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Cigna maintains a complex supply chain, which involves relationships with numerous suppliers in areas such as health services operations, pharmaceuticals, and business services.
Building and maintaining strong relationships with stakeholders throughout our supply chain is critical to our success as an organization and how we are able to serve clients and customers. We also take advantage of compelling opportunities to drive economic, social, and environmental impact through engagement with our suppliers, distributors, and partners.
Global Procurement and Third-Party Management
Global Procurement and Third-Party Management (GP&TPM) manages strategic sourcing, purchasing, and supplier-relationship management. In 2020, Cigna’s GP&TPM team managed more than $5 billion in goods and services provided by over seven thousand suppliers globally. Our suppliers provide goods and services that support our information technology, operations activities, and internal corporate functions.
Once a contract has been executed with a supplier, the Third-Party Management (TPM) group within Global Procurement takes over responsibility for the day-to-day management of the ongoing third-party relationship, including contract adherence, performance, and supplier risk/issue mitigation.
Risk Management Procedures
The Third Party Risk Management (TPRM) team within Global Procurement has responsibility for assessing risk prior to contract negotiation and execution. We utilize a third-party risk management software platform prior to onboarding a new vendor, with each new scope of services contemplated for existing suppliers, and to proactively monitor supply chain risks. Our supplier screening evaluates suppliers for a number of risk dimensions, including risks related to financial solvency, adverse media, compliance, privacy, and information protection. We also work with stakeholders to complete a risk questionnaire. The questionnaire identifies and evaluates potential risks or hazards specific to each of the third party’s contract engagements with Cigna, including materiality, operational readiness, data security and privacy, and strategic importance. It can also help to identify additional areas that Cigna may need to assess prior to contracting with the third party.
Once a contract has been executed with a supplier, the TPM group within Global Procurement partners with the appropriate Operations/IT team for the ongoing management of a subset of key supplier relationships, including contract adherence, performance, and supplier risk/issue mitigation. Key responsibilities of the TPM team for that subset of key supplier relationships include managing third party adherence to contractual terms and conditions, including compliance with all service level agreements; setting performance expectations for the third party and managing performance reviews; and managing the remediation of third party risks and issues that negatively impact Cigna. TPM also conducts a third party Performance Scorecard process with key business stakeholders in order to provide guidance to the third party, under TPM purview, on strengths and opportunities for improvement. When needed, TPM may establish and manage a Corrective Action Plan to align third party performance.
EvernorthTM Supply Chain
Pharmacy is the number one driver of total medical costs – typically making up more than 30 percent of spend; it is also a frequent touchpoint in health care. With the importance of pharmacy in mind, Express Scripts’ Supply Chain group is now part of Evernorth℠, our next-generation health services portfolio. It also includes a dedicated team that manages Cigna’s formulary – a list of preferred prescription drugs – and rebate management, retail pharmacy networks, and pharmaceutical procurement for our owned pharmacies.
Within this supply chain, our goal is to source the highest-quality pharmaceuticals for our customers while negotiating agreements that help produce sustainable value to assist clients and patients in their efforts to lower overall health care costs. Our innovative solutions are designed to tackle difficult challenges facing the U.S. market, including access to ultra-expensive therapies for rare conditions through Embarc Benefit Protection℠ and access for patients temporarily without coverage through our Parachute Rx℠ initiative.
As drug costs continue to rise,1 we are working to combat these trends by developing new and innovative solutions, including condition-specific programs encompassing customer engagement tools and cost-containment strategies; traditional and value-based pharmacy network solutions; and cost-effective, clinically sound formularies supported by clinical rules helping to ensure customers receive the right medication at the right time for the right price.
Social and Environmental Responsibility
We expect our business partners – including suppliers, distributors, and vendors – to share our commitment to integrity in human rights and labor, business conduct, and the environment. As part of Cigna’s Social Responsibility and Sustainability Program, in order to be considered a potential supplier, a company must read and attest that they comply with Cigna's Supplier Code of Ethics. The latter is standard in Cigna’s supplier contracts and no supplier is exempt. In addition to addressing integrity in business conduct and the environment, the Code addresses integrity in human rights and labor – describing our expectations in the areas of community, child labor, human trafficking, forced labor, wages and working hours, health and safety, freedom of association, nondiscrimination, and harassment prevention.
