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October 23, 2020 07:00pm
By Sara Karlovitch, Assistant Editor
The Department of Justice today granted conditional approval to the $69 billion merger between CVS Health Corporation and Aetna Inc.
The Department of Justice (DOJ) today granted conditional approval to the $69 billion merger between CVS Health Corporation and Aetna Inc, as long as Aetna sells its Medicare Part D prescription drug plan business, according to a DOJ press release.
The merger, which combines the largest US retail pharmacy chain and the third largest health insurer, represents a paradigm shift toward major consolidation in the industry that could impact patient access and cost of care. With DOJ clearance, the deal remains on track to close in the early part of Q4 2018.
To alleviate regulator concerns, Aetna last month agreed to sell its private Medicare drug plans. According to the DOJ, the proposed divestiture to WellCare Health Plans Inc, an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, would preserve competition in the marketplace. Under the proposed settlement, Aetna must also assist WellCare in operating the business during the transition and in transferring the affected customers.
“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” Assistant Attorney General Makan Delrahim of the DOJ’s Antitrust Division, said in a statement.
“The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the health care services that American consumers can obtain.”
CVS has previously said that the deal presents a novel opportunity to rethink access to lower cost, high-quality care in various settings and ultimately reshape the consumer health experience.
"CVS Health and Aetna have the opportunity to combine capabilities in technology, data and analytics to develop new ways to engage patients in their total health and wellness,” Larry J Merlo, CVS Health president and chief executive officer said in a statement.
“Our focus will be at the local and community level, taking advantage of our thousands of locations and touchpoints throughout the country to intervene with consumers to help predict and prevent potential health problems before they occur. Together, we will help address the challenges our health care system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payors."
Although mergers such as the CVS-Aetna deal offer the promise of potential cost-savings and patient benefits, health advocacy groups have raised concerns about the long-term impact on pharmacies and patients. The American Medical Association (AMA) released a statement urging the DOJ to block the merger due to concerns that the merger would increase anticompetitive practices.
“There is every indication that extensive vertical integration resulting from the proposed merger would raise prices, reduce choice, and stifle innovation in markets for PBM services, health insurance, retail pharmacy, and specialty pharmacy,” AMA President Barbara L McAneny, MD, said in a press release.
Additionally, National Community Pharmacists Association CEO B. Douglas Hoey, MBA, previously expressed concern that the merger would negatively affect patients and community pharmacy providers.
“For all of the talk about cost savings, prescription drug costs have clearly continued to rise despite previous vertical mergers like UnitedHealth’s 2015 acquisition of Catamaran,” Hoey said in a press release.
“Moreover, the anticipated efficiencies CVS and Aetna tout may benefit the merged company more than the consumer, who is likelier to be driven to use health care resources chosen by the health plan rather than those of his or her own choosing.”
Last month, federal antitrust authorities also gave the green light to health insurer Cigna’s acquisition of pharmacy benefit manager Express Scripts. The deal is anticipated to close by the end of 2018.