CVS-Aetna merger approved despite objections from health, consumer advocates – News – The Columbus DispatchSeptember 9, 2019
With little fanfare, a federal judge in Washington D.C. last week removed the final obstacle to CVS’s blockbuster merger with Aetna.
The $70 billion consolidation, announced in 2017, will combine the nation’s third-largest health insurer with a company that owns the nation’s largest pharmacy-retail chain and the second-largest pharmacy-benefit manager.
During hearings in June, lawyers for the two businesses argued that their combination would enable them to provide better, more-efficient care, while a proposed settlement with several states would answer any competitive concerns. The settlement requires Aetna to sell off its Medicare prescription drug plans.
Get the news delivered to your inbox: Sign up for our morning, afternoon and evening newsletters
Critics, however, argued that such vertical integration of the businesses would make an already uncompetitive marketplace even more so, forcing health costs even higher. Three pharmacy benefit managers control more than 70% of that market, 41 percent of the insurance marketplace is “moderately concentrated” to “super concentrated,” while CVS alone accounts for almost a quarter of all prescription revenue in the United States.
In its Side Effects series, The Dispatch has reported on how CVS has used its position as pharmacy benefit manager for Ohio Medicaid to slash reimbursements to retail competitors and then offer to buy them out. It also prompted a state analysis showing that over a one-year period, CVS’s PBM and OptumRx billed taxpayers $244 million more for Medicaid drugs than they paid the pharmacies that supplied them.
After CVS and Aetna agreed to a settlement with states objecting to the merger, it went before U.S. District Court Judge Richard Leon, who said he wasn’t going to be a “rubber stamp.” During days of hearings in June, the judge expressed skepticism about whether the merger would be the public benefit that its supporters proclaimed.
But by the time Leon wrote his final order last week, his concerns seemed to have been eased.
“Although (critics) raised substantial concerns that warranted serious consideration, CVS’s and the government’s witnesses, when combined with the existing record, persuasively support why the markets at issue are not only very competitive today, but are likely to remain so post-merger,” he wrote in a memorandum. “Consequently, the harms to the public interest the (critics) raised were not sufficiently established to undermine the government’s conclusion to the contrary.”
The businesses lauded the ruling.
“CVS Health and Aetna have been one company since November 2018, and today’s action by the district court makes that 100 percent clear,” CVS spokesman T.J. Crawford said in an email. “We remain focused on transforming the consumer health care experience in America.”
Critics, however, blasted Leon’s decision.
“We know from history that when health insurance and pharmaceutical benefit management markets are ruled by only a few massive companies,…