct. 25 conference call with investors that “we have about $40 billion plus or minus of gross [drug] spend, and almost all of that is [currently] with Caremark,” CVS Health Corp.’s PBM. Cigna CEO David Cordani said that the deal will cover “approximately 20 million Centene members.”

© 2022 MMIT
Peter Johnson

Peter Johnson

Peter has been a reporter for nearly a decade. Before joining AIS Health, Peter covered a wide variety of topics in his hometown of Seattle, where he continues to live. Peter’s work has appeared in publications including The Atlantic and The Stranger. Peter attended Colby College.

Related Posts

centene
October 28

Centene Posts Solid 3Q Results Despite Wall Street Concerns

READ MORE
cigna-logo
November 4

Cigna Keeps Medical Costs in Check in 3Q, Raises Full-Year Earnings Outlook

READ MORE
cvs-health-building
November 4

Amid Headwinds, CVS Beats Street’s 3Q Earnings Estimate

READ MORE

GAIN THERAPEUTIC AREA-SPECIFIC INTEL TO DRIVE ACCESS FOR YOUR BRAND

Sign up for publications to get unmatched business intelligence delivered to your inbox.

subscribe today