Last week the U.S. Department of Justice (DOJ) approved a $69 billion merger between CVS Health Corporation (CVS) and Aetna Inc. (Aetna). The deal, first announced in December 2017, was approved on the condition that Aetna sell off its Medicare Part D prescription drug business. CVS, the nation’s largest retail pharmacy chain, and Aetna, the nation’s third-largest health-insurance company, are significant competitors in the sale of Medicare Part D prescription drug plans to individuals that together serve nearly 6.8 million members nationwide. It is expected that WellCare Health Plans, Inc. will purchase Aetna’s Part D business and resolve DOJ’s only competition concern related to the merger. The settlement must still meet the approval of the U.S. District Court for the District of Columbia before it is fully finalized.
“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,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “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 deal follows close on the heels of the Cigna-Express Scripts merger, which was given the green light by the DOJ in September. The mergers provide further evidence of the ongoing transformation of health care delivery in the U.S., with a focus on neighborhood health destinations for basic care and health monitoring and a streamlining of the prescription drug delivery pipeline. Proponents of both the Cigna-Express Scripts deal and the CVS-Aetna deal cite better care and convenience at a lower cost for both patients and payors as the primary benefits of the mergers.
Not everyone sees a happy ending however, with some consumer advocates expressing skepticism that consumers will see savings when consolidation of this magnitude is going on in the health insurance/pharmacy benefit manager/pharmacy markets. In addition, the mergers may further degrade the economic outlook for smaller, independent pharmacies as they continue to fight behemoths like Cigna-Express Scripts and CVS-Aetna for market share.
As required by law, any person may submit written comments concerning the proposed settlement within 60 days of its publication in the Federal Register. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries. Questions may be directed to any of the following attorneys: