The Cigna Group (CI) Bernstein Healthcare 1:1 Forum 2024 summary

Market overview and growth drivers

• Specialty drugs now account for a growing share of healthcare costs, expected to rise from 25% to 40% of total care costs within the next decade, driven by complex drug innovation and FDA approvals, with over 70% of new drugs being specialty.

• The specialty drug market is valued at $400 billion, growing faster than Medicare Advantage, with 60% under pharmacy benefit and 40% under medical benefit, and unique ability to compete across both segments.

• Long-term annual earnings growth for specialty and care services is projected at 8-12%, with 7-9% from secular industry growth and up to 2% from share gains.

• Biosimilars and rare/orphan drugs are key growth areas, with biosimilars representing a $100 billion opportunity by decade's end and gene therapies rapidly expanding.

• Only 2% of patients require specialty drugs, but they account for a third of total care costs and half of drug spend.

Differentiators and operational capabilities

• Clinical specialization is achieved through Therapeutic Resource Centers (TRCs), organizing care by disease state and deploying over 600 field-based infusion nurses nationwide.

• Accredo operates 30 care delivery sites and four clean rooms, enabling safe handling of complex drugs and providing highly specialized patient care.

• Accredo has access to over 98% of limited and exclusive distribution drugs, more than any competitor, and treats patients under both pharmacy and medical benefits.

• CuraScript serves over 12,000 healthcare providers, offering a high-touch, specialized account model and alignment with Accredo for integrated drug access.

• Collaboration with CarepathRx extends specialty pharmacy and infusion services to over 700 hospitals and health systems.

Biosimilars and cost savings

• Private label biosimilars, such as those for Humira and Stelara, are offered through Quallent Pharmaceuticals, providing 80%+ savings off list price and no out-of-pocket costs for eligible patients.

• Biosimilars are expected to save patients up to $4,000 annually and represent a robust pipeline for future growth, with early adoption rates around 25% for Humira biosimilars.

• CuraScript distributes Quallent biosimilars and aims to increase its share of Accredo's spend, creating a virtuous cycle for growth.

• The economic model emphasizes value, drug access, and high-quality clinical care over unit pricing, with specialty margins higher for Accredo than CuraScript.