By Leroy Leo
(Reuters) -Cigna Corp expects its pharmacy benefit management unit to earn more from the second half of 2023 as makers of cheaper versions of AbbVie Inc’s arthritis drug Humira will boost aftermarket discounts to gain access to patients.
Amgen Inc launched a biosimilar version of Humira called Amjevita in the United States on Tuesday, and at least seven others are expected to roll out in July.
Pharmacy benefit managers (PBMs) act as intermediaries between drugmakers and insurers. They get after-market discounts from drugmakers to add treatments to the lists they recommend to insurers and companies offering coverage for employees.
PBMs typically pass on most of the discounts, called rebates, to their clients and retain some in fees.
Cigna’s PBM unit has both Humira and Amgen’s Amjevita on its list of covered drugs.
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Chief Executive David Cordani said in a conference call to discuss Cigna’s fourth-quarter earnings that he anticipates “value creation from the increased availability of biosimilars building in the second half of 2023 and ramping in 2024 and beyond.”
Those gains will help partially offset the anticipated cost this year of setting up its contract to manage Centene Corp’s annual pharmacy spend of around $40 billion.
Cigna’s insurance arm, meanwhile, faces a possible shift towards less profitable government-backed health programs due to chances of the U.S. economy’s “fragility” pressuring enrollment in corporate plans, Cordani said.
The company forecast a medical care ratio – the ratio of the amount paid out for medical services versus revenue brought in – of 81.5% to 82.5% for 2023. The midpoint is marginally higher than last year’s 81.7% and a Wall Street estimate of 81.9%.
Its annual profit forecast of at least $24.60 per share was marginally below expectations of $24.84 per share.
Shares of Cigna were down 1% at $298.44.
(Reporting by Leroy Leo in BengaluruEditing by Vinay Dwivedi and Devika Syamnath)