Beginning on Jan. 1, 2024, Cigna’s Express Scripts will manage Centene’s pharmacy benefit services and will handle the more than $35 billion in annual prescription drug spend for about 20 million Centene members.
The new multi-year contract will deliver greater savings than prior expectations, Centene CEO Sarah London said Tuesday on a call discussing third-quarter results with investors.
Analyst AJ Rice from Credit Suisse described the PBM move as “one of the biggest contracts that’s changed hands in awhile.”
The award means the payer will break away from CVS Caremark, which was managing “$40 billion plus or minus” of gross pharmacy spend, Centene CFO Drew Asher said Tuesday.
London didn’t provide specifics on what gave Express Scripts the edge. London said they were very pleased with how competitive the process was, saying it gave the company multiple options.
“It was really sort of the aggregate calculus that made the decision, not any one individual thing,” London said.
The decision to rebid the PBM contract is part of a larger long-term plan to boost the company’s profit margin.
Last year, the executive team said it was looking to divest non-core assets as part of its “value creation plan,” that includes off-loading its international business.
Centene said it closed the sale of Pantherx this quarter, a specialty pharmacy it acquired in 2020.
London said the company is in the closing process for the sale of Magellan Rx, a PBM, and Ribera in Spain, which operates 10 hospitals with 1,650 beds and 71 outpatient centers.
The company previously said it inked a $2.8 billion deal for the sale of its pharmacy businesses, Pantherx and Magellan Rx.
The St. Louis-based insurer raised its financial earnings targets for the full year on increased membership, enrollment, net income and revenue.
Profit was up 26% to $738 million while revenue increased 11% to about $36 billion. Membership climbed 5%.