Billionaire investor Carl Icahn discusses why he is opposed to Cigna-Express Scripts deal.
Q2 hedge fund letters, conference, scoops etc
Carl Icahn: Cigna-Express Scripts Deal Just Doesn’t Make Any Sense
Transcript
Joining me right now on the phone for his first interview since opposing the Cigna-Express Scripts deal legendary investor Mr. Carl Icahn. Carl good to have you.
Good to talk to you.
All right you don't like this deal you don't like it one bit. I have some excerpts here from the letter where you say basically this could be one of the worst things since Time Warner AOL. Walk me through your thinking why is this a bad idea sir.
Well it just doesn't make any sense. Trish it's sort of right. I happen to think. You know we we don't see the forest for the trees here. This company scraps is first of Blaz overpay and I believe. At least 40 points. I think the company did they would sell in the 50s. If it weren't for this deal we could go through all the numbers and what have you with it. But if you look at the bottom of this company. And they make even they admit they charge 5 percent 5 percent of what they get on what you call reaping. So they so the whole thing as perverse they go to they go to drug companies. You know you could even you could back up the value even. Of the drug price because then you could give us a big rebate they get a big rebate. They go to their clients they say look great we are we going to give you 95 percent. And the clients have to pay an arm and a leg for that fee. I happen to use scrip. We have nine companies that we control or own and we do use scrip because we do get that 95 percent rebate but we pay them 3 billion dollars or we could get. What we could get what they do for us. We're about 100 to 200 those we believe now they'll argue with those numbers and I'm not going to argue back and forth on it. So the whole model is very flawed because. You see today that one of the greatest problems of this country are drug pricing and this is obvious that drug prices are higher because. Companies like scrip DBMS go to these drug companies. And they sort of almost intimidate them. Into giving them big rebates and so they could go to their clients with it and that's what scrips does now. You know I watched the you this morning. Got you. And you know CNN is a very good company it is well run. So that's not my beef here.
Now you're telling me the fundamentals of the industry and this could really change right. I mean you've expressed it in fact in this letter your concerns about Amazon for example really being able to upset the model which would actually be great for American consumers but would really be rather bad if you're Cigna and you bought the Express Scripts.
Yeah I absolutely. You know it's I'm just saying it. Ian Read the CEO of Pfizer says they're going away these these is a. Rebate should go away. Is there a perverse incentive. I mean in other words a perverse incentive is that. Script is almost incentivized to get. Drug price tires so you can get. You can go get a bigger rebate. So the whole point of this is it's just you don't. If you just look at it very simplistically yes we're on the most of my body you look at simple things like with eBay pay Poultney. You know it just made sense for him to split PayPal and eBay and it took two three years to get him to do it. But here this company I believe scrip is in danger existentially. I don't see the reason. For it. I mean I know it sounds a little. Arrogant to say but I don't really see and I've seen companies like this built the way because I don't. Believe they help. The Americans on their drug pricing. And in fact in fact the rebates worked against.
