Yahoo Finance Presents: Cigna CEO David Cordani

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Cigna CEO David Cordani joins Yahoo Finance to discuss the U.S. government's push for at-home Covid testing, the benefits of technology in medicine, and pharmaceutical drug pricing

Video Transcript

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- Welcome to Yahoo Finance Live, and this is a part of our JP Morgan health care annual coverage. Joining me now is CEO of Cigna David Cordani. David, thank you for taking the time to join us today.

DAVID CORDANI: Good to be with you today.

- So I know you've already had your presentation for JPM and lots to discuss of really the future for insurance as well as right now still in the middle of a pandemic. So I want to start there. We recently saw that the White House and the administration have really pushed for more coverage for at-home testing, that's something I'm sure that you've had to sort of wrangle with as just an additional thing that's being asked of the company right now. Walk us through, you know, how this process has been, especially, with reaching a point where we have caps and specific limits on coverage.

DAVID CORDANI: Sure. So I want to kind of to go back to early on in the pandemic. I'm really proud of the fact that the industry stepped up quickly and decisively and declared that the industry would cover all aspects of testing-- removing that uncertainty from the marketplace immediately. And those were medically necessary tests. Monitoring tests and surveillance tests were separated from that. And I think that's a great point to start with in terms of the industry understanding it was a different time.

We fast forward, here we sit some 21 months, 22 months into the pandemic and the environment changes. So the administration came forward now with a different [INAUDIBLE] role for the at-home test. In advance of that, our company through our Evernorth Service Organization stepped forward with an additional expanded level of coverage and service available to those we serve around at-home tests and around additional services related to that.

And we continue to collaborate with the administration relative to its current position and posture as well as on a go forward basis. So we're learning to live with and operate as a society with COVID being present. This is an example of continuing moving forward and living with it. Testing is an important part, but we need to make sure that that testing becomes sustainable and balanced and not over utilized in any one shape or form.

- Right. And that balance is really important. I know we've already had to deal with as well the vaccine coverage and administration of that and everything that came with it. I know for our time, especially with early on in 2020, the pause of elective procedures, that sort of gave you guys a breather and it was largely a good thing really for the industry. Moving forward now, we're still in a position where hospitals are strained and we're sort of seeing that cycle return. How do you expect that to impact-- now that we're in a phase where we do have vaccines, but still see the strain on the health systems?

DAVID CORDANI: No doubt. So partnering with our health service providers is mission critical, and identifying how we could support them, remove administrative burden, supply access to care opportunities like your virtual care to extend their capabilities where appropriate, or even coordinated home care is mission critical. Second, as an organization, we have long since prioritized, if you will, pushing, or supporting, or incentivizing, and enabling the right care to be consumed.

So even during the preponderance of the pandemic, we monitor medication compliance, we monitor and drive more use of preventative care, we monitor and drive more use of appropriate screening necessary for high risk oncology events, et cetera. So we're actually driving utilization of necessary services, even during the course of the pandemic, to avoid erosion of health status or increase risks to transpire.

And then working with a health care provider partners if they're seeing spikes in utilization, for example, in hospital facilities to try to get the right balance of services to be consumed and by and large, that has been manageable over a prolonged period of time, even if it includes working with the practicing physician and an individual on a slight time before a relative to an elective outpatient service.

So with the inpatient services that are not elective or not being deferred, it's the elective outpatient services that may be deferred for a short period of time. So it's collaborating with our partners, it's working to rightfully drive more preventative and whole personal health care, and then it's extending the health care delivery system that we think is mission critical in this environment.

- I definitely want to touch on that, especially, on the telehealth part of it. That seems to be something that we saw really explode early on. And still maintain some level of importance. Moving forward though, looking at, and specifically chronic care, I think that's where, you know, the real opportunity has cropped up for remote monitoring devices and other such things. Where do you see that play into? Have you already started to see that uptick, is it something that maybe is still sort of languishing?

DAVID CORDANI: So we were an early innovator and partner with some of the players in the space that specialize in a specific singular chronic illness and using a digital-first landscape. So we were an early collaborator from that standpoint. Fast forward to where we are here today, we view that using technology in a digital-first set of capabilities is mission critical for the reasons we just talked about, right?

It extends the health care delivery system, two, its more personalized, right? You have the ability to make it very convenient and personalized. Three, it's highly connected so you able to take a fragmented health care delivery system and connect it in a more orderly basis. And four, it's more affordable from that standpoint.

So taking the care capabilities and connecting primary health and behavioral health is an example. Moving into chronic, taking chronic episodes like musculoskeletal or diabetes and doing digital-first alternatives relative to that. And then ultimately, designing solutions for the polychronic. All that work takes place in our Evernorth services portfolio, and within Evernorth Care where we have dedicated teams that are bringing those solutions to market for the Cigna population as well as for the Evernorth population that we serve through that portfolio.

- Speaking of behavioral health, mental health really big on the telehealth side. But talk to me about what you're seeing. You know, we know that it's so critical right now. The pandemic has really highlighted the need for more attention on mental health, and the support there stereotypically and in the past, we've seen historically that there has been a lack of access, you largely have practitioners out-of-network.

So what are you seeing in that space? Is there movement to more in-network coverage or are you seeing maybe a surge in interest there, or are you still having to sort of, you know, curtail how many options are available for consumers?

DAVID CORDANI: So before we come to the important question you asked related to access, I want to come back to a program design. So long before the pandemic, we had worked for many years to take aspects of behavioral health, and aspects of medical health, and integrate them together. For example, we were able to learn, a decade ago, that if someone confronts a chronic issue-- a heart attack and survives, they're likely to have clinical depression in the recovery. Their life has changed.