As part of our Supplier Code of Ethics, we explicitly prohibit the use of child or forced labor and request that our suppliers demonstrate ethics, compliance, and integrity in the following three pillars:
Integrity in Human Rights and Labor
- Act as responsible corporate citizens
- Use workers of legal age and pay at least minimum wage
- Comply with all applicable nondiscrimination laws
Integrity in Business Conduct
- Protect Cigna assets, intellectual property, and confidentiality
- Protect Cigna customer, employee, and client privacy
- Not profit from or disclose nonpublic information acquired through Cigna
- Disclose any actual or potential conflicts of interest
- Comply with all anti-corruption laws
Integrity in Environment
- Comply with all applicable environmental laws
- Attempt to minimize and reduce waste, reduce carbon footprints, and conserve water
Launching Our Supplier Sustainability Road Map
In 2020, Cigna carried out the first phase of the supplier sustainability road map that we developed in 2019. In the initial phase of the road map, we incorporated our Supplier Code of Ethics into Cigna’s Supplier Master Services Agreement, which outlines ESG principles and expectations for our Supplier Community. We also conducted a sustainability survey with a select group of suppliers in order to better understand the extent of their sustainability reporting and maturity of their sustainability programs; benchmarked the best practices of a group of select suppliers in order to identify measures of success; and reviewed sustainability-focused industry initiatives, such as the U.S. Environmental Protection Agency (EPA) SmartWay Partnership, which Cigna became a member of in 2020.
The next phase in our sustainability efforts will be to establish a Responsible Supplier Program (RSP), where Cigna will collaborate on sustainability through a common platform, universal scorecard, benchmarks, and performance improvement tools. The initial focus of this program will be suppliers under management, which account for 80 percent of Cigna’s indirect spend. Results will be monitored by the RSP for outreach or action-planning activities as needed.
Creating Economic Opportunity for Diverse Suppliers
Cigna has been promoting supplier diversity for over 50 years. Each year, we aim to identify new ways to expand contributions within local markets and deepen engagement with and support of small and diverse suppliers.
Supplier diversity expands and enhances our corporate relationships and experiences, and it contributes to our ability to better understand and serve our broad spectrum of customers. Cigna's program is designed to support its purchasing needs and engage the very best suppliers, including those who share our commitment to integrity, quality, and efficiency.
The success of small and minority-women-veteran-and-LGBTQ+-owned businesses – as well as other underrepresented suppliers – adds to Cigna's success and to the communities we serve. Often, these suppliers can provide the best combination of total cost, quality, and service, which contributes to healthy competition and a level playing field for all potential and existing suppliers. Additionally, our supplier diversity work aligns with and furthers our company's diversity goals and objectives.
Cigna is a long-standing corporate member of various development organizations, including the National Minority Supplier Development Council (NMSDC), the Women's Business Enterprise National Council (WBENC), and the National Veteran Business Development Council (NVBDC). These organizations provide a direct link between large corporations and diverse suppliers. It is our goal to continue to cultivate these alliances to ensure an equal opportunity for all companies that want to do business with us. We continued to actively partner with these organizations in 2020.
Additionally, in 2018, we launched an 18-month Cigna Supplier Mentor Protégé Program for diverse suppliers. As part of the program, a select group of suppliers are paired with Cigna executives who mentor them through monthly meetings and quarterly onsite forums. Although the COVID-19 pandemic made running the program untenable in 2020, we look forward to relaunching it in 2021.
Our annual economic impact statistics for 2020 are:2
- Around 520 million in Tier 1 diverse spend.
- Roughly 125 million in Tier 2 diverse spend.3
- Nearly 980 million in economic contributions delivered through three channels: direct, indirect, and induced.
- Slightly more than 3,150 jobs supported at small and diverse suppliers.
- Around 190 million in earnings through jobs with small and diverse suppliers.
By encouraging our Tier 1 suppliers to do business with diverse suppliers and share this information with us, we reflect a portion of this spend in our Tier 2 program. A Tier 2 supplier is a supplier that invoices a Tier 1 supplier for goods and services rendered.
We also expanded on a prior diverse spend target, creating a more ambitious goal to achieve $1 billion in diverse supplier funding by 2025. Additionally, we continued to raise awareness about the benefits of supplier diversity and empowered employees to take personal accountability for driving diverse spend within their business functions. This included heavier weighting of diverse spend during senior-level virtual Supplier Diversity 101 training for all Global Procurement employees.
Responding to COVID-19
In 2020, the economic and logistical disruptions associated with COVID-19 impacted our global supply chain. In order to keep our employees, customers, clients, health care partners, and other stakeholders safe and healthy during this unprecedented period, our Supplier Diversity team worked closely with our Procurement team as well as our corporate partners. These teams created a COVID-19 capability list of diverse suppliers to establish a personal protective equipment (PPE) Command Center, allowing us to provide PPE to thousands of customers and Cigna clinical teams across the country.
12020 Drug Trend Report. (2021, March 24). 2020 Drug Trend Report. https://www.evernorth.com/drug-trend-report/utilization-and-costs#main-content.
2Economic impact statistics are from a preliminary data report provided by our third-party source for economic impact modeling, which develops estimates of spending, income, and employment impacts.
3Procurement spend our Tier 1 suppliers report from their small and diverse suppliers.