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What $52B Cigna-Express Scripts deal means for healthcare

The U.S. Department of Justice approved the proposed $52 billion merger between Cigna and Express Scripts Sept. 17.

The approval marks the final hurdle for the proposed merger, which was first announced in March. The deal is slated to close by the end of 2018.

However, the deal comes at a time when pharmacy benefit managers like Express Scripts are facing increasing scrutiny by the public and federal regulators, who accuse such organizations of encouraging and profiting off of ever-increasing drug prices, Bloomberg's Max Nisen reports.

Political interest in the PBM business model has sparked the Trump administration to consider laws to make the process more transparent. The administration is reportedly working on a rule that may make the drug rebates PBMs negotiate substantially less lucrative, Mr. Nisen states.

Some experts suggest the Justice Department approved the proposed merger because it represented a vertical combination, which presents fewer antitrust issues than other failed insurance mergers, according to Reuters.

Experts also suggest the deal is one of many that will be made in the coming months and years to combat increasing disruption within the industry from the likes of Amazon and other organizations. Amazon, in particular, recently purchased online pharmacy retailer PillPack for $1 billion, which some analysts speculate will help the retailer undercut traditional prescription drug sales.

A Mizuho Securities analyst reiterated Amazon's potential foray into the market, writing in a report obtained by Forbes that "although PillPack is a small player, it's probably safe to assume this acquisition is the first of many steps that Amazon will take to enter the pharmacy space."

"Everyone is feeling the pressure right now ... to react to disruption in the healthcare industry," Brad Haller, a director in West Monroe Partners' mergers and acquisitions practice, told Reuters.

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