Cigna aims to manage the GLP-1 spending panic

Cigna sales reps are having the same kinds of conversations about Wegovy, Saxenda and Zepbound that other brokers — and brokers’ parents, aunts, uncles and neighbors — are having.

Executives from the health insurer and pharmacy benefit manager talked about the impact of the GLP-1 agonists on benefits advisors’ conversations with employers Thursday, during a conference call the company held with securities analysts to go over second-quarter earnings.

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

GLP-1 agonists and related drugs help people with diabetes control their blood sugar and may also help people lose weight while preventing or treating conditions such as Alzheimer’s disease. Express Scripts has been trying to expand patient access to GLP-1 agonists and other hot new drugs by making deals with drug makers that could help it hold overall costs down for employer plans.

“This class of drug is on tap to be the number 1 pharmacy benefit trend driver for plans of all sizes this year,” Cigna Chief Executive Officer David Cordani told the analysts. “The impact will grow.

Roughly 10% of Americans could be using GLP-1s within 10 years, Cordani said.

Related: Large group health looks good in Q2: Elevance

Cigna and Express Scripts have been taking heat from drug makers and pharmacists who are angry about the effects of the big PBMs on their revenue and from consumer advocates who fear that PBMs might be manipulating costs for employers and patients in unfair and counterproductive ways.

During the call, however, Cordani said PBMs like Express Scripts will be central to helping society afford the rise of the GLP-1 agonists.

“Our role is to negotiate with pharmaceutical manufacturers as well as pharmacies to ensure that individuals are able to access pharmacological innovations at a fair and affordable price,” Cordani said. “In fact, pharmacy benefit companies are the only part of the drug supply chain who work to drive cost down.”

GLP-1 agonists and related drugs have been getting the most attention, because they are so popular and so expensive, but GLP-1 cost panic is a symptom of the fact that the median annual price for all new drugs coming to market in the United States increased to $300,000 in 2023, up 35% over the 2022 median, Cordani said.

Meanwhile, Cordani said, the average out-of-pocket cost for a prescription for an employer plan participant that uses Express Scripts is still just $15.

Employer conversations

Brian Evanko, president of Cigna Healthcare, said each employer client has unique needs.

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

“In terms of our existing clients, we have a similar amount out to bid as we did last year at this time,” he said.

Hot topics during conversations with executives at the employer clients include overall costs, improving behavioral health benefits and finding ways to consolidate the number of benefits providers used.

The new wave of drug innovation that produced the 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 talked much more about employer plans during their company’s earnings call than executives from CVS Health, Elevance and UnitedHealth did during their calls, although executives from all of the companies seemed to be happy with the performance of their employer plans operations.

ICHRAs

Evanko also took an analyst question about individual coverage health reimbursement arrangements, or plans that an employer can use to give employees money to buy their own individual coverage.

Cigna thinks of the ICHRA market as a niche market today but is watching it closely, Evanko said. If ICHRAs take off, they will probably have the most appeal for employers with fewer than 50 employees, which have an average of fewer than 10 employees, he said.

Increased ICHRA use could help sales of Cigna individual coverage through the Affordable Care Act public exchange system but should have little effect on the company’s employer plan business, because Cigna generates little revenue from employers in the micro group segment, Evanko said.

Cigna’s earnings

The second quarter ended June 30.

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

The company ended the quarter providing or administering health coverage for 19 million people, down 2% from the total recorded a year earlier.

About 85% of the company’s employer plan enrollees are in self-funded plans, or “administrative services only” plans.

The number of enrollees in the self-funded plans fell 2%, to 13.6 million, and the number in fully insured plans fell 6%, to 3.8 million.

Enrollment fell in some markets for some types of plans because of moves to increase prices, but, this year, strong growth in sales to employers with fewer than 500 employees should lead to an increase in the number of U.S. employer plan lives covered, Evanko said.