CEO David Kordani said Friday that Cigna is prepared to face government crackdown on pharmacy benefit managers despite its Express Scripts subsidiary’s reliance on spread pricing and drug maker rebates.
The bipartisan leaders of the Senate Health, Education, Labor and Pensions Committee have to consider a legislative package Next week that would ban spread pricing and force PBMs to pass on all rebates to employer customers. The Senate Finance Committee and two House panels are also working on legislation to rein in PBMs.
Cordani said during a call with investors that Cigna’s Express Scripts subsidiary is the second-largest PBM by market share and generates 20% of its pre-tax profit from rebates and retail spread pricing, which at the time declined with.
“We are confident that we will be able to flex quickly if necessary, but we also want to assure that we are a voice for employers and will still work to provide options for them to choose from within their programs. How do you finance the,” Cordani said.
The company cut its annual profit guidance to less than 10 cents after the company’s health insurance arm reported lower-than-expected medical costs, driven by higher premiums and lower spending on COVID-19, influenza and respiratory syncytial virus, the chief financial officer said. The low extended to $24.70 per share. Brian Ivanko said during the call. Cigna reported an 81.3% medical loss ratio during the first quarter, down slightly from 81.5% a year ago.
Net income rose 5.8% to $1.2 billion, or $4.24 per share, and revenue rose 5.7% to $46.5 billion, driven by higher premiums for health insurance exchange policies and growth in pharmacy services.
Express Scripts served 98.7 million pharmacy patients during the quarter, an increase of 4.6%, driven by new customers and an increase in specialty pharmacy services for complex conditions such as rheumatoid arthritis.
PBM recently introduced employer model Those that don’t use spread pricing forgo rebates and end up paying higher fees to rural pharmacies. PBMs still evaluating how Florida is doing ban on spread pricing Local contracts will be affected, Cordani said.
“We believe that if some of these payment vehicles are replaced by regulatory changes or customer preference, [Express Scripts] has a comprehensive set of capabilities that create value and generate attractive returns,” said Cordani.
Cigna’s health insurance business covered 17.8 million U.S. members in the first quarter, an 11.3% increase driven by exchange enrollment, which was driven by the entry of the company’s exchanges in Indiana, South Carolina and Texas and the exit of competitors from some of Cigna’s markets. more than doubled to 786,000 after The company added 16 million people to job-based health plans during the quarter, a growth of 10%. Ivanko said the insurer expects its employer membership to decline in the second half of the year as the looming recession looms.
Medicare Advantage membership grew 6% to 584,000, below the industry average of 8%.