UPDATE 1-Medco CEO: More drug unit sales by HMOs possible

* Says weak economy is a catalyst

* Follows WellPoint sale of unit to Express Scripts

* Cigna CEO says "actively" looking at PBM

* Cigna shares rise 7.1 pct; Medco up 1.3 pct

By Lewis Krauskopf

NEW YORK, May 28 (Reuters) - The CEO of Medco Health Solutions Inc (MHS.N), the largest U.S. pharmacy benefit manager, said on Thursday he would not be surprised if other health insurers follow the lead of WellPoint Inc (WLP.N) and sell off their pharmacy benefit units.

Speaking at the same investor conference, the chief of Cigna Corp (CI.N) said the health insurer was "actively" evaluating at its pharmacy benefit manager. Cigna shares were up 7.1 percent, while Medco was up 1.3 percent.

Investors are speculating other transactions will follow in the wake of pharmacy benefit manager Express Scripts Inc's (ESRX.O) $4.68 billion purchase of WellPoint's NextRx unit, announced in April. Express Scripts said on Thursday it cleared an antitrust hurdle for the acquisition. [ID:nN28316888]

Medco CEO David Snow said the Express Scripts-WellPoint deal was not a surprise.

"It doesn't surprise me that the trend has started and it wouldn't surprise me if others take note and follow suit," Snow said at a Sanford C. Bernstein investor conference, which was broadcast over the Internet.

Snow said the weak economy is a catalyst for such deals, "when shareholders are looking for better bottom line earnings and they're hard to come by.

"That often forces real honesty about how well an asset is performing, and I think that's what happened and I wouldn't be surprised if others look at the same sets of scenarios to see if they can drive better shareholder value," Snow added.

A former longtime health plan executive, Snow says he always felt drug-benefit units inside health insurers "had a tough time competing in the big account markets."

"Ultimately, better value could be driven within a health plan to contract with best-in-class PBMs, who spend all their money around the expertise of managing drug spend," Snow said.

Speaking at a separate session at the Bernstein conference, Cigna CEO H. Edward Hanway said the company periodically looked at its pharmacy benefit unit (PBM) to evaluate whether the capabilities could be replaced sufficiently.

Hanway said the company "would do that evaluation again."