DOJ clears CVS-Aetna union

DOJ clears CVS-Aetna union

DOJ clears CVS-Aetna union

The Department of Justice gave preliminary approval on Wednesday for CVS Health Corp.'s (NYSE: CVS) acquisition of insurer Aetna (NYSE: AET), cementing a deal that could transform how USA consumers access health care. Aetna has already agreed to sell the business to a subsidiary of WellCare.

Together Aetna and CVS have 6.8 million members in standalone Medicare drug plans, the Justice Department said.

In combining CVS and Aetna, Merlo said the two companies will create a model that's "easier to use, less expensive and puts people at the center of their care".

The CVS Health-Aetna deal is still subject to some state regulatory approvals, though majority have been granted.

Still, some healthcare providers and antitrust experts have opposed the deal. Together, CVS and Aetna have promised they will "remake the consumer health care experience".

Watch CVS and Aetna trade in real time here.

"Today's settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals", said Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division.

The DOJ said the sale of the Medicare Part D plan was a condition of clearing the deal. "We now urge the DOJ and state antitrust enforcers to monitor the post-merger effects of the Aetna acquisition".

Aetna's agreement to sell its Medicare prescription-drug business, in order to get clearance for the merger with CVS, was part of a settlement reached with the Justice Department and five state attorneys general, including California's. "There is every indication that extensive vertical integration resulting from the proposed merger would raise prices, reduce choice, and stifle innovation in markets for PBM services, health insurance, retail pharmacy, and specialty pharmacy", AMA President Barbara L McAneny, MD, said in a press release.

The Aetna acquisition is also expected to give CVS more leverage in its negotiations with drugmakers over drug prices, analysts say. "The elimination of this very important silo means that it's no longer that where one side's cost is another side's revenue", he said.

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 previous year had tried to acquire rival insurer Humana Inc. for $34 billion, but that deal also was dropped after a federal judge blocked that merger on antitrust grounds.

This year, the DOJ did not stand in the way of Cigna's takeover of Express Scripts. The agency gave the green light to health insurer Cigna Corp's (CI.N) $52 billion acquisition of the nation's largest pharmacy benefit manager (PBM), Express Scripts Holding Co (ESRX.O), on September 17. The deal is anticipated to close by the end of 2018.