CVS Health, Aetna merger wins Justice Department approval

Leslie Hanson
October 13, 2018

"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.

CVS-Aetna appears to be headed for completion.

The companies have said they will save administrative and patient care costs when they combine, in part by steering Aetna customers to walk-in clinics in CVS stores for less expensive medical services.

On Wednesday, the top law enforcement officials of three states - Connecticut, New Jersey and Washington state - and the District of Columbia announced they had reached settlements with Aetna resolving allegations that the company had mishandled patient information and violated their privacy.

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

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

"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". The companies maintain a prior view that the transaction will close in the early part of the fourth quarter of 2018.

Since then, online retailer Inc (AMZN.O) stepped into the healthcare market with the purchase of online pharmacy PillPack, which Wall Street analysts say can help it expand further in healthcare and undercut major players across the prescription drugs supply chain. CVS gained 0.8 percent to $80.12.

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

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.

Merlo said in September that the combined Company will have more data, giving CVS a more complete picture of someone's health. Both CVS and Aetna now have to secure state-level approvals before the merger is complete.

"Together, we will help address the challenges our healthcare system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payers".

After the deals were announced, antitrust experts described them as "vertical" combinations that were less troublesome from a competitive standpoint than a previous round of proposed consolidation deals among insurers, which were blocked.

Aetna past year 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. So too was the proposed merger between Anthem and Cigna.

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.

Other reports by Iphone Fresh

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