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

  • Nov 10, 2022

    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.” 

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  • Peter Johnson

    Peter has worked as a journalist since 2011 and has covered health care since 2020. At AIS Health, Peter covers trends in finance, business and policy that affect the health insurance and pharma sectors. For Health Plan Weekly, he covers all aspects of the U.S. health insurance sector, including employer-sponsored insurance, Medicaid managed care, Medicare Advantage and the Affordable Care Act individual marketplaces. In Radar on Drug Benefits, Peter covers the operations of (and conflicts between) pharmacy benefit managers and pharmaceutical manufacturers, with a particular focus on pricing dynamics and market access. Before joining AIS Health, Peter covered transportation, public safety and local government for various outlets in Seattle, his hometown and current place of residence. He graduated with a B.A. from Colby College.

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