Cigna aims to tame GLP-1 spending panic

Cigna is the parent company of Express Scripts, which had a 23 percent share of the U.S. pharmacy benefit management services market in 2023, according to the Drug Channels Institute.

GLP-1 agonists and related drugs help people with diabetes control their blood sugar levels, and they can also help people lose weight while preventing or treating conditions like Alzheimer’s disease. Express Scripts is trying to expand patient access to GLP-1 agonists and other hot new drugs by striking deals with drugmakers that can help keep overall costs low for employee plans.

“This class of drugs is on track to become the No. 1 pharmacy benefit trend this year for plans of all sizes,” Cigna CEO David Cordani told analysts. “The impact will grow.

Within 10 years, about 10% of Americans could be using GLP-1, Cordani said.

Cigna and Express Scripts have faced criticism from drugmakers and pharmacists who are outraged by the impact large PBMs have on their revenues, and from consumer advocates who worry that PBMs may manipulate costs for employers and patients in unfair and counterproductive ways.

During the call, however, Cordani said PBMs like Express Scripts will play a key role in helping society finance the growth in demand for GLP-1 agonists.

“Our role is to negotiate with pharmaceutical manufacturers as well as pharmacies to ensure individuals have access to pharmaceutical innovations at a fair and affordable price,” Cordani said. “In reality, pharmaceutical benefit companies are the only part of the drug supply chain that is working to reduce costs.”

GLP-1 agonists and related drugs are getting the most attention because they are so popular and expensive. But the panic about GLP-1 costs is a symptom of the fact that the median annual price of all new drugs introduced in the United States has risen to $300,000 in 2023, up 35% from the median in 2022, Cordani said.

Meanwhile, Cordani says, the average prescription cost for an employee plan participant using Express Scripts is still just $15.

Conversations with employers

Brian Evanko, president of Cigna Healthcare, said every employer and customer has unique needs.

Cigna is receiving a “relatively flat number” of requests for proposals from employers seeking new insurers or plan administrators compared with what Cigna was seeing in mid-2023, Evanko said.

“As far as our current customers are concerned, we have a similar amount to offer as we did this time last year,” he said.

Hot topics of conversation with executives from employer clients include overhead costs, improving mental health benefits and finding ways to consolidate the number of benefit providers.

The new wave of drug innovation that has produced GLP-1 agonists and gene therapy agents is another key area of ​​focus, Evanko said. He emphasized that the company is taking a disciplined approach to pricing.

Cigna executives discussed employee plans significantly more during the earnings conference call than did executives from CVS Health, Elevance and UnitedHealth, although executives from all companies seemed pleased with how their employee plans were performing.

Cigna sees the ICHRA market as a niche market, but it’s one that it’s watching closely, Evanko said. If ICHRAs take off, they’ll likely be most attractive to employers with fewer than 50 employees, which have fewer than 10 employees on average, he said.

Increased use of ICHRAs could boost Cigna’s individual insurance sales through the Affordable Care Act’s public exchange system, Evanko said, but it shouldn’t have a major impact on the company’s employee plans business because Cigna generates little revenue from employers in the microgroup segment.

Cigna’s revenues

The second quarter ended on June 30.

Cigna reported total net income of $1.6 billion for the quarter on revenue of $60 billion, compared to $1.5 billion in net income on revenue of $41 billion for the second quarter of 2023.

The company ended the quarter having provided or administered health care to 19 million people, down 2% from the number reported a year earlier.

About 85% of the people enrolled in the company’s employee plans are in self-funded or “administrative services only” plans.

The number of people enrolled in self-insured plans fell 2% to 13.6 million, while the number of people enrolled in fully insured plans fell 6% to 3.8 million.

Some countries have seen a decline in enrollment in some types of plans due to price increases, but a large increase in sales to employers with fewer than 500 employees this year should lead to an increase in the number of people covered by employer plans in the U.S., Evanko said.