CVS Health-Aetna merger wins federal approval

Modesto Morganelli
Октября 13, 2018

The Department of Justice (DOJ) has announced that it will approve the proposed merger between CVS and Aetna as soon as Aetna completes the divestiture of its Medicare Part D business line.

The deal was approved on condition that the company's sell Aetna's Medicare Part D prescription drug business, the Justice Department said.

The deal is aimed at simplifying the healthcare experience for consumers demanding change. "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 health-care services that American consumers can obtain", said Makan Delrahim, the head of DOJ's antitrust division, in a statement Wednesday.

The Justice Department sued and won its case to stop Aetna's $37 billion plan to acquire smaller USA health insurer Humana Inc (HUM.N). Along with its thousands of retail pharmacies, CVS manages drug-benefits plans for employers and insurers.

"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. And it follows a recent foray by Inc. into the drug business with its $1 billion purchase of online prescription company PillPack.

The tie-up will allow CVS - whose retail pharmacy business serves 5 million customers a day - to turn more of its brick-and-mortar locations into front-line clinics for basic medical services and patient monitoring.

Aetna shares were up 1.1 percent to $206.04 at 10:46 NY. CVS gained 0.8 percent to $80.12.

Aetna last month said it would sell all of its standalone prescription drug plans for the government Medicare program for Americans aged 65 and older and the disabled to WellCare Health Plans Inc, paving the way for the deal's approval. 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.

"Together, we will help address the challenges our healthcare system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payers". "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". Both CVS and Aetna now have to secure state-level approvals before the merger is complete. With DOJ clearance, the deal remains on track to close in the early part of Q4 2018.

Walgreens, which is scheduled to report its fourth-quarter results on Thursday morning, declined to comment. It also blocked a combination of health insurers Anthem Inc (ANTM.N) and Cigna. It has held talks with Walmart Inc. for a closer partnership to provide health care to consumers at home and prevent illness.

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