- Aetna has sold its Medicare Part D prescription plan business of 2.2 million beneficiaries to WellCare in an attempt to increase the likelihood of the CVS-Aetna merger closing before year’s end.
In SEC filings, Aetna explained that WellCare will own Aetna’s national Part D business operations in 2020, which is not likely to impact Aetna’s other Medicare-sponsored business products. WellCare is now anchored to the CVS-Aetna merger since its Part D acquisition will only complete once the CVS-Aetna merger closes.
The filings indicate that Aetna pursued the sale in support of its CVS merger but did not disclose further details of the transaction. Aetna stated that the purchase price of the sale was “not material” and it will continue to administer and retain the business’s financial components until 2020.
WellCare will fully fund the purchase of Aetna’s Part D business through available cash reserves and will need to go through additional regulatory approvals before a close.
In a separate filing, CVS Health expressed optimism about the merger’s closing and the potential for the WellCare’s Part D acquisition to assist toward that end.
CVS Health said that Aetna’s divestiture is a significant step toward completing the Department of Justice’s (DoJ) review of the merger, and that both Aetna and CVS are engaged in productive discussions with the DoJ. Aetna’s divestiture of may lower the chance that regulators see the merger as an opportunity for both companies to monopolize the pharmacy benefit industry.
Aetna’s divestiture follows industry efforts to counter the merger.
The American Antitrust Institute warned the DoJ about the potential anti-competitive effects of a CVS-Aetna merger, including higher prices for consumers and limited consumer choice for pharmacy services. The American Medical Association also urged the federal agency to block the CVS-Aetna merger which the organization argued would lead to higher consumer prices, lower pharmacy benefit manager competition, and reduced payer competition.
“There is every indication that extensive vertical integration resulting from the proposed merger would raise prices, reduce choice and stifle innovation in markets for PBM services, health insurance, retail pharmacy, and specialty pharmacy,” said AMA President Barbara L McAneny, MD.