CVS and Aetna's game-changing merger gains crucial approval

Justice Department approves CVS purchase of Aetna

Justice Department approves CVS purchase of Aetna

Woonsocket, R.I. -based CVS's plan to buy out the Hartford, Conn., company started previous year, and last month Aetna announced it would sell its business for an undisclosed amount. Affiliations with large insurers could change that dynamic, he added. The new partnership, much like the CVS-Aetna deal, is created to turn corner drug stores into one-stop health care centers. The approval marks the close of an era, during which powerful pharmacy benefit managers brokered drug prices among pharmaceutical companies, insurers and employers.

The $69 billion acquisition, announced in December 2017, will drastically remap the health care industry.

The approval comes just a few weeks after the United States signed off on another deal combining a big health insurer with a pharmacy-benefits manager - Cigna Corp.'s $54 billion takeover of Express Scripts Holding Co. In response, the Antitrust Division indicated that it had "thoroughly considered whether the merger would raise the cost of (i) CVS/Caremark's PBM services or (ii) retail pharmacy services to Aetna's health insurance rivals", and "after a careful analysis, the Division determined that the merger is unlikely to cause CVS to increase costs to Aetna's health insurance rivals due to competition from other PBMs and retail pharmacies".

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To have antitrust officials at the DOJ sign off on the merger, Aetna will sell off its Medicare Part D business to a subsidiary of WellCare Health Plans, Inc.

"CVS CEO Larry Merlo outlined his vision for the combined company in a September 20 speech - a new data-driven health-care model that's more personal, convenient and tailored to individual patients than ever before". Amazon sells its own line of over-the-counter drugs online, and it recently bought online prescription delivery business PillPack. Steering Aetna customers toward its stores to fill prescriptions - and shop for shampoo and razors - could also help CVS cope with a rocky retail landscape. Under the proposed settlement, Aetna will have to help WellCare run the business during the transition and give it the opportunity to hire key employees.

"Despite the companies" big promises that consumers will see greater savings thanks to new "efficiencies, ' history has taught us to remain skeptical", George Slover, senior policy counsel for Consumers Union said in a statement in the wake of the CVS-Aetna merger approval. The combined company, with its thousands of retail locations, will "be able to offer better care and convenience at a lower cost for patients and payors". 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. Walgreens stock declined 2%. Both deals followed blocked attempts to merge with rival health insurers. Anthem Inc., whose deal to acquire Cigna Corp. was blocked previous year, is another possible acquirer.

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