Cigna is buying Express Scripts, a deal valued at about $67 billion

Cigna is buying drug benefits manager Express Scripts in a deal valued at about $67 billion, making it one of the biggest healthcare acquisitions ever. The industry is in a dealmaking frenzy as companies try to cope with spiraling medical costs and as the threat of Amazon entering the sector looms.

The acquisition follows CVS Health’s offer in December to buy insurer Aetna, a transaction valued at about $69 billion, according to Dealogic data. Cigna’s takeover would be the fifth-biggest healthcare buyout on record. The Bloomfield, Connecticut-based company’s stockholders will own roughly 64% of the combined company, and the deal is expected to be completed by the end of the year, subject to shareholder and regulatory approvals.

In January, Amazon, Berkshire Hathaway, and JPMorgan announced a vague but market-moving plan to offer healthcare services to the companies’ employees at a lower cost. While the news was short on detail, it was enough to cause Cigna and Express Scripts’ share prices to fall about 6%.

“The healthcare ecosystem puts tremendous pressure on our society, and by expansion on far too many individuals and families,” Cigna CEO David Cordani said in a conference call. “The need for more a sustainable healthcare system is evident.”

Express Scripts is the US’s biggest independent pharmacy benefit manager (PBM), which is an intermediary that negotiates between those who pay for medicine (like insurers) and drugmakers. It aims to amass large numbers of patients and use that heft to require pharmaceutical makers to pay rebates. Last month, president Donald Trump’s Council of Economic Advisers criticized (pdf) these companies for undo market power and a lack of transparency.

The Cigna deal comes as Express Scripts is also losing its top client, according to Bloomberg. In 2017, health insurer Anthem said it would start its own pharmacy-benefits management unit, after previously accusing Express Scripts of billions of dollars in overcharges.

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