Justice Department Approves CVS-Aetna Merger

The U.S. Department of Justice (DOJ) has approved the merger of the pharmacy and health-care provider CVS Health with insurer Aetna, which would create one of the largest health companies in the U.S. The $69 billion merger’s approval is conditional on Aetna’s sale of its Medicare Part D prescription drug plan to WellCare Health Plans. This provision alleviates DOJ concerns that the combined companies would control too much of the market.

CVS and Aetna, which had revenues of $185 billion and $60 billion in 2017, respectively, say that the new company will provide an improved experience for customers. “Care will be coordinated among the health-care providers, caregivers and their health-care teams, leveraging the connectivity CVS will provide,” said CVS Health CEO Larry J. Merlo.

CVS’s purchase of Aetna continues the trend of health-care company consolidations, following the DOJ’s approval allowing Cigna to buy Express Scripts, another pharmacy benefit manager. State regulators and advocates worry that these mergers, along with other large insurers’ acquisitions of pharmacy operations, will make it difficult for smaller competitors to compete in either industry.

In a statement released by George Slover of advocacy group Consumers Union, the group reiterated its opposition to the merger. “This type of consolidation in a market already dominated by a few, powerful players presents the very real possibility of reduced competition that harms consumer choice and quality.”

Sources: Department of Justice news release, October 10, 2018; The New York Times, October 10, 2018.