Does AT&T/Time Warner Ruling Predict Insurer Deal Approval?

From Health Plan Weekly

After a highly watched district court ruling gave AT&T the green light to acquire Time Warner, Wall Street analysts predicted that the CVS Health Corp./Aetna Inc. and Cigna Corp./Express Scripts Holding Co. deals now have a better chance of closing.

But not everyone thinks that the outcome of the AT&T/Time Warner deal is indicative of what will happen with the pending health care acquisitions.

"Every antitrust case is really fact-specific, and I think if the [AT&T/Time Warner] result had come out a different way, that would not necessarily mean there would be a challenge" in the pending CVS/Aetna and Cigna/Express Scripts deals, says Leigh Oliver, a partner in the antitrust and competition group of the law firm Hogan Lovells.

David Balto, an antitrust attorney with the Law Offices of David Balto, says the judge failed to find significant real-world evidence of anticompetitive behavior in past acquisitions made by AT&T and Time Warner, while "the record's replete with evidence" that past purchases by CVS and Express Scripts have been anticompetitive and harmed customers.

Besides, Turner Broadcasting System, Inc. is a relatively small player in the media and entertainment market, while Express Scripts and CVS's PBM Caremark are crucial to payers, he says.

Balto adds that "the cable industry is going though tectonic changes in which significant rivals are emerging in the market," yet the same can't be said about the health insurance and PBM markets.
Wall Street analysts are more optimistic. Jefferies analysts wrote that the AT&T/Time Warner decision "makes it more difficult for DOJ to successfully support a case for the [CVS/Aetna] deal harming consumers." The probability of the Cigna/Express Scripts deal "should improve as well."

In Jefferies' view, the only area of potential concern in the CVS/Aetna deal is in the Medicare Part D business, though the note added that "such issues could be remedied structurally through a divestiture of assets." 

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