Monday, 19 November, 2018

Justice Department OKs CVS-Aetna merger with divestiture

A CVS Pharmacy drug store is seen in Washington DC A CVS Pharmacy drug store is seen in Washington DC
Melissa Porter | 13 October, 2018, 15:43

To help seal US 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.

CVS Chief Executive Larry Merlo said in a statement that the deal is on track to close early in the fourth quarter. "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". "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", said Makan Delrahim, the head of DOJ's antitrust division, in a statement Wednesday.

Aa sign stood on the campus of the Aetna headquarters, in June 2017, in Hartford, Conn.

The approval comes just a few weeks after the USA signed off on another deal combining a big health insurer with a pharmacy-benefits manager - Cigna Corp.'s $54 billion takeover of Express Scripts Holding Co.

Together the two have 6.8 million members in Medicare Part D drug plans, the Justice Department said. Without requiring Aetna to sell off part of its business in order for the merger to go through, the consolidation would have limited access to affordable prescription drug benefits. "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.

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 United States health system of public and private programs that is comprised of myriad hospitals, insurers, gatekeepers and drug companies. The companies have said their proposed merger would yield $750 million in savings in its second full year and $2.4 billion annually by the fifth year.

"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", Merlo said.

The deal is aimed at simplifying the healthcare experience for consumers demanding change.

The tie-up will allow CVS - whose retail pharmacy business serves 5 million customers a day - to turn more of its brick-and-mortar locations into front-line clinics for basic medical services and patient monitoring.

Driving that new approach to care will be the enormous 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. Jones, however, does not have direct regulatory approval over the deal.