Newspaper article St Louis Post-Dispatch (MO)

St. Louis Braces for Loss of Another Headquarters as Cigna Acquires Express Scripts

Newspaper article St Louis Post-Dispatch (MO)

St. Louis Braces for Loss of Another Headquarters as Cigna Acquires Express Scripts

Article excerpt

St. Louisans should be numb to it by now.

It was 10 years ago that Anheuser-Busch, a brand entwined in this city's DNA, was gobbled up by international brewer InBev. German conglomerate Bayer's takeover of agriculture and scientific giant Monsanto is expected to close in months. Panera Bread is now part of a Luxembourg investment firm. Purina is part of Nestl.

With consolidation rampant in the health care industry, it's not a surprise to those who follow it that Express Scripts appears to be on its way to becoming the pharmacy benefit unit of health insurance giant Cigna.

But locals can be excused if news of the tie-up, a closely guarded secret until hours before the official announcement, came as a shock. The esoteric business of prescription drug management didn't exactly make Express Scripts a national household name. But it was long one of the best-performing corporations here, run from headquarters in north St. Louis County and employing some 4,700 locals.

And it had risen over the last three decades to become the biggest company by revenue in St. Louis, coming in at No. 22 on the Fortune 500 list last year. That's bigger than Bank of America. Bigger than Microsoft. Bigger than its acquirer, Cigna.

Though the Express Scripts pharmacy benefit management unit will remain headquartered here, St. Louis knows all too well that the loss of the C-suite can affect local charitable giving and local jobs, often high-paying administrative ones.

With corporate consolidation comes talk of synergies, code for overlapping functions that often include information technology, management and accounting. Cigna says it believes it can hit $600 million in annual administrative efficiencies following closure of the $67 billion deal.

"When you have two organizations coming together in any space, there's likely to be some overlap," said John Boylan, an Edward Jones analyst who follows Express Scripts.

That said, he added that Cigna doesn't currently operate a pharmacy benefit manager, so there's less overlap than other mergers. "We see the operation in St. Louis being an important part of the organization longer term."

Still, there are likely functions at both health care companies dealing with prescription benefits, said Jason Turner, a professor of health policy and management at the University of Cincinnati and a former controller at Cigna. Whether affected jobs will be on the Cigna side or the Express Scripts side is hard to say.

Some of the efficiencies could come from more cost-effective delivery of health care benefits, using the vast data of both companies to coordinate prescription drugs and other services, Turner said. Even then, "I suspect that the vast majority of it will be redundancy," he said.

Bloomfield, Conn., where Cigna is based, isn't exactly a hotbed of pharmacy benefit management talent, though. …

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