The Anthem-Cigna deal is officially off the table. But the breakup has been far from amicable.
Last week, a Delaware court denied granting Anthem a temporary restraining order that would have stopped Cigna from terminating the merger. As a result, the Indianapolis, Indiana-based insurer officially called off the merger agreement.
Groups like the American Medical Association were pleased with the termination, even calling it “a clear victory” in the fight to keep competition in the field. In a statement, AMA President Dr. Andrew Gurman said:
To the detriment of patients, there is already far too little competition among insurers. Networks are already too narrow, and premiums are already too high. Competition, not consolidation, is the right prescription for health insurance markets.
For the past few months, Anthem appeared to be holding on for dear life, desperately hoping the deal wouldn’t fall through. When a court blocked Anthem’s proposed merger with Cigna in February, the insurer said it would appeal the ruling. But in April, a U.S. appeals court upheld the lower court’s decision to block the deal. Earlier this month, Anthem even filed a petition with the Supreme Court seeking review of the Cigna deal.
But just because the merger agreement is over doesn’t mean the battle between the insurers is.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
In a statement issued May 12, Anthem called out Cigna and said it wouldn’t pay the $1.85 billion breakup fee it owes:
Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee. On the contrary, Cigna’s repeated willful breaches of the Merger Agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna.
Cigna, however, disagreed. In a statement, the Bloomfield, Connecticut-based insurer said Anthem was supposed to “use its reasonable best efforts to obtain regulatory approval,” but that it “willingly breached those obligations and as a result the transaction did not receive the requisite regulatory approvals.”
Furthermore, Cigna demanded the $1.85 billion fee from Anthem, as well as $13 billion in additional damages “for the harm that [Anthem] caused Cigna and its shareholders.”
It’s been a long road for the two health insurers, beginning in July 2015 when Anthem agreed to acquire Cigna. And it’s not quite over yet. Although their merger has been nixed, the legal battle between them continues.
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