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Express Scripts stock plunges on report that Carl Icahn wants to block Cigna merger

Carl Icahn rattled the health care industry on Wednesday.Icahn, an activist investor, built a sizable...

Posted: Aug 2, 2018 8:24 AM
Updated: Aug 2, 2018 8:24 AM

Carl Icahn rattled the health care industry on Wednesday.

Icahn, an activist investor, built a sizable stake in health insurer Cigna, the Wall Street Journal reported. Cigna is in the process of buying pharmacy benefits manager Express Scripts for $67 billion. Shareholders of both companies are scheduled to vote on approving the deal next month.

Icahn reportedly believes Cigna is paying too much for Express Scripts and will urge shareholders to oppose the deal. Icahn is also wary of the new company competing with Amazon, which is increasingly interested in the pharmacy business, the Journal reported. He is also worried about a federal proposal to limit pharmacy benefits managers' rebates.

Icahn and Cigna did not immediately respond to request for comment.

Related: Cigna agrees to buy Express Scripts for $67 billion

Amazon announced in June that it is buying PillPack, an online pharmacy that delivers medications to customers in pre-sorted doses. The move gives Amazon access to pharmacy licenses in all 50 states and came just a week after CVS announced it will start delivering prescriptions and certain over-the-counter medications to people's homes.

Icahn is also apparently concerned about the Trump administration's efforts to rein in drug costs. Officials are considering scaling back the ability for drug manufacturers to give rebates to pharmacy benefits managers, which is key to their operations. The administration and others blame this system for helping to drive up drug prices.

Related: Amazon buys online pharmacy PillPack

Express Scripts fell 6% on the report, while Cigna moved up 2%. Rite Aid, which Albertsons supermarket chain agreed to buy in February for an undisclosed amount, plunged 6%. Walgreens bought a larger chunk of Rite Aid in September after a long holdup with federal regulators.

Separately, California Insurance Commissioner Dave Jones released a report Wednesday urging the Justice Department to block CVS' proposed tie up with Aetna. CVS agreed to buy Aetna for $69 billion in December.

"The proposed merger of CVS and Aetna will significantly reduce competition," Jones said in a statement. "A merger of this size and type...will likely lead to increased prices and decreased quality."

The commissioner said CVS is a dominant player in both the retail pharmacy business and the pharmacy benefits manager industry, which negotiates with drug companies on behalf of insurers. Consolidating CVS with a health insurer could make it harder for other insurers to use its services, Jones argues. And it will eliminate Aetna as a possible entrant into the pharmacy benefits manager market, which is already very concentrated.

Related: What the CVS-Aetna deal means for consumers

Also, the merger could harm senior citizens since both companies offer Medicare Part D prescription drug plans -- Aetna has a 9% market share and CVS a 24% share, Jones said. If they combined, it could lead to reduced competition and higher premiums.

CVS and Aetna both dropped 1%.

CVS in a statement said it strongly disagrees with the insurance commissioner's assessment.

"Our vision is to create a new health care model that will help consumers improve their health by focusing on prevention and primary care, simplifying their health care experience and reducing costs. We believe that competition within each of the business segments in which we operate -- pharmacy benefit management, pharmacies and insurers -- is fierce and will remain so," it said.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 455783

Reported Deaths: 6166
CountyCasesDeaths
Hennepin945441502
Ramsey40698749
Dakota33623354
Anoka31398368
Washington20579237
Stearns18111190
St. Louis14006251
Scott1221199
Wright11811107
Olmsted1083075
Sherburne831270
Carver705639
Clay660684
Rice624774
Kandiyohi558772
Blue Earth549533
Crow Wing490678
Otter Tail464968
Chisago460438
Benton423788
Winona394948
Douglas379766
Nobles374847
Mower374429
Goodhue358163
Polk330760
McLeod328647
Beltrami316148
Morrison314645
Lyon306139
Becker289439
Itasca287843
Isanti286143
Carlton284443
Steele279510
Pine270515
Freeborn254723
Todd233730
Nicollet230538
Brown218634
Mille Lacs215745
Le Sueur214416
Cass210824
Meeker201533
Waseca193316
Wabasha17483
Martin172026
Roseau166517
Hubbard151138
Redwood141327
Houston140314
Dodge13974
Renville138540
Chippewa133232
Cottonwood129118
Fillmore12778
Wadena120818
Rock112012
Aitkin111533
Faribault110116
Sibley11017
Watonwan10698
Pennington101016
Kanabec99818
Pipestone97223
Yellow Medicine95016
Murray9137
Jackson87310
Swift84718
Pope7485
Stevens7078
Marshall70415
Clearwater68814
Lake66415
Lac qui Parle66116
Wilkin63510
Koochiching60810
Lincoln4912
Big Stone4703
Unassigned43968
Grant4388
Norman4268
Mahnomen4167
Kittson37420
Red Lake3204
Traverse2623
Lake of the Woods1981
Cook1160

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 312194

Reported Deaths: 4433
CountyCasesDeaths
Polk46975465
Linn18114279
Scott15900172
Black Hawk14123243
Woodbury13145181
Johnson1231752
Dubuque11651159
Pottawattamie9182115
Dallas910872
Story883538
Cerro Gordo474372
Webster473377
Warren461539
Sioux460457
Clinton459168
Marshall432262
Buena Vista397230
Muscatine396578
Des Moines395543
Plymouth353670
Wapello351798
Jasper333359
Lee326932
Marion310853
Jones275250
Henry269131
Carroll258934
Bremer250448
Crawford235824
Washington224133
Boone223517
Benton213950
Mahaska198637
Jackson195332
Tama190959
Dickinson189229
Kossuth180944
Delaware176536
Clay173021
Wright167624
Fayette166324
Hamilton162530
Buchanan162324
Winneshiek161020
Harrison158762
Hardin157831
Cedar155819
Clayton153949
Butler152324
Page148115
Floyd141936
Cherokee140327
Mills138517
Lyon137933
Poweshiek135424
Hancock132424
Allamakee131530
Iowa128022
Madison124210
Calhoun12379
Grundy122828
Jefferson122425
Winnebago122329
Mitchell117137
Louisa116430
Cass115343
Chickasaw113812
Appanoose113040
Sac112815
Union111723
Emmet111332
Humboldt107819
Shelby106427
Guthrie104624
Franklin103618
Unassigned10210
Palo Alto92611
Montgomery89224
Keokuk86426
Howard85919
Monroe82620
Clarke8199
Pocahontas78711
Ida76430
Davis70421
Adair69720
Greene6977
Monona68418
Lucas66910
Osceola65011
Worth6224
Taylor6009
Fremont5276
Van Buren50515
Decatur4994
Ringgold45511
Audubon4258
Wayne42021
Adams3023
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