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What the Cigna-Express Scripts deal means for healthcare consolidation — 4 key questions with PwC's Karen Young

In early March, Cigna announced plans to acquire Express Scripts for $67 billion in cash and stock as well as assume $15 billion of Express Scripts' debt.

The transaction joins several key partnerships and acquisitions in the healthcare space over the past 18 months, including the landmark partnership between JPMorgan Chase & Co., Amazon and Berkshire Hathaway as well as the CVS-Aetna deal. The partners hope to close the deal by the end of the year.

Karen Young, U.S. Pharmaceutical and Life Sciences Leader of PwC, discusses the potential acquisition and where deals in the healthcare space are headed.

Question: What do you make of the partnership between Cigna and Express Scripts?

Karen Young: This is a continuation of what we are seeing as a result of healthcare costs continuing to rise and the demand of regulators to drive the costs down. You also have new entrants into the healthcare market — the Amazon effect — that are putting pressure on the existing value chain. Those two dynamics are continuing to drive collaborations and acquisitions of each other to reduce complexity in the healthcare industry. The hope is that we'll get more value from healthcare delivery.

Q: What do you expect to see as a result of the partnership?

KY: We will continue to see consumer demand for lower prices and more transparency. The lack of patients' ability to understand how much drugs cost is a frustration of patients. We see value-based contracts coming to the forefront, and consumers want to be more educated about their bills and have the process simplified.

Q: Do you expect to see more partnerships between big industry players going forward?

KY: We call what we're seeing today the "new health economy." These combinations are going to create efficiencies and lower costs, but at the same time the consumer benefits from the combination of data, patient records and increased exposure for the information on covered lives. I think the expectation is you would hope the combination of these elements will benefit the consumer, and at the same time collapsing the supply chain will bring more affordability to the healthcare system. If you just lower costs, that will benefit patients, but in our new health economy patients are expecting the consumer experience to be more insightful and technology-oriented. Uber is helping patients get to their appointments, and that's having a huge impact on the healthcare economy.

Q: How do you see healthcare delivery changing in the future as a result of these partnerships?

KY: We'll see more value-based contracts and emphasis on utilizing insights from patient data to better target patients. Just prescribing drugs and seeing if it works won't cut it; the hope is we'll be able to use data analytics and evidence to drive better outcomes from prescriptions. As value-based contracting becomes more common, the issue then will be how to make it not overly complex so people can see how they paid for their medication and whether it worked or not. Speed will be important for companies that want to succeed in the space.

It's no surprise you are seeing the roll up in the market now of various combinations to find a winning solution. There is a winning combination out there that will deliver a better cost and outcome.

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