U.S. health insurer Cigna is in talks to merge with Humana in a deal that could be worth more than $60 billion and compete in size with UnitedHealth Group and CVS Health, a Reuters source said. However, the overlapping management of pharmacy benefits and other companies could destroy the deal.
Humana is the second-largest payer of Medicare Advantage and serves many government health plans. Cigna is #15 on Fortune 500 and reportedly had Last year a turnover of 180 billion dollarsmaking it one of the most profitable companies in the world.
While Reuters reported this earlier Cigna planned to sell its stagnant MA businessAnd Humana is leaving the employer market and strengthening home and primary care services for government operations, some experts say antitrust concerns are still likely to arise from a Cigna-Humana merger.
“If you’re going to try to prepare to be a better match with Humana from a regulatory perspective, dropping MA would make it a lot easier,” Craig Garthwaite, a healthcare economist at Northwestern University, told Reuters.
Overlap in pharmacies could prevent a merger
Yet several others have pointed this out overlapping PBM companies will certainly get on the nerves of the regulators. Louisville-based Humana manages Medicare drug benefits, and Cigna owns PBM giant Express Scripts, which it bought in 2018.
Congress is also looking at it PPE reform to avoid tactics that increase the cost of medications.
Wendell Porter, who once managed mergers and acquisitions communications for the Bloomfield, Indiana-based payvider, said the rumors “indicate that Cigna views such a deal as a strategic priority.”
He said that on Tuesday blogging that “another reason to believe there is something to the speculation is the fact that Humana announced last month that it had hired former UnitedHealth executive Jim Rechtin as Chief Operating Officer and CEO-in-waiting” to succeed soon-to-retire CEO Bruce Broussard.
Porter noted that in that announcement, Humana highlighted Rechtin’s “deep experience in healthcare mergers and the overall healthcare industry” while she was at Bain & Company.
After the federal government failed to approve Aetna’s proposal to buy Humana and Anthem’s Cigna deal in 2017, speculators raised a Cigna-Humana merger in sight.
“By using technology and integrated services to simplify the consumer experience, the combined entity will be even more effective in meeting the health needs of many more people, especially those with chronic conditions, who will benefit from Humana’s home care, pharmacy management and data analytics programs Broussard said in 2015 when the Aetna deal was proposed.
Cigna reportedly wanted out of the deal with Anthem while the government considered the merger, and both companies ended sue each other for damages of the failed merger, which neither won. Some Cigna investors have also sued Cigna.
Andrea Fox is editor-in-chief of Healthcare IT News.
Email: afox@himss.org
Healthcare IT News is a HIMSS Media publication.