The planned merger between Cigna and Express Scripts will be closely watched in Bloomington, where Express Scripts employs about 1,000 people.
St. Louis-based Express Scripts, which is the nation's largest pharmaceutical benefits manager (PBM), has in the Twin Cities a mix of employees and contractors working in technology, account management, human resources, clinical evaluation and other corporate functions, said Brian Henry, a company spokesman.
On Thursday, the Connecticut-based health insurer Cigna offered to buy Express Scripts in a $52 billion deal that promises about $600 million in what the companies called "retained synergies" primarily from administrative efficiency.
"Unfortunately, whenever you have two large organizations coming together, there likely will be some degree of overlap," said John Boylan, a senior analyst with Edward Jones, via e-mail. "To what extent and where, we don't know."
Boylan added: "However with Express Scripts being such a unique company, and a large PBM is something Cigna doesn't have, we see Express' PBM operations being an important part of the combined organization longer-term, assuming regulatory approval."
PBMs manage the pharmacy portion of health insurance benefits. They negotiate prices with drug manufacturers as well as the pharmacies that dispense medications. PBMs also advise health plans on "formularies" that assign particular drugs to tiers with different copay requirements.
Under terms of the deal announced Thursday, Cigna would buy Express Scripts in a cash and stock transaction valued at about $67 billion, with Cigna also absorbing about $15 billion in Express Scripts debt. The companies said the acquisition would help improve quality while making health care more affordable.
The Twin Cities has a significant chunk of the PBM market's leadership. Beyond the Express Scripts workers in Bloomington, Minnetonka-based UnitedHealth Group runs OptumRx, which is the nation's third-largest PBM.
Eagan-based Prime Therapeutics is the PBM for many nonprofit Blue Cross and Blue Shield insurance companies, employing more than 2,500 people in Minnesota. Minneapolis-based Fairview Health Services runs a PBM, as well.
Henry, the Express Scripts spokesman, said it's business as usual for workers until the deal closes, which isn't expected until December. In information filed with the Securities and Exchange Commission on Thursday, Cigna addressed questions about the potential for lost jobs and layoffs.
"There will be no immediate layoffs as a result of the announcement of the proposed transaction," the company said. "Post close, integration planning will begin. Based on those integration plans, there are certain positions which could be impacted but it is too premature to know specifics."
In the filed materials, Cigna also called the deal "a strategic acquisition. The success of the combined company will not be built upon savings through layoffs but rather through the collective skills of the people from both Cigna and Express Scripts."