Cigna-Express Scripts: Can a Vertical Merger Rescue an Industry Under Attack?

In Fall 2019, Cigna Corporation – a global health services company with a significant presence in the U.S. employer-sponsored health insurance market - was digesting its $54 billion acquisition of Express Scripts, Inc. (ESI), a pharmacy benefit manager (PBM) headquartered in St. Louis, Missouri and supplying drug benefits to over 80 million (largely U.S.-based) members. The case describes the role of PBMs in the US and the ways in which PBMs are compensated. This background enables discussions of the business model of PBMs, the significance of discounts or “rebates” by brand-name drug manufacturers, and of whether and how vertical integration of an insurance company and a PBM can affect plan sponsors and enrollees.