9 months ago
Cigna Unit Accused of Selling Generic Drugs at Higher Prices
Imagine Cigna is like a big company that helps decide how much medicine should cost and also sells some medicines itself.
Cigna has a smaller company called Quallent that puts its own label on generic drugs made by others and then sets a price for them.
A research group called 46brooklyn looked at these prices and said that the drugs Quallent sells are often more expensive than other places.
They used a special way to measure prices called AWP.
Cigna says this group is wrong and is using numbers in a tricky way.
They claim that Quallent tries to sell good quality drugs, and sometimes the cheapest ones aren't the best.
Cigna also says that many other companies are similar to Quallent.
The research group believes that companies like Cigna have a reason to make prices seem higher to earn more money.
Cigna says that health plans pay the same for these generic drugs as for others and that they are trying to move away from contracts based on the AWP system.
A report by 46brooklyn Research claims Cigna's Quallent Pharmaceuticals sells generic drugs at higher prices.
The analysis focused on the Average Wholesale Price (AWP) metric, finding Quallent's drugs are often priced significantly higher than competitors.
Cigna, through its Evernorth Health Services division, disputes the report's findings and methodology, calling it a misrepresentation.
Quallent Pharmaceuticals states it prioritizes quality and affordability, suggesting cheaper generics may have safety issues.
The report notes a disconnect where Quallent's wholesale acquisition cost might be lower, but its prices to outside customers appear higher.
- Who
- Cigna Group's subsidiary, Quallent Pharmaceuticals, and 46brooklyn Research
- What
- A report alleges Cigna's Quallent Pharmaceuticals sells generic drugs at higher prices than competitors, using a specific pricing metric.
- Where
- Cayman Islands (Quallent Pharmaceuticals base)
- When
- A new analysis has been released.
- Why
- The analysis questions Cigna's role in drug pricing, particularly how its subsidiary Quallent sets prices for generic drugs, while Cigna disputes the findings and methodology.
46brooklyn Research Analysis
Cigna/Evernorth Response
Generic Drug Pricing
46brooklyn Research Analysis
Quallent Pharmaceuticals, a Cigna subsidiary, sells generic drugs at prices skewed higher than many competitors, often 33 times more expensive than the cheapest option and averaging over 80% of the maximum price, according to the analysis of Average Wholesale Price (AWP).
Cigna/Evernorth Response
The report from 46brooklyn 'appears to be willfully misrepresenting how generic medicines are priced and sold' and is based on 'flawed use of averages, including extreme outliers, which results in skewed data and incorrect assumptions.'
Quality vs. Price
46brooklyn Research Analysis
The company's pricing strategy, particularly its higher Average Wholesale Price (AWP), incentivizes raising the starting point to make more money.
Cigna/Evernorth Response
Quallent aims to provide the highest-quality, most affordable products, which may not always be the cheapest. Cheaper generics could have safety or quality issues. Prices are generally within $2 of high-quality generic manufacturers, and the methodology used in the report would yield similar findings for any high-quality generic manufacturer due to outliers.
Methodology and Data
46brooklyn Research Analysis
Analysis focused on generic drugs and the Average Wholesale Price (AWP) metric, showing Quallent's prices are often higher. A higher AWP can increase costs as contracts often use discounts off AWP.
Cigna/Evernorth Response
The data and methodology of the report cannot be verified. The analysis appears to use a flawed use of averages, including extreme outliers, leading to skewed data and incorrect assumptions.
Key facts
- Company Subsidiary
- Quallent Pharmaceuticals
- Parent Company
- Cigna Group
- Report Source
- 46brooklyn Research
- Pricing Metric Analyzed
- Average Wholesale Price (AWP)
- Quallent's Pricing Relative to Cheapest Option
- Typically 33 times more expensive
- Quallent's Pricing Average Relative to Maximum Price
- More than 80% of the maximum price
- Quallent's Alternative Pricing Measure (Wholesale Acquisition Cost)
- Often lower, suggesting higher prices for outside customers than for pharmacies
Quotes
Antonio Ciaccia
chief executive officer of 46brooklyn
“They are telling you they hate high prices, they are telling you they work to get the lowest prices. This data suggests the opposite is occurring.”
livemint.com
Justine Sessions
spokesperson for Evernorth Health Services
“We cannot verify the data or methodology of this 46brooklyn report, but it appears to be based on a flawed use of averages, including extreme outliers, which results in skewed data and incorrect assumptions.”
livemint.com
Jaya Subramaniam
president of Quallent Pharmaceuticals
“Quallent’s prices are closely in line with the majority of high-quality generic manufacturers — typically within $2 or less. 46brooklyn’s flawed methodology would yield the same findings about any high-quality generic manufacturer.”
livemint.com
Ben Link
president of 46brooklyn
“When everything is tied to these discountings as a worldview, the incentive is to raise the starting point to make more money. Here we can see that behavior to a T.”
livemint.com
