Cigna CEO David Cordani mounted a defense of pharmacy benefit managers during the company’s earnings call on Thursday morning as regulators and critics turn up the heat on the industry.
Cigna owns Express Scripts, which along with CVS’ Caremark and UnitedHealth Group’s Optum Rx, dominate the PBM space. Cordani said that pharmacological innovation is a “key force of change in healthcare,” but as new and more sophisticated drugs come to market, they also come with a price.
Last year, the median yearly cost for new therapies grew by $300,000, or 25%, compared to 2022, Cordani said. However, Express Scripts was able to keep cost-sharing “relatively flat on average,” demonstrating the significant role PBMs play in the drug pricing ecosystem, he said.
He acknowledged, though, that the way PBMs negotiate with pharmaceutical manufacturers and their key business strategies can “at times generate friction in the system,” which is why these companies are a major target for regulatory reform. With this pressure on the industry, it’s up to the PBMs to prove what they’re doing generates value, he said.
“We accept the responsibility to accelerate innovation to make medications more affordable while continuing to improve health outcomes in finding solutions for every person we serve,” Cordani said. “Make no doubt our team will continue to lean into the challenge for the benefit of our patients, clients and the healthcare ecosystem and we are proud of the work that our team does every day and the role we play, and the results we’re able to achieve.”
Revenue at Cigna grew 25% year over year as its Evernorth division continues to build momentum, according to the company’s earnings report released Thursday morning.
Revenues in the second quarter were $60.5 billion, up from the $48.6 billion reported in the second quarter of 2023. The performance surpassed Wall Street analysts’ expectations, according to Zacks Investment Research.
The company also beat the Street on profit, posting $1.5 billion, according to Zacks. That’s on par with the prior-year quarter, where Cigna also reported about $1.5 billion in profit.
“Our second quarter results underscore the strength of our diversified portfolio,” Cigna Group CEO David Cordani said. “We continue to deliver innovative solutions to meet the evolving needs of those we serve.”
“We remain disciplined in our approach to executing our strategy, enabling us to consistently deliver value and sustain our growth in a dynamic environment,” Cordani said.
At the midpoint of 2024, Cigna posted $117.8 billion in revenue and $1.3 billion in profit.
In its report, Cigna said Evernorth was the major driver behind the revenue growth. Revenues at the segment were up 30% overall, including a 41% increase at Express Scripts backed by notable client wins.
Revenues were also up 18% at its specialty care and care services arms, according to the report.
Express Scripts’ membership has expanded significantly over the past year due in part to the onboarding of Cigna’s massive contract win with Centene. In the second quarter, the pharmacy benefit manager boasted 122.5 million members, compared to 98.6 million in the prior-year quarter.
Medical membership was down slightly compared to the second quarter of 2023. Cigna had 19 million health plan members as of June 30, compared to 19.5 million a year ago.
Revenues at Cigna Healthcare, the company’s health insurance segment, were up by 3%. The company has a much smaller footprint in Medicare Advantage when compared to some of its peers, so was less pressured by headwinds in that market.
Medical loss ratio for the quarter was 82.3%, Cigna said.
Cigna expects to bring in at least $235 billion in revenue for the year and $28.40 in earnings per share.