Zachary Tracer Bloomberg News
September 27 2018, 9:33am EDT
(Bloomberg) -- Aetna
said it plans to sell its Medicare prescription-drug business to WellCare
Health Plans, a key step toward completing its $67.5 billion merger with CVS
Health.
Financial terms of the
deal weren’t disclosed. In a securities filing, Aetna said that the “purchase
price is not material” to the company. The divestiture of the Medicare Part D
plans to WellCare may help resolve objections to the CVS-Aetna deal from U.S.
antitrust regulators.
“Aetna believes the
divestiture is a significant step toward completing the DOJ’s review” of the
CVS deal, the company said in the filing.
CVS has said that
selling off some Medicare prescription-drug plans wouldn’t have a material
impact on the expected benefits of the Aetna deal, because they’re a small
portion of the combined firm’s overall business. CVS is a drugstore giant, and
manages drug benefits for employers and insurers, while Aetna is the No. 3 U.S.
health insurer, with about 22 million members.
WellCare, a smaller
health insurer based in Tampa, Florida, has been using deals to fuel its
expansion. The company completed a $2.5 billion deal for the health insurer
Meridian in early September, adding about 1.1 million insurance customers to
its base of 4.4 million members. As a sign of its growth, WellCare was added to
the S&P 500 Index this month.
Medicare Part D plans
offer prescription-drug insurance for the elderly and disabled, subsidized by
the federal government. As of June, CVS had the biggest Part D business, with
about 6.1 million customers, while UnitedHealth was No. 2 at 5.4 million
members, according to data compiled by Bloomberg. Aetna was smaller, with about
2.2 million members.
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