(Adds background, conf. call and analyst comments; updates share price)
By Saumya Joseph and Tamara Mathias
Feb 1 (Reuters) - The U.S. government's proposal to eliminate rebates that pharmacy benefit managers receive from drugmakers will not have a meaningful impact on growth, and does not affect the commercial market, Cigna Corp Chief Executive Officer David Cordani said on Friday.
Investors are worried that Cigna, which closed its $52 billion acquisition of PBM Express Scripts in December, could be hurt by the Trump administration's proposal targeting after-market discounts that middlemen in the pharmaceutical supply chain have received for decades.
Cigna's shares fell 5 percent to $189.74 on Friday morning. Shares of rival CVS Health, which has a huge PBM unit, and UnitedHealth Group, which manages drug benefits through its Optum unit, also traded lower.
On an earnings conference call with analysts, Cordani played down the potential impact of the proposed rule from the U.S. Department of Health & Human Services, noting Express Scripts already passes about 95 percent of rebates and discounts to its commercial clients.
The U.S. anti-kickback statute only applies to government programs, not commercial insurance. However HHS secretary Alex Azar has called on lawmakers to extend the rebate proposal to the commercial market through legislation.
"Congress has an opportunity to follow through on their calls for transparency, too, by passing our proposal into law immediately and extending it into the commercial drug market," Azar said in a Friday morning speech.
Evercore ISI analyst Michael Newshel told Reuters that the course the law may take is not yet clear, but a trickle-down impact to commercial plans is possible.
"There's kind of a gap of what maybe (HHS') intention is and what the rule is if the industry really resists," he said.
PBMs and health insurers are already pushing back on the rule. America's Health Insurance Plans said that the rule would dramatically weaken the ability of insurers and PBMs to negotiate lower drug prices for patients and participants in federal health programs.
Cigna on Friday reported a better-than-expected fourth-quarter profit, and provided what analysts called a "conservative" forecast for 2019.
The health insurer said it expected 2019 adjusted income from operations of between $16 and $16.50 per share, below the average estimate of $16.74 per share, according to Refinitiv IBES. The company's revenue forecast also came below Wall Street expectations.
Excluding items, Cigna earned $2.46 per share in the fourth quarter, beating estimates of $2.42. Cigna recorded about 11 days as a combined company with Express Scripts in the quarter. (Reporting by Tamara Mathias and Saumya Sibi Joseph in Bengaluru and Caroline Humer in New York; Editing by Maju Samuel)