Published: Sat, October 13, 2018
Medical | By Vicki Mclaughlin

CVS, Aetna win USA approval for $69 billion merger

CVS, Aetna win USA approval for $69 billion merger

In order to pass antitrust hurdles, Aetna sold its Medicare Part D business to a WellCare subsidiary, a deal that's expected to close at the end of this year.

The divestiture would alleviate the U.S. Justice Department's concerns that the merger would reduce competition, it said Wednesday.

CVS said the Aetna deal remained on track to close in the current quarter. CVS first announced plans to buy Aetna last December.

Aetna, based in Hartford, Conn., has about 22 million medical members, and its 2017 revenue totaled $63 billion.

The approval of the CVS-Aetna merger comes less than a month after the Justice Department greenlit the $67 billion deal between insurer Cigna Corp. and the nation's largest pharmacy benefit manager, Express Scripts. Federal antitrust enforcers have not successfully blocked a vertical merger in decades.

DOJ said that without the settlement, the merger would "cause anticompetitive effects, including increased prices, inferior customer service, and decreased innovation in sixteen Medicare Part D regions covering twenty-two states".

CVS, a drugstore and retail chain, and insurer Aetna unveiled their merger in December 2017, part of a wave of health transactions aimed at controlling costs in the morass-like USA health system of public and private programs that is comprised of myriad hospitals, insurers, gatekeepers and drug companies.

The settlement resolves California's yearlong investigation into the $69 billion merger and settles the Justice Department's objections.

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Merlo added that the merger will allow both organizations to combine technology and data analytics capabilities to improve consumers' overall health and wellness.

Aetna last month said it would sell all of its standalone prescription drug plans for the government Medicare program for Americans aged 65 and older and the disabled to WellCare Health Plans Inc, paving the way for the deal's approval. "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".

"The AMA worked tirelessly to oppose this merger and presented a wealth of expert empirical evidence to convince regulators that the merger would harm patients", said AMA president Barbara McAneny Wednesday in a statement.

California Insurance Commissioner Dave Jones in August also warned against the deal because the companies did not explicitly commit to lowering insurance premiums, despite the vast savings they promised would result from the combination.

Driving that new approach to care will be the vast amounts of data generated not only by CVS's 9,800 retail outlets and 1,100 MinuteClinics, but also from Aetna's 22 million medical members.

CVS Health, Corp (NYSE:CVS) has gained preliminary approval from the DOJ on its acquisition of insurance giant Aetna, which would deeply impact America's health care system.

Livingston writes for Crain's sister publication Modern Healthcare.

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