Cigna CEO David Cordani on Carl Icahn opposing Express Scripts deal

Brendan McDermid | Reuters

David Cordani, president and CEO of CIGNA Corp., appears on CNBC at the New York Stock Exchange, in New York, March 8, 2018.

Cigna CEO David Cordani is “disappointed” famed activist investor Carl Icahn aired his concerns about the health insurer’s acquisition of Express Scripts in an open letter instead of sharing them with Cigna, Cordani told CNBC’s “Squawk on the Street” on Wednesday.

Icahn published a searing letter Tuesday opposing Cigna’s $54 billion acquisition of pharmacy benefit manager Express Scripts. Titled “Cigna’s $60 billion folly,” he says buying the firm “may well become one of the worst blunders in corporate history.”

“We’re disappointed that he chose that, his means of communication, as an open letter,” Cordani said. “There’s been no inbound communication to our corporation.”

Pharmacy benefit managers control which drugs are covered and negotiate discounts, known as rebates, on branded drugs with manufacturers. They’re a favorite target of drugmakers, who say these middlemen want higher drug prices so they can squeeze higher profits from rebates.

The Trump administration has vowed to re-examine this system. President Donald Trump spent a large chunk of his speech announcing his blueprint to lower drug prices attacking middlemen who he said “won’t be so rich anymore.” Pfizer CEO Ian Read last week told Wall Street analysts he believes the Trump administration may eliminate rebates altogether.

Icahn argues this looming regulatory combined with the possibility of Amazon disrupting the industry pose “existential threats to the PBM business model.” Amazon does not currently operate in the prescription drug benefit space, though earlier this year it said it would acquire online pharmacy start-up PillPack.

Cigna defended its deal in a letter to shareholders published Tuesday evening, saying it “believes that the proposed combination will create tremendous value for shareholders, accelerate the transformation of healthcare and address the dynamic regulatory environment for health services.”

Cordani reiterated Cigna’s position Wednesday that buying Express Scripts gives it a way to compete in the changing landscape.

Rival health insurer Aetna is in the process of being acquired by CVS Health. The roughly $69 billion deal would create a health-care powerhouse, combining insurance, prescription drug benefits and drugstores. Shareholders from both companies have already approved the deal, and CVS said Wednesday it expects it to close in the late third quarter or early fourth quarter of this year.