Cigna Group's plan to eliminate drug rebates will carry a steep price tag.
"We made a pledge recently to reinvent the PBM offering for the marketplace, and it's going to reduce our earnings by $500 (million) to $600 million next year," CEO David Cordani said at congressional committee hearing on Thursday. "We've made that commitment, that comes out of every executive's opportunity next year."
This was the first time the company had placed a dollar figure on the potential impact of its decision to end rebates. The remarks came during a House committee hearing in which the nation's largest insurers testified about health care affordability.
Cigna announced the policy change last October, at least in part because in response to consumer criticism about costs. Annual premiums for U.S. families with employer-sponsored health insurance in 2025 rose 6% to nearly $27,000, according to a KFF survey. Medical costs have risen more by than 7% in recent years, U.S. government data show.
Cigna said the rebate-free pharmacy benefit model would lower costs, improve transparency and support local pharmacies.
"While pharmacy benefit managers have already helped the U.S. achieve the lowest prices for generics in the world -- which account for 90% of all prescriptions -- the cost of brand-name medicines remain out of reach for too many Americans," Cordani said at the time the policy was announced. "We applaud President Trump and his administration for taking decisive action to help lower costs for brand-name medicines that have long been controlled by drug companies."
In response to a question during the Thursday hearing, Cordani said Cigna will not return profits in its Affordable Care Act plans to customers, adding that its plans have been profitable in only two years since the marketplaces opened in 2014. UnitedHealth Group said it would rebate ACA profits to customers this year, although the plans make up a negligible portion of its business.
"Like all of you, we are dissatisfied with the status quo in health care," CEO Stephen Hemsley said in statement to Congress. "We share responsibility for the way things are today, and we are determined to make the system work much better, using our capabilities, expertise and ingenuity to improve it, not only for the people and communities that we serve but for all Americans."
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