Health and Science

Cigna CEO David Cordani 'disappointed' Carl Icahn shared his concerns over Express Scripts deal in an open letter, says Icahn hasn't contacted Cigna 

Key Points
  • Carl Icahn published a searing letter opposing Cigna's $54 billion acquisition of pharmacy benefit manager Express Scripts.
  • Cigna CEO David Cordani says Icahn hasn't reached out to the company directly.
  • He says he's "disappointed" Icahn chose to share his concerns in an open letter.
Cigna CEO David Cordani defends Express Scripts deal

Cigna CEO David Cordani told CNBC on Wednesday he is "disappointed" activist investor Carl Icahn aired his concerns about the health insurer's acquisition of Express Scripts in an open letter instead of sharing them with Cigna.

Icahn published a searing letter Tuesday opposing Cigna's $54 billion acquisition of pharmacy benefit manager Express Scripts. Titled "Cigna's $60 billion folly," Icahn said buying the company "may well become one of the worst blunders in corporate history."

"We're disappointed that he chose that, his means of communication was an open letter," Cordani told CNBC's "Squawk on the Street." "There's been no inbound [communication] to our corporation."

Cigna says it and Express Scripts are complementary businesses that when combined can improve care for patients and lower health-care costs. Icahn argues looming regulatory risk combined with the possibility of Amazon disrupting the industry pose "existential threats to the PBM business model."

Pharmacy benefit managers control which drugs are covered and negotiate discounts, known as rebates, on branded drugs with manufacturers. They're a favorite target of drugmakers, who say these middlemen want higher drug prices so they can squeeze higher profits from rebates.

The Trump administration has vowed to re-examine this system. President Donald Trump spent a large chunk of his speech announcing his blueprint to lower drug prices attacking middlemen, who he said "won't be so rich anymore." Pfizer CEO Ian Read last week told Wall Street analysts he believes the Trump administration may eliminate rebates altogether.

Amazon does not currently operate in the prescription drug benefit space, though earlier this year it said it would acquire online pharmacy start-up PillPack.

"As it relates to Amazon, it's another example of change and evolution," Cordani said. "They're entering the mail order pharmaceutical fulfillment. We see that action, obviously we anticipated that action. The clinical integration, we think, is the point of differentiation."

Rival health insurer Aetna is in the process of being acquired by CVS Health. The roughly $69 billion deal would create a health-care powerhouse, combining insurance, prescription drug benefits and drugstores. Shareholders from both companies have already approved the deal, and CVS said Wednesday it expects it to close in the late third quarter or early fourth quarter.

"We're committed to this really attractive strategic and financial combination," Cordani said.