Pharma, Payers

Express Scripts-Cigna deal gets regulatory OK, while CVS-Aetna hits another snag

While one healthcare mega-merger clears its final regulatory hurdle, another one has a new barrier in the form of D.C. District Court Judge Richard Leon.

The two biggest healthcare mergers of 2018 have each hit a major milestone on their march to change the landscape of the country’s healthcare industry.

Cigna’s $52 billion acquisition of pharmacy benefit manager Express Scripts has received all necessary regulatory approvals and is expected to close by the end of the week. On the other hand, the all but done CVS-Aetna deal has reached a stumbling block.

Executives at Cigna have touted the ability of the combined company to offer a more integrated approach to healthcare. The takeover bid of the largest independent PBM in the market plays as part of an overarching trend of insurers combining with healthcare cost drivers in order to cut down on costs and improve efficiency.

Last week regulators from California and New York approved the deal with conditions and were joined by officials in New Jersey on Tuesday marking the end of a long process to certify the purchase.

Among the concessions made to New York and California regulators was a promise to maintain current product lines and networks and investing money into California healthcare initiatives.

Cigna received a regulatory nod from the U.S. Department of Justice in September but a longer-than-expected timeline for other approvals led the companies to extend the termination date of their merger agreement from Dec. 8 to June 2019.

While Cigna’s Express Scripts deal speeds to the finish line, the massive $69 billion effort by CVS Health to acquire insurer Aetna has hit a roadblock in the form of D.C. District Court Judge Richard Leon.

Although CVS received all necessary regulatory approvals by the beginning of the month, Leon has objected to what he considers his role as a “rubber stamp” to approve the merger.

A law known as the Tunny Act requires the DOJ to turn to a federal court for final review of antitrust actions. While legally Judge Leon can’t completely cancel the deal, he can force the companies to remain separate pending additional review.

“I am concerned that your complaint raises anti-competitive concerns about one-tenth of one percent of this $69 billion deal,” he said of DOJ’s argument about deal during an earlier hearing.

Pharmacists United for Truth and Transparency (PUTT) and the Pharmacists Society of the State of New York (PSSNY) have filed a joint motion intended to stop the merger while the court investors the potential effects of the deal on consumers and smaller competitors.

“History has shown that when CVS acquires rivals, consumers pay more and service and quality suffer. Past acquisitions have enabled CVS to restrict consumer access and force them to use more expensive drugs,” PUTT President Teresa Dickinson said in a statement.

The organizations contend that Aetna’s sale of its Medicare Part D business to WellCare to clear anti-trust concerns by the DOJ, isn’t enough to ensure fair and open market competition.

Opposition to the CVS-Aetna merger has previously emerged from groups concerned that the deal could lead to decreased competition and higher prices for patients, including from New York financial watchdog Maria Vullothe American Medical Association and the California Insurance Commissioner.

Judge Leon has doubled down on his concerns about the merger and has proposed assigning a outside monitor to ensure the companies stick to certain actions meant to keep operations separate, including letting Aetna continue to decide pricing for products.

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