Ahead of its pending $69 billion acquisition by CVS Health, major health insurer Aetna has sold off its Medicare Part D business to WellCare Health as it looks to get its ducks in a row for final regulatory approval.
A subsidiary of Tampa, Fla.-based WellCare Health has agreed to purchase Aetna’s Medicare Part D prescription drug plan business which covers approximately 2.2 million members, according to an SEC filing.
Medicare Part D is an optional benefit to help Medicare beneficiaries pay for prescription medication that is administered by private insurance companies.
The WellCare Health acquisition is expected to be effective on Dec. 31, but Aetna will provide administrative services and retain the financial risk of the business through 2019.
“Aetna believes the Divestiture is a significant step toward completing the DOJ’s review of the CVS Health Transaction,” the company wrote in its SEC filing.
In recent weeks, more opposition to the CVS-Aetna merger has emerged from groups concerned that the deal could lead to decreased competition and higher prices for patients, including from New York financial watchdog Maria Vullo, the American Medical Association and the California Insurance Commissioner.
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.
Aetna is the country’s third-largest health insurer and CVS Helath is the largest pharmacy chain in the nation. CVS Caremark, the pharmacy benefit subsidiary of CVS Health, is one of the largest PBMs in the country.
One of the concerns laid out by the AMA was a substantial reduction of competition in the stand-alone Medicare Part D prescription drug plan and the pharmacy benefit management services market.
Aetna’s sale of its Part D business to WellCare Health is an effort to head off some of this criticism.
The planned CVS acquisition has recently been buoyed by Department of Justice’s decision not to challenge Cigna’s $52 billion purchase of pharmacy benefits manager Express Scripts.
CVS Health said in a regulatory filing that the timeline for the Aetna acquisition remains unchanged and the deal is still expected to close before the end of the year.
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