June 20, 2018
Dive
Brief:
- The American Medical Association pushed
against the CVS Health-Aetna deal during a hearing on
the proposed acquisition in San Francisco Tuesday, warning it will would
lead to “likely anti-competitive effects on Medicare Part D, pharmacy
benefit management services, health insurance, retail pharmacy and
specialty pharmacy.”
- Kristen Miranda, Aetna’s president
of California and the head of the west territory, and Thomas Moriarty, CVS
Health’s EVP, defended the merger's potential benefits, including reducing
healthcare costs, improving care coordination and helping patients with
chronic illness, such as diabetes.
- AMA President Barbara McAneny said
that the doctors' group researched the matter for months, speaking to
academic experts and others, but concluded the merger would lessen
competition in many healthcare markets.
Dive
Insight:
The
$69 billion proposed CVS buy of Aetna is expected to close in the second half
of the year. CVS and Aetna shareholders backed
the purchase earlier this year. Company officials appeared before
Congress in late February to
discuss the deal and the Department of Justice is
reviewing the purchase and its potential ramifications.
On
Tuesday, California Insurance Commissioner Dave Jones held a hearing on
the proposed deal, making it clear he has no decision-making power but wanting
to give outside groups a forum to weigh in.
CVS
and Aetna officials trumpeted potential cost savings in the deal. Moriarty said
the merger could save $750 million in the first two years. He also spoke of the
potential of CVS pharmacists taking a more active role in healthcare. Patients
see their pharmacists more than they see their doctor. Moriarty said
pharmacists could play a key role in complementing a doctor’s care.
Despite
CVS and Aetna’s contentions, AMA President Barbara McAneny said that the
doctors' group ultimately concluded the merger would lessen competition in
many healthcare markets.
“The
AMA is now convinced that the proposed CVS-Aetna merger should be blocked,”
McAneny said at the hearing.
The
problems the AMA listed include:
- A possible increase in premiums
connected to an increase in market concentration in 30 of 34 Medicare
Part D regional markets.
- An anticipated increase in drug
spending and out-of-pocket costs.
- A reduction in competition in
health insurance markets that could lead to higher premiums and a
reduction in the quality of insurance.
- The companies won’t be able to
realize the efficiencies and benefits they’ve promised in the deal.
Other
speakers also discussed concerns with the proposal, including worries about
competition and what it will mean for consumers.
Supporters
of the deal note the vertical merger will not raise the same competitive
concerns cited in the DOJ’s opposition to Aetna’s proposed pact with fellow
payer Humana in 2017. The CVS-Aetna deal is not the only
vertical integration being discussed by a major payer. Humana is reportedly in early talks with
Walmart on a deal that may involve strengthening partnerships
or could even involve a purchase of the payer. And Express Scripts and Cigna are
in the process of an attempted merger also.
The
industry is watching the CVS-Aetna deal closely and whether the federal
government will allow the purchase. If the vertical deal goes through, other payers
and major companies will likely intensify talks for their own mergers.
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