Aetna/CVS expect unconditional approval

27 June 2018 - 12:00 am UTC

Retail pharmacy chain CVS Health [NYSE:CVS] expects the Department of Justice’s (DoJ) ongoing review of its merger with health insurer Aetna [NYSE:AET] to conclude without any remedies required, according to a spokesperson for the company.
The statement comes just one week after a hearing held by the California Insurance Commissioner, where the American Medical Association (AMA) announced its opposition to the merger on the grounds that it would reduce competition, thereby increasing insurance premiums and consumer drug spending due to horizontal and vertical aspects of the deal.
CVS’s anticipated unconditional approval is inconsistent with expectations held by many observers including Thomas Greaney, a professor of antitrust law at University of California Hastings and former assistant chief at the DoJ.
“I would suspect a divestiture in the Part D, where there’s a horizontal overlap,” he said. Combined CVS and Aetna would have the leading market share in Medicare Part D plans and substantially increase concentration in 30 of 34 Medicare Part D regional markets, according to the AMA.
Meanwhile, lawyers also continue to speculate on how the DoJ might resolve vertical concerns with the transaction—to the extent the agency has such concerns.
Former assistant attorney general for antitrust, Don Baker told this news service that he thinks the deal is bad news for independent pharmacies, largely because of CVS’s tendency to steer consumers to its mail order business. However, Baker said he does not think the deal will be blocked and is unsure of what remedy might be imposed.
by Kevin McCaffrey in New York and Whitney McKnight in Washington DC