A new analysis reveals that THE CIGNA GROUP's (CI.US) subsidiary, Quallent Pharmaceuticals, prices its generic drugs higher than many competitors, sparking scrutiny over the company's role in drug pricing. Cigna operates one of the largest pharmacy benefit managers (PBMs) in the U.S., negotiating drug prices between manufacturers, insurers, and pharmacies. While drugmakers and politicians often blame PBMs for inflating prices, these entities argue they actually reduce costs, pointing fingers at pharmaceutical companies instead.
Quallent Pharmaceuticals, a Cigna-owned subsidiary, markets its own line of generic drugs, meaning Cigna both negotiates drug prices through its PBM division and profits from Quallent’s sales. Additionally, Cigna runs home-delivery pharmacy services and specialty pharmacies. Little is known about Quallent, a Cayman Islands-based firm listing dozens of drugs on its website. As margins shrink in Cigna’s PBM business, these operations may grow in importance. Recent restructuring announcements unsettled investors, triggering Cigna’s steepest stock drop since 2008.
Nonprofit 46brooklyn Research, which focuses on drug pricing and has clashed with PBMs before, found that Quallent’s generics often carry higher price tags. Quallent does not manufacture drugs but rebrands others’ products and sets its own prices. "They claim to fight high prices, yet the data shows the opposite," said 46brooklyn CEO Antonio Ciaccia.
Cigna’s PBM division, Evernorth Health Services, disputed the findings. Spokesperson Justine Sessions accused 46brooklyn of "misrepresenting generic pricing and sales practices," citing flawed methodology that allegedly skews results with outliers. Ciaccia and 46brooklyn also run a consulting firm serving government agencies and healthcare clients.
The analysis highlights opaque drug pricing among vertically integrated healthcare giants. Major insurers like UnitedHealth (UNH.US) and CVS Health (CVS.US) have launched similar drug-selling subsidiaries—Nuvaila and Cordavis, respectively—focusing on biosimilars. Quallent offers both biosimilars and generics.
46brooklyn examined generics using the "Average Wholesale Price" (AWP), a technical benchmark influencing insurer payments. Quallent’s drugs were consistently priced higher—sometimes 33 times costlier than the cheapest alternatives—and never the lowest-priced. On average, they exceeded 80% of the highest prices. Quallent President Jaya Subramaniam defended the pricing, stating the company prioritizes quality over rock-bottom costs and warned of potential safety risks with cheaper generics. She criticized 46brooklyn’s methodology, arguing it would unfairly target any premium generic maker.
Critics allege such subsidiaries let insurers steer patients toward in-house drugs via formulary placements. For its analysis, 46brooklyn compared Quallent’s prices against industry benchmarks but withheld specifics due to confidentiality. Ciaccia noted higher AWPs inflate costs, as insurer-PBM contracts often peg reimbursements to AWP-based discounts.
However, Quallent’s wholesale acquisition costs—what pharmacies pay—were lower, creating a "disconnect" between procurement and customer pricing, per 46brooklyn’s Ben Link. Sessions countered that pharmacies don’t buy generics at wholesale rates.