Billionaire hedge fund manager Carl Icahn has amassed a sizable stake in health insurance industry giant Cigna Corp. (CI) and plans to vote against its proposed $54 billion acquisition of Express Scripts Holding Co. (ESRX) when shareholders vote Aug. 24, as first reported by The Wall Street Journal. (See also: Icahn Slashes Stake in Herbalife.)

Icahn, a controversial, high-profile activist investor who once served as an advisor to President Trump, holds less than a 5% stake in the insurance company. He reportedly believes that Cigna is paying too high of a price for the pharmacy benefit manager (PBM), which faces various risks including consolidation of industry rivals and the entrance of e-commerce and cloud computing titan Amazon.com Inc. (AMZN) into the market. 

In December, drugstore chain and PBM manager CVS Health Corp. (CVS) agreed to buy Cigna insurance rival Aetna Inc. (AET) in a deal worth $69 billion. On Wednesday, California Insurance Commissioner Dave Jones released a report urging the U.S. Justice Department to block to proposed tie up. 

Heightened Competition Amid Amazon Fears

In June, Amazon announced its buyout of online pharmacy delivery company PillPack, granting the Seattle-based behemoth access to pharmacy licenses in all 50 states just a week after CVS announced a new prescription delivery service. 

Icahn is apparently also concerned with the Trump administration's efforts to limit PBMs' rebates, which have been criticized for driving drug prices higher. 

Targeting Health Outcomes

On Thursday, Cigna's top executives highlighted the deal's potential to lower costs by paying for prescriptions that optimize value-based payment models. Chief Executive Officer (CEO) David Cordani told analysts that a tie up with Express Scripts means drug makers will be "rewarded for superior outcomes" of the drugs they sell "rather than the consumption," as reported by Forbes.

While PBMs, which serve as a middleman between drugmakers and consumers, are now compensated based on the volume of medical care delivered, Cordani says payments will shift to rely more on health outcomes and quality of treatment. 

"The combined company will drive than on an accelerated basis," said Cigna's CEO, noting 500 "collaborative accountable care relationships" across the U.S. that tie medical care providers to quality measures. (See also: What's Behind Cigna's $67B Express Scripts Buy?)