The Department of Justice's approval of CVS's blockbuster $69 billion acquisition of insurance giant Aetna on October 10 hit a pothole in the stock market just one day later. By gathering those businesses under one roof, the companies are betting they'll be better-positioned to face changing consumer habits and the emergence of new rivals. "The DOJ recently cleared health insurer Cigna's acquisition of pharmacy benefits manager Express Scripts", they add.
In an accompanying document entitled "Questions and Answers for the Public", the Antitrust Division addressed whether the vertical integration of CVS and Aetna was of concern. The state officials joined the Justice Department in approving the transaction as long as Aetna made the divestiture. "This type of consolidation in a market already dominated by a few powerful players presents the very real possibility of reduced competition that harms consumer choice and quality". The new partnership, much like the CVS-Aetna deal, is created to turn corner drug stores into one-stop health care centers. PBMs like Optum and CVS's Caremark help manage prescription drug plans for commercial health insurers. Aetna, on the other hand gained close to $60bn in revenue, providing essential health insurance to 22mn USA consumers. And it follows a recent foray by Amazon.com Inc. into the drug business with its $1 billion purchase of online prescription company PillPack.
Aetna said the consent decree will not delay the closing of the CVS Health-Aetna transaction.
Additionally, the DOJ has informed Aetna that it must enable WellCare to hire employees who are employed by this division.
"CVS Health and Aetna have the opportunity to combine capabilities in technology, data, and analytics to develop new ways to engage patients in their total health and wellness", CVS Health President and Chief Executive Officer Larry Merlo said in a statement. CVS Health's acquisition of Aetna remains on track to close in the early part of Q4 2018.
Consequently, those with Aetna health plans could be shoehorned into exclusively utilising CVS retail clinics, whilst those uninsured by Aetna could pay higher prices, creating significant issues for consumers.
Completion of the CVS-Aetna deal could put pressure on rivals to come up with their own deals.
"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. Walgreens holds a 26 percent stake in drug distributor AmerisourceBergen Corp., which helps supply Walgreens stores, and last winter the companies held early discussions about a merger, according to reports at the time. Walgreens stock declined 2%.
Humana Inc., whose deal to merge with Aetna was blocked on antitrust grounds past year, is another potential deal-maker.