Monday, October 29, 2018

CVS Health and Aetna $69 Billion Merger Is Approved With Conditions

From the NYT:  
The Justice Department’s approval of the $69 billion merger between CVS Health and Aetna on Wednesday caps a wave of consolidation among giant health care players that could leave American consumers with less control over their medical care and prescription drugs.

The approval marks the close of an era, during which powerful pharmacy benefit managers brokered drug prices among pharmaceutical companies, insurers and employers.
But a combined CVS-Aetna may be even more formidable. As the last major free-standing pharmacy manager, CVS Health had revenues of about $185 billion last year, and provided prescription plans to roughly 94 million customers. Aetna, one of the nation’s largest insurers with about $60 billion in revenue last year, covers 22 million people in its health plans. 
The two companies say that they will be better able to coordinate care for consumers as the mergers help tighten cost controls. Larry J. Merlo, the chief executive of CVS Health, said in a statement that the approval “is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience.” 
But critics worry that consumers could end up with far fewer options and higher expenses. 
Just last month, the Justice Department also approved the takeover of Express Scripts, a major CVS rival, by the big insurer Cigna. ...

The preliminary approval was based on Aetna’s decision to sell its plans to WellCare Health Plans to address the government’s concerns that the combined companies would control too much of the market. But state regulators and consumer groups have also raised other concerns about the impact of the merger, saying that the lack of large pharmacy managers that aren’t affiliated with insurers could make it difficult for smaller competitors in either sector.
Previous mergers in the industry have left consumers with fewer choices and higher drug bills, said David A. Balto, an antitrust lawyer who is a critic of the pharmacy managers. 
“This is a marketplace that hasn’t done well because of lack of transparency, and transparency may be even weaker,” said Mr. Balto, who had worked at the Federal Trade Commission and the Justice Department. Affiliations with large insurers could change that dynamic, he added. “It might correct some of the more pernicious practices.” 
Mr. Balto warned that while state officials have not traditionally overseen pharmacy managers, the combined mammoths “could bring them into the cross hairs of regulation.” ...