Cigna hails pharmacy deal with the FTC, battles elevated cost trends

The Cigna Group faced many of the same increased health care cost drivers during the fourth quarter, and it pushed profits down slightly.

But the healthcare giant resolved one issue this week with its pharmacy benefit manager settlement with the Federal Trade Commission.

The settlement with Express Scripts resolves allegations that it inflated insulin prices through anti-competitive rebate tactics. Cigna agreed to eliminate spread pricing, move its Swiss-based Ascent Health Services to the U.S., and lower patient costs by linking out-of-pocket expenses to net prices, not list prices, by 2027.

Cigna CEO David M. Cordani hailed the agreement as a deal that will bring stability for the insurer and lower prices for consumers. Cordani spoke during a Thursday morning conference call with Wall Street analysts.

"The beneficiary of the settlement is our customers and patients," he said. "The settlement noted $7 billion in out-of-pocket cost relief over the next 10 years for the 100 million customers and patients we serve. The savings will be delivered through lower insulin prices and reduced costs for branded medications for consumers at the pharmacy counter."

Cigna is required to submit to FTC monitoring for 10 years. The settlement encourages transparency in how drug rebates are handled, but does not include financial penalties or admission of wrongdoing.

PBMs are third-party administrators that manage prescription drug benefits on behalf of health insurers, large employers, unions, and government programs. They act as intermediaries between insurers, drug manufacturers, pharmacies, and patients.

A FTC report from earlier this year found that the ‘Big 3 PBMs’—Caremark Rx, Express Scripts, and OptumRx —marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.

PBM reform announced this week will bring "additional clarity" to Cigna's efforts, Cordani said. Part of legislation signed by President Donald Trump this week, ending a partial government shutdown, the Consolidated Appropriations Act 2026 includes transparency requirements for PBMs.

In Other News

Medical-loss ratio. The Cigna Healthcare medical-loss ratio, which the insurer calls its "medical-care ratio," was 88% in Q4, compared to 87.9% during the year-ago quarter. The Cigna MLR was 84.4% for full-year 2025, compared to 83.2% for 2024, primarily due to "higher medical costs, driven by the Individual and Family Plans business," the insurer said in a news release.

It is a trend plaguing most health insurers as aging Americans need more medical care.

Repricing and rate increases will help Cigna get its MLR back where it should be, said Ann Dennison, chief financial officer.

"The 2025 [MLR] benefited from several one-time items in our individual business, both of which impact the jump-off point for the year and temper the year-over-year [MLR] improvement," she noted. "And beyond those items, there are mixed dynamics to consider as well."

Quarterly Snapshot

• Cigna Healthcare membership is expected to remain flat year over year at about 18.1 million lives. That breaks down to growth in the U.S., employer and international health businesses, offset by a decline in individual exchange customers within the U.S.
• Total customer relationships increased 3% year-over-year to 188.4 million, reflecting new sales and the continued expansion of relationships in Pharmacy Benefit Services and Behavioral Care, partially offset by the HCSC transaction.
• In Pharmacy Benefit Services, Q4 and full-year 2025 adjusted revenues increased 20% and 18%, respectively.
• In Cigna Healthcare, Q4 and full-year 2025 adjusted revenues decreased 16% and 11%, respectively, primarily reflecting the impact of the HCSC transaction.
• The Cigna Group's outlook for full-year 2026 adjusted revenues is approximately $280 billion.

Management Perspective

“Chronic disease and mental health conditions account for roughly 90% of total health care spending. … In most industries, when additional supply comes online, costs go down. However, in health care, costs are rising even as additional supply becomes available. Consider that since 2000, the cost of a hospital stay has increased more than 220%. According to 2024 data, the median price of a new drug launch was over $370,000 compared to only $2,000 just 20 years ago.”

CEO David M. Cordani on rising healthcare costs

By The Numbers

• Total Revenue: $72.5 billion ($65.6 billion in Q4 2024)
• Net Income: $1.2 billion ($1.4 billion in Q4 2024)
• Earnings Per Share: $4.64 ($5.13 in Q4 2024)
• Share Repurchases: $3.6 billion during 2025
• Dividend Declared: $1.56 per share
• Stock Price Movement: Shares rose more than 3% by midday Thursday to $280.26.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.