Published: Sat, October 13, 2018
Medical | By

Feds approve CVS, Aetna merger

Feds approve CVS, Aetna merger

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 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. The Justice Department also just recently approved a merger of heath insurer Cigna and pharmacy benefits manager Express Scripts.

Regulators had been concerned that combining the CVS Medicare Part D plans with Aetna's could reduce competition and result in higher prices, worse customer service, and a dampened drive for innovation across 22 states, the DOJ said.

George Slover, senior policy counsel for the advocacy group Consumers Union, which opposed the deal, said this merger posed anticompetitive questions to an unprecedented degree.

Much of the US health-care system revolves around fixing costly ailments.

"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 healthcare services that American consumers can obtain", Makan Delrahim, head of the department's Antitrust Division, said in a statement. With DOJ clearance, the deal remains on track to close in the early part of Q4 2018. And it follows a recent foray by Inc. into the drug business with its $1 billion purchase of online prescription company PillPack. Year-to-date, CVS has gained 11.21%, versus a 5.65% rise in the benchmark S&P 500 index during the same period.

Aetna's plan to sell its Medicare Part D business to WellCare Health Plans has satisfied federal regulators, who signed off on Aetna's planned megamerger with CVS Health.

CVS and Aetna received regulatory approval for their $69 billion merger - with some conditions.

"We are now working to complete the remaining state reviews", Larry Merlo, CVS' chief executive officer, said in a statement. 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.

The CVS-Aetna marriage is part of a wave of consolidation rolling across the US healthcare industry.

Aetna a year ago had tried to acquire rival insurer Humana Inc. for $34 billion, but that deal also was dropped after a federal judge blocked that merger on antitrust grounds.

The Justice Department's Delrahim signaled past year that he was taking a tougher stand on deals that unite companies in different parts of an industry's supply chain when he sued to block AT&T Inc.'s takeover of Time Warner.

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.

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