The changes across the health-care landscape come amid widespread frustration among U.S. businesses and individuals over the complexity of a system in which doctors, hospitals, insurers and pharmaceutical companies have different, often competing, interests.

Share story

The health-insurance giant Cigna said Thursday it had agreed to buy Express Scripts, the largest pharmacy-benefit manager in the United States, in a $52 billion deal that would further reshape the health-care industry.

The deal is the latest in a recent wave of consolidation across the health-care sector, which has been marked by spiraling costs and roiled by Amazon’s announcement in January that it was teaming up with Berkshire Hathaway and JPMorgan Chase to try to simplify coverage, a move that unsettled established industry players.

The changes come amid widespread frustration among U.S. businesses and individuals over the complexity of a system in which doctors, hospitals, insurers and pharmaceutical companies have different, often competing, interests.

The deal announced Thursday would combine one of the United States’ largest insurers, Cigna, with a company that is responsible for the drug plans of more than 80 million Americans, including those of workers at large employers such as the Department of Defense.

Most Read Business Stories

Unlimited Digital Access. $1 for 4 weeks.

Express Scripts has long pitched itself as an independent player whose main focus is lowering medical costs by striking deals with drug companies on behalf of insurers and large employers.

Its major competitors are CVS Health, which owns retail pharmacies and itself recently announced a merger with health insurer Aetna; and OptumRx, which is owned by insurance giant UnitedHealth Group.

Cigna and Express Scripts said the acquisition would benefit consumers by allowing the two companies to bring together patients’ medical and pharmacy histories to improve treatments and lower costs.

“This step furthers our strategy to improve the affordability and value to the consumer in a more personalized way,” said Cigna’s chief executive, David Cordani, who will serve as CEO for the combined company.

The completion of the deal would mark the end of Express Scripts as the last major independent pharmacy benefit manager. The company is responsible for the prescription plans of more than 80 million Americans.

“This is the future of the stand-alone” pharmacy benefit manager, said Tim Wentworth, chief executive of Express Scripts, who would serve as president of the Express Scripts business under the deal.

The two companies said that they would continue to offer pharmacy services to other insurers and to employers that do not use Cigna.

The insurance companies now say they need to integrate the delivery of care and pharmacy benefits into their own operations in order to tackle high medical costs.

On Wednesday, the commissioner of the Food and Drug Administration, Scott Gottlieb, said in a speech that the situation had created “misaligned incentives,” as the discounts that manufacturers negotiate “may not always be passed along to employers or consumers.”

The deal announced Thursday would not address the issue of consolidation, but analysts have said that better coordination between insurers, which manage a member’s medical costs, and pharmacy-benefit managers, which are responsible for drugs, could lower costs overall.

Indeed, the companies said Thursday that the news would “drive the combined company’s role as the connective tissue between individuals and their health-care providers” and bring “a more coordinated approach to an individual’s health care journey.”

Executives for CVS and Aetna made similar claims when that deal was announced last year. But others have expressed skepticism, questioning whether the new behemoths will be able to disrupt the industry and improve the experience of health-care consumers.

Thursday’s deal comes a little over a year after a judge blocked a proposed $48 billion merger of Cigna and Anthem. Separately, a judge also blocked a $37 billion deal between Aetna and another health insurer, Humana, last year.

Express Scripts, based in St. Louis, reported revenue of $100.3 billion in 2016 and employed about 25,000 people. Under the terms of the deal, its shareholders would receive $48.75 in cash and 0.2434 of a share of the combined company, equivalent to $67 billion in cash and stock, including the assumption of $15 billion in debt. That represented a 31 percent premium to the closing price of Express Scripts on Wednesday. The company’s stock was up 14 percent in premarket trading Thursday.

After the transaction, Cigna shareholders would own about 64 percent of the combined company, and Express Scripts shareholders would own the rest. The transaction is expected to close by the end of the year and is subject to shareholder and regulatory approval.

The combined company would be named Cigna and would be based in Bloomfield, Connecticut, where Cigna has its headquarters. Express Scripts would continue to have its headquarters in St. Louis.