DOJ Approves Cigna’s $67 Billion Proposed Acquisition of Express Scripts

September 27, 2018

On September 17, 2018, the DOJ released a statement announcing that it would be closing its investigation into Cigna Corporation’s (Cigna) $67 billion proposed acquisition of Express Scripts Holding Company (Express Scripts).

Cigna previously announced on March 8, 2018, that it had signed a definitive agreement to acquire Express Scripts for $67 billion in cash and stock, including $15 billion in Express Scripts debt, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

In the DOJ’s September 17 closing statement, Assistant Attorney General Makan Delrahim of the Antitrust Division announced that after a thorough review of the proposed transaction, the Antitrust Division had determined that the combination of Cigna, a health insurance company, and Express Scripts, a pharmacy benefit management (PBM) company, was “unlikely to result in harm to competition or consumers.”

In particular, the DOJ analyzed whether the proposed merger would: (1) substantially lessen competition in the sale of PBM services; or (2) raise the cost of PBM services to Cigna’s health insurance rivals.  On the first issue, the DOJ determined that the merger was “unlikely to lessen competition substantially in the sale of PBM services because Cigna’s PBM business nationwide is small.”  In addition, the DOJ determined that the merger was “unlikely to lessen competition substantially in markets for certain customers because at least two other large PBM companies and several smaller PBM companies will remain in the market post-merger.”

Regarding the second issue, the DOJ considered how the merger would affect Express Scripts’ incentives to provide competitive PBM services to Cigna’s health insurance competitors to which Express Scripts currently provides services.  The DOJ concluded that the merger was “unlikely to enable Cigna to increase costs to Cigna’s health insurance rivals due to competition from vertically-integrated and other PBMs.”  In particular, the DOJ stated that the merger was unlikely to lead Express Scripts to raise PBM prices to Cigna’s competitors “because that likely would result in the merged company losing PBM customers and not result in Cigna’s gaining a sufficient volume of additional health insurance business to offset the loss of PBM customers.”

A copy of the DOJ’s closing statement is available here.

https://www.jdsupra.com/legalnews/doj-approves-cigna-s-67-billion-14379/