Wednesday, 12 December, 2018

DOJ Gives Preliminary Approval for CVS, Aetna Merger

DOJ approves $69B CVS Health-Aetna merger, with conditions CVS, Aetna win US approval for $69 billion merger
Samantha Long | 13 October, 2018, 02:57

CVS and Aetna announced their plans to combine in December 2017, framing the deal as creating a new type of healthcare model where CVS' walk-in clinics and pharmacists would play a bigger role in caring for patients and coordinating their care, particularly among patients with chronic illnesses. By deepening its knowledge of and relationships with patients, CVS, which is headquartered in Woonsocket, Rhode Island, has said the combination could help Americans stick with medication regimens and stay out of the hospital.

Pharmacy chain CVS Health Corp (CVS.N) won US antitrust approval for its $69 billion acquisition of health insurer Aetna Inc (AET.N), the Justice Department said on Wednesday, paving the way for a combination with potential to cut USA healthcare costs for consumers.

To help seal USA approval for the deal, Aetna last month agreed to sell its Medicare drug plans to WellCare Health Plans Inc., to alleviate concerns that a takeover by CVS would otherwise harm competition among plans that sell pharmaceutical coverage to seniors. Under the proposed settlement, Aetna must also assist WellCare in operating the business during the transition and in transferring the affected customers.

"We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value-creation potential of our combination with Aetna", CVS Health Chief Executive Larry Merlo said in a statement.

The Aetna acquisition is among the most significant health care mergers of the past decade, combining one of the top US drugstore chains with the third-biggest health insurer.

Completion of the CVS-Aetna deal could put pressure on rivals to come up with their own deals. That help could extend to nutrition counseling or even the use of wearable devices that automatically notify patients and health-care providers of a potential problem. As health care costs have risen, PBMs have emerged as important power players in the pharmaceutical supply chain.

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CVS and Aetna received regulatory approval for their $69 billion merger - with some conditions. Opponents such as the American Medical Association also had said the acquisition could heighten insurance premiums and out-of-pocket expenses more broadly. "We now urge the DOJ and state antitrust enforcers to monitor the post-merger effects of the Aetna acquisition".

But CVS and Aetna competed directly by selling Medicare prescription drug plans, together serving 6.8 million drug plan 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, who leads the Justice Department's antitrust division, said in the announcement.

The approvals of the CVS-Aetna and Cigna-Express Scripts deals underscore that vertical deals can still get through when companies can show the tie-up will provide consumer benefits.

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.

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