September 27, 2018 | Amy
Baxter | Healthcare Economics & Policy
CVS
Health’s $69 billion acquisition of health
insurance giant Aetna is not going to complete without divestments. WellCare
Health Plans, a Tampa-based managed care company, has agreed to acquire Aetna’s
entire Medicare Part D prescription drug plan business, which encompassed 2.2
million members as of June 30.
The
agreement was detailed in a public filing by CVS Health Thursday morning.
WellCare’s acquisition will be effective Dec. 31, 2018, according to the
filing.
The
divestiture is part of CVS Health’s attempt to purchase Aetna in a deal valued
at approximately $69 billion. Previous reports indicated that the two companies
would need to divest some assets related to their prescription drug plans,
which had some overlap, in order to clear the antitrust process by regulators.
The
deal brings together a major health insurance and services provider with one of
the nation’s largest pharmacy benefit managers (PBMs) and pharmacy retailers.
The CVS-Aetna deal still hinges on federal and state regulatory approval, including the Department
of Justice.
“CVS
Health believes the Divestiture is a significant step toward completing the
DOJ’s review of the CVS Health Transaction,” the filing states. “CVS Health and
Aetna continue to engage in productive discussions with the DOJ.”
The
company also remained confident the deal would close
in the fourth quarter of 2018.
Regulatory hiccup
Even
with divestitures in place, some regulators may not be on board with the
transaction. The DOJ previously blocked a $37 billion acquisition of Humana by
Aetna in 2016, even with divestiture plans.
Earlier
this week, a New York regulator wrote to
her counterpart in Connecticut opposing the deal, citing numerous concerns. The
combined entity will create an unfair competitive advantage for Aetna, too much
concentration in the PBM space, higher Part D concentration and
potentially harm consumers with higher drug prices, data privacy
concerns and higher healthcare prices.
“The
proposed transaction, if approved, would create an incredibly large market
share in the healthcare market for the combined company, in an already
concentrated marketplace, and is likely to increase prices for members and
reduce options for consumers, without any discernible increase in quality,”
Maria Vullo, superintendent of the New York Department of Financial Services,
wrote in the letter. “CVS already is a major player in the unregulated and
opaque PBM market, which in itself creates real concerns as to the cost of
prescription drugs and the reduction in competition.”
She
further questioned CVS’s commitment to healthcare quality and service as a
large commercial enterprise. Connecticut has scheduled a hearing on the deal
for Oct. 4. Other policymakers and industry stakeholders have called for more oversight over mega-deals
like CVS-Aetna.
The
deal looked more optimistic after the DOJ cleared another significant merger in
the space on Sept. 19—Cigna’s $67 billion acquisition of
Express Scripts.
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