Carl Icahn slams Express Scripts deal in public letter to Cigna

Investor Carl Icahn penned a public letter to shareholders of health insurance company Cigna in an effort to derail the acquisition of Express Scripts, a pharmacy benefits manager, for more than $60 billion.

The “folly,” according to Icahn, stems from the “ridiculous” price tag for Express Scripts, which is one of the nation’s largest PBMs.

Cigna investors would only possibly vote for the acquisition from a desire to see Express Scripts saved at the expense of their Cigna investment, he concluded.

Beyond being overvalued, Icahn said, the deal faces regulatory risks and will face scrutiny over competitive disruption. He cited the Trump administration’s recent attempts to lower drug prices and recent changes to the rebate system that put Express Script’s mere existence in jeopardy. Furthermore, the entry of Amazon into the healthcare and PBM space will put further pressure on Express Scripts’ success.


“It’s a travesty to complete this deal,” he wrote. “Paying an over 50 percent premium to a company whose very existence may be challenged is a potentially massive destruction of Cigna shareholder value.”

Cigna has launched a website to defend the deal with Express Scripts, and the scheduled shareholder’s meeting to vote on the deal is scheduled for Aug. 24.

Cigna executives were bullish on the merger getting shareholder approval during the company's second quarter earnings call Thursday, Aug. 2. 

Icahn proposed to keep Cigna independent and build its own PBM business or contract with PBMs instead of buying one.

Icahn's concerns, including the price of the deal and the looming competition from Amazon, are “not new,” according to an analysis from Ana Gupte, senior analyst and managing director of healthcare services at Leerink Partners, who also sees Icahn’s alternative as “unrealistic.” The merger would make Cigna more competitive in the pharmacy benefits space.

“Integration of medical and pharmacy benefits with clinical capabilities and physician networks is the future of health benefits and minimizes existential threats from [Amazon] and can counter the elimination of rebates through a total cost of care and medical underwriting business model,” Gupte wrote.