If the clinical depression goes undiagnosed and untreated, they have a higher probability of having a second heart attack. So a long time ago we integrated behavioral professionals in our coronary disease management programs. That's a simple illustration. So we've been long of the mindset of the mind and body connection is mission critical. The pandemic, to your point, has supercharged that and resulted in more global acceptance outside the United States as well that the mind and body connection is indisputable.

So now you have more need and you have access challenges, to your point. What we have been working toward is broadening the physical network. So where patients could go get access to care, but also broadening the accessibility through virtual services. Virtual services provided by us, virtual services provided by partners to augment a strained and stressed physical delivery infrastructure around behavioral health care professionals.

So the point is, you have to view it as it's a leverage effect and it's a connection, it's not just a point solution in triaging, two, think differently both the physical access as well as the virtual access, and then relentless innovation around that. All that comes through our Evernorth service capabilities today and we continue to grow that both the traditional network as well as through the virtual services.

- OK. What about-- let's talk about PBMs for a second. I know there's been a lot of attention, of course, post Express Scripts. And I noticed yesterday, you mentioned the idea of a yesterday's definition of a PBM. I want to dig into that a little bit. There could be critics who say that's just, you know, a pivot to avoid the discussion about drug pricing, but where do you see the change really when it comes to what the role is of PBMs nowadays?

DAVID CORDANI: Sure. So first, by way of starters, I believe very passionately that pharmacy benefit managers and the legacy of those have created a lot of value from a societal standpoint. Access to care, care coordination programs, the movement from brand to generic was led by the PBMs long before Cigna Express Scripts came together. So a lot of value creation. Two is, we have to look at any business, whether it's the traditional medical business portfolio or traditional pharmacy business portfolio. The change in innovation is ever present.

So what I meant by my comment, if you think about a traditional definition of what a PBM does, most people view that a PBM would work with the manufacturers to contract for access to certain services, sell those services and then have some economics in between that correlate. So supply chain management and kind of access to care.

Today in the marketplace we operate in, we've moved in a three-year period of time to far less than 50% of all of our relationships having full transparency funding mechanisms to well greater than 75%. And in the case of rebates well over 90%. So that's the definition of yesterday versus the future because what it comes down to is, how do you use pharmacy services to help to maintain or improve the quality of life for an individual?

And we exist in a society where more and more each and every day, pharmaceuticals are becoming a larger part of the overall care equation. And lastly, ending with a concrete example, the fastest growing part of our Evernorth service portfolio is within the specialty pharmacy capabilities through our Accredo capabilities.

In some cases, these drugs are single source unique drugs that the coordination with the medical professional, the patient, and then the care team around them is mission critical. And one of our Accredo nurses is invited into the home of that patient to facilitate the infusion and the care coordination plan. So that's an example of the change that manifests itself over time.

And at the end of the day, we see the pharmacy services as an important complement to medical services and behavioral services that when you design the right solutions for an employer, a health plan, or governmental agency, you're giving better value to them. And importantly, to their patients by coordinating the service around that. That's what we mean by yesterday versus today and tomorrow where the model is going.

- Speaking of yesterday versus today, pharmaceuticals, in general, are also looking to the future. And we've seen a lot of pretty interesting things happen. I'm sure you saw the headline of a modified pig's heart, and we're looking at genetics and gene therapy, genetic treatments, as well as, of course, the surge in interest in mRNA.

All of this while great, also proves to be a specific hike for you in terms of coverage. It's going to be more expensive because it's new and has a lot more growth to go through. How do you see that play into drug pricing policy and conversation?

DAVID CORDANI: So when you think about your wonderful question, we've touched upon two and now the third major part of change we see in the marketplace. The changing access to care, harnessing technology is one. Two, the mental and physical health coordination of services, and three, pharmacological innovation is what you articulate.

We will see more and more specialty drugs, gene therapies, personalized medicines, and unique interventions as we go forward from a societal standpoint. That's good because in many cases, they are curative, in some cases they are life transforming, in some cases they are life saving. Yet, they're extremely expensive.

And the question comes down to, how do you amass the portfolio of services to be able to get and optimize the outcome for the patient? Because this is where precision takes place. The data to get the precise matching to the individual and then the care coordination plan around the individual with the medical professional and the pharmaceutical professional. That's what we're positioned to do.

And taking a concrete example, as you know, the biosimilar adoption in the United States lags all the other OECD countries in the world, yet we're on the precipice of an acceleration. In 2023, 2024, 2025, with more biosimilars, our organization is positioned to thrive in that environment, to be able to provide more services.

And when you think about the cost, if you frame it, that comes from smart use of biosimilars, it creates more financing capacity for what you just talked through. Societally, there will be need to create the capacity. This is not a message of legislating a price point or limiting access, it's driving innovation. And we see biosimilars is a wonderful example where hundreds of billions of savings, $275 billion societally are able to be pulled out of the spending equation if we're using biosimilars at the same rate as other OECD countries.

So yes, an affordability challenge, innovation is required to be able to harness that. And then more spending capacity, specifically, through the aggressive adoption and smart utilization of biosimilars we think is mission critical. And we position our company to be at the forefront of that.

- Certainly we'll be waiting to watch and see how that all pans out and everything else for 2022. We'll have to leave it there, but thank you so much, again, Cigna CEO, David Cordani, pleasure to have you on.

DAVID CORDANI: Good to be with you today. Thank you.