As part of the approval process, the DOJ set forth the condition that Aetna had to divest itself from its Medicare Part D drug plan, which it eventually sold to WellCare Health Plans for an undisclosed amount late last month.
CVS Chief Executive Officer 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.
It is the second large recent healthcare deal to win a thumbs up from the US Justice Department.
Regulators had been concerned that combining the CVS Medicare Part D plans with Aetna's could reduce competition and result in higher prices, worse customer service, and a dampened drive for innovation across 22 states, the DOJ said.
"The AMA worked tirelessly to oppose this merger and presented a wealth of expert empirical evidence to convince regulators that the merger would harm patients", said AMA president Barbara McAneny Wednesday in a statement. The merger, which combines the largest USA retail pharmacy chain and the third largest health insurer, represents a paradigm shift toward major consolidation in the industry that could impact patient access and cost of care.
"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 healthcare services that American consumers can obtain", Assistant Attorney General Makan Delrahim said in a statement.
Watch CVS and Aetna trade in real time here.
Shares of CVS and Aetna each rose about 1 percent on Wednesday, a day when the broader market was sharply lower, with CVS trading at $80.20 and Aetna at $206.48.
CVS Health has characterized the merger as a way to serve customers better, noting that 70 percent of Americans live within three miles of one of its pharmacies.
With DOJ approval secured for the megamergers of both CVS-Aetna and Cigna-Express Scripts, a major sector of the healthcare industry is under a seismic shift. "We are now working to complete the remaining state reviews". CVS said Eva Boratto, the company's chief accounting officer and controller, would become CFO when the deal closes, which is expected to occur in the fourth quarter of 2018. Without requiring Aetna to sell off part of its business in order for the merger to go through, the consolidation would have limited access to affordable prescription drug benefits. Anthem Inc., whose deal to acquire Cigna Corp. was blocked previous year, is another possible acquirer. His view is that competition problems arising from so-called vertical deals need to be fixed with asset sales rather than imposing restrictions on how companies operate.
The approvals of the CVS-Aetna and Cigna-Express Scripts deals underscore that vertical deals can still get through when companies can show the tie-up will provide consumer benefits.