Tuesday, 11 December, 2018

Justice Department approves CVS purchase of Aetna

Justice Department approves CVS purchase of Aetna DOJ approves $69B CVS-Aetna merger as healthcare industry restructures
Celia Hoffman | 13 October, 2018, 22:57

The Justice Department gave the OK yesterday to a $69 billion merger between CVS Health and Aetna.

The combination would create a giant with a hand in insurance, prescription-drug benefits and drugstores across the United States. By gathering those businesses under one roof, the companies are betting they'll be better-positioned to face changing consumer habits and the emergence of new rivals.

"This reflects our commitment to transform our stores into neighborhood health destinations that provide a differentiated, consumer-focused experience, while providing access to a broad range of affordable health care services at a trusted and convenient setting", executive vice chairman and CEO of Walgreens Boots Alliance Stefano Pessina said in a statement. "The DOJ recently cleared health insurer Cigna's acquisition of pharmacy benefits manager Express Scripts", they add.

The Justice Department said the move resolves competition concerns.

Clearance to proceed with the Aetna acquisition follows an agreement reached between CVS and the Department of Justice. "This type of consolidation in a market already dominated by a few powerful players presents the very real possibility of reduced competition that harms consumer choice and quality".

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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. "Along with its thousands of retail pharmacies, CVS manages drug-benefits plans for employers and insurers", write Bloomberg's David McLaughlin and Robert Langreth. The move will make the new business one of the largest drugstore chains in the U.S., including a major segment in delivering key health plans to consumers across its pharmacy benefit arm. It could also help steer Aetna customers into stores to shop.

In order to approve the merger, the DOJ required Aetna to sell off its Medicare Part D business, worth $2.2 million, as CVS already has its own Part D business under its "SilverScript" brand.

Additionally, the DOJ has informed Aetna that it must enable WellCare to hire employees who are employed by this division. The merger still requires regulatory approval from some states, but the companies say the deal remains on track to close in the early part of the fourth quarter. "Together, we will help address the challenges our health care system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payors".

"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". Last year, UnitedHealth Group, yet another leading insurance provider, announced plans to buy a large physician group, DaVita's primary and urgent care services, for $4.9 billion.

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