Icahn: Amazon could ruin Cigna-Express Scripts deal
Amazon’s budding entry into the online prescription business is one of several reasons why shareholders should reject health insurer Cigna’s proposed acquisition of pharmacy benefits manager Express Scripts, activist investor Carl Icahn argued.
The billionaire investor is mounting a campaign to kill the $54 billion deal, saying that Cigna acted too hastily amid signs of structural change for the health care industry.
Icahn argued in an open letter released Tuesday morning that the tie-up is “a travesty” and “patently ridiculous.”
“Cigna is dramatically overpaying for a highly challenged Express Scripts that is facing existential risks on several fronts,” the Cigna shareholder and Icahn Enterprises chief wrote.
Key to his argument is his perspective that Amazon’s recent entry into the online pharmacy business poses a serious threat to Express Scripts’ position as the middleman in pharmaceuticals.
Some health care leaders have blamed PBMs (pharmacy benefit managers) as a driver of steep drug prices, saying the sector’s role in the distribution of medicine and management of drug benefits is an unnecessary layer of bureaucracy. PBMs contend they save billions of dollars annually by managing benefits efficiently.
Speculation is swirling that Amazon will use its recently announced acquisition of Boston-based online pharmacy startup PillPack to challenge the status quo in the health care business.
What’s more, Amazon CEO Jeff Bezos, billionaire investor Warren Buffett and JPMorgan Chase CEO Jamie Dimon have announced a separate not-forprofit company aimed at lowering health care costs.
“Competitive risk from Amazon, arguably the strongest competitor in the world, will be an existential threat to PBMs like Express Scripts, possibly challenging their very existence,” Icahn wrote.
A spokesperson for the Cigna-Express Scripts deal was not immediately available for comment Tuesday morning.
“When Amazon starts to compete as we believe they will, with their 100 million Prime users and scale distribution system, they will have no trouble breaking into the so-called ‘ecosystem.’ With lower prices, the beneficiary will be the American consumer, not the owners of Express Scripts,” Icahn said.
Icahn also contended that Express Scripts customers, including nine of his own companies, are upset about drug rebates paid to PBMs. Instead of an acquisition, Icahn argued that Cigna should partner with Express Scripts or form its own PBM capability.