Cigna’s $3.5 Billion Bet Tightens Its Grip on Specialty Drugs

Evernorth’s new latest investment in Shields Health Solutions ties its parent company, Cigna, even closer to hospitals and the fast-growing specialty drug market.

Regular readers will know that we’ve harped on UnitedHealth Group’s vertical integration into care delivery, pharmacy benefits and nearly every other corner of the health care landscape. But UnitedHealth isn’t the only company guilty of vertical integration: Cigna is playing the same game.

This week, Cigna’s health services arm, Evernorth, announced a $3.5 billion investment into Shields Health Solutions, a fast-growing specialty pharmacy company.

Shields partners with more than 80 health systems and over 1,000 hospitals and clinics across nearly all 50 states. That reach gives Cigna another way to weave itself into the daily operations of hospitals – and the lives of millions of patients.

From insurer to health services conglomerate

When I was an executive at Cigna, the company was primarily what’s known as a third-party administrator. We sold some health and group life policies as an insurer, but our bread-and-butter was administering health benefits for large employers. Our “value proposition" back then was keeping costs under control — at least as we defined them. Evernorth didn’t exist. At the time, to me, the idea that Cigna would one day be pouring billions into specialty pharmacies and drug distributors would have seemed far-fetched.    

In 2018, though, Cigna bought the huge pharmacy benefit manager Express Scripts. And soon after that, it created Evernorth to oversee its non-insurance health services operations, not only its PBM but also specialty pharmacies, and now investments like Shields. Cigna is no longer just deciding what care to cover, but it’s increasingly involved in how drugs are dispensed and priced. In fact, the company now gets the great majority of its revenues from the pharmacy business. Of the $195 billion in revenues Cigna took in last year, $154 billion came from Evernorth. 

The same old consolidation story

According to Reuters, Evernorth’s investment in Shields was structured as preferred stock and, according to the company, won’t affect its 2025 profit forecast. But make no mistake: This is part of the same playbook we’ve seen before from companies Americans have been led to believe are primarily insurers.

UnitedHealth buys physician practices, rehab centers, and home health companies. CVS Health owns Aetna, the PBM Caremark, and a sprawling pharmacy business. Cigna, for its part, is also planting stakes across the drug supply chain. In addition to Express Scripts, it also owns Accredo, one of the nation’s largest specialty pharmacies, and now Shields.

Cigna CEO David Cordani, who I once worked with during my time at Cigna, framed the deal as a way to “deliver exceptional care across healthcare settings – from home to physician’s office or clinic, to hospital”. In a statement on Evernoth’s website, Cordani said: 

“Demand for specialty medications continues to grow at an accelerated pace, and Evernorth is uniquely positioned to serve the rapidly expanding number of individuals living with complex and chronic conditions and the doctors who care for them.”

Specialty medications, as Cordani mentioned, are among the fastest-growing and most expensive parts of the pharmaceutical market and include medications for cancer, multiple sclerosis, rheumatoid arthritis and other complex and chronic conditions. Research indicates that spending on specialty drugs will make up more than half of all U.S. drug spending in the coming years.

That’s why Evernorth already owns Accredo. Now, by getting into bed with Shields, Evernorth is tying itself even closer to the hospitals and health systems that rely on specialty pharmacies to serve patients.

What can be done about it?

When insurers buy into the businesses that are supposed to compete for contracts (like pharmacies and physician practices) it gives the insurer almost all the cards because they are able to both set the rules of the game and profit from it. Competition suffers, and costs for patients and employers can rise.

Fortunately, Washington is starting to wise up to these tactics. The Patients Over Profits Act, soon to be introduced by Sen. Jeff Merkley (D-Oregon) and Rep. Val Hoyle (D-Oregon), would prevent insurers from owning most doctors offices and medical providers. In addition, The Patients Before Monopolies Act, introduced by Sens. Elizabeth Warren (D-Massachusetts) and Josh Hawley (R-Missouri), prevents pharmacy benefit managers and/or health insurers from owning pharmacies. Given a divided Congress, these bills wont be easy to pass, but seeing strange bedfellows like Warren and Hawley taking the lead brings me great hope. 

I saw firsthand during my years inside Cigna how Wall Street’s pressure for constant growth drives these decisions. Insurers and their shareholders aren’t satisfied with premiums alone. They want to control the entire pipeline — from the doctor’s prescription pad to patients’ wallets.

So the next time you hear about vertical integration in health care, don’t just think about UnitedHealth Group. Remember that Cigna is moving just as aggressively. With this latest $3.5 billion bet, it’s clear that the insurer I once worked for has transformed into something much larger — and far concerning — than the insurance company most folks believe it to be.