The FEHBlog nearly fell out his breakfast nook yesterday morning when he read in the Wall Street Journal that
Activist investor Carl Icahn has built a sizable stake in Cigna Corp. and plans to vote against the health insurer’s $54 billion purchase of Express Scripts Holding Co., the latest sign of trouble for the planned tie-up.
Mr. Icahn, whose stake amounts to less than 5% of Cigna’s shares outstanding, believes the company is paying too high a price for the pharmacy-benefit manager, which faces threats on a number of fronts, according to people familiar with the matter.
He therefore plans to vote against the merger. Last evening, the Journal’s Heard on the Street columnist reported that while Cigna’s second quarter 2018 report suggests the Mr. Icahn has a valid point, his “uphill” challenge may be in the FEHBlog’s “a day late and a dollar short.” The Cigna / Express Scripts merger requires the supporting vote of a majority of stockholders (of record as of July 10, 2018) by August 24, 2018.
Here are links to Healthcare Dive’s reports on Cigna’s and Aetna’s second quarter earnings reports for your information. Both companies and their merger partners do business in the FEHBP.
Take a look at this Healthcare Dive report on a Mayo Clinic study of opioid prescription coverage in the commercial insurance and Medicare Advantage markets over the period 2007 – 2016.
Also consider the Wall Street Journal’s set of charts seeking to explain why Americans spend so much on healthcare.
As this series of charts shows, Americans aren’t buying more health care overall than other countries. But what they are buying is increasingly expensive. Among the reasons is the troubling fact that few people in health care, from consumers to doctors to hospitals to insurers, know the true cost of what they are buying and selling.
Providers, manufacturers and middlemen operate in an opaque market that can mask their role and their cut of the revenue. Mergers give some players more heft to enlarge their piece of the pie.
Consumers, meanwhile, buoyed by insurance and tax breaks, have little idea how much they are really spending and little incentive to know underlying costs.
In the FEHBlog’s view, high deductible plans coupled with health savings accounts do provide consumers with a greater incentive. Efforts are underway to create more transparency. The charts indicate why it’s a tough row to hoe. The Drug Channels blog reminds us that
In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system:
“[W]e may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from artificial list prices, would likely serve patients far better.” (emphasis added)
No one has yet explained what a system without rebates would look like.
The Drug Channel blog posted his vision of such a new system for public comment. Keep the faith and have a good weekend.