The Department of Justice (DOJ) today granted conditional approval to the $69 billion merger between CVS Health Corporation and Aetna Inc, as long as Aetna sells its Medicare Part D prescription drug plan business, according to a DOJ press release.
The two companies cleared their path to merge when Aetna announced on September 27 that it reached an agreement to sell its Medicare Part D drug plan business to WellCare Health Plans for an undisclosed amount. Aetna will continue to provide administrative services and retain financial results for the plans through 2019. "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".
Critics of the CVS-Aetna deal had anxious that the merger could lead to higher drug prices for Medicare Part D beneficiaries.
CVS Health, Corp shares were unchanged in after-hours trading Wednesday.
CVS, based in Woonsocket, R.I., operates about 9,800 drugstores - including one in Sterling - and it's a pharmacy benefits manager under the Caremark brand.
The approval for both major PBM-insurance combinations - CVS-Aetna and Cigna-Express scripts - is in stark contrast to last year's proposed major mergers among insurers.
CVS executives said its pharmacists will play a critical role influencing patient behavior, especially for those Aetna members with chronic conditions such as diabetes.
Merlo added that the merger will allow both organizations to combine technology and data analytics capabilities to improve consumers' overall health and wellness.
CVS and Aetna executives faced tough questioning from CT regulators last week about the necessity for the merger.
DOJ and attorneys general from five states filed a civil antitrust suit against the merger on Wednesday, along with a proposed settlement on the required divestiture. To alleviate regulator concerns, Aetna last month agreed to sell its private Medicare drug plans. Jones, however, does not have direct regulatory approval over the deal.
"The Cigna-Scripts and CVS-Aetna deals are doing what everyone else in the health-care space is doing right now, just on a grander scale - reacting to continued cost pressures from market forces like the ACA, consumerism and other industry players building scale against each other", said Brad Haller, a lawyer specializing in mergers and acquisitions at the firm West Monroe.
Amazon.com, for example, is seeking to challenge the traditional dominance of drugstores by selling over-the-counter medicines and supplements.
It would have also harmed California's most vulnerable populations, seniors ages 65 and over and people with disabilities, by reducing options and increasing healthcare costs, Becerra said. But tech giants have come under growing scrutiny from regulators for their privacy practices. The deal is anticipated to close by the end of 2018.
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