Private Payers News

CVS-Aetna Merger Gets DOJ Nod as Aetna Sheds Medicare Part D

The Department of Justice has said it will approve the CVS-Aetna merger after Aetna divested its Medicare Part D business.

The DOJ said it will approve the CVS-Aetna merger.

Source: Thinkstock

By Thomas Beaton

- The Department of Justice (DOJ) has announced that it will approve the proposed merger between CVS and Aetna as soon as Aetna completes the divestiture of its Medicare Part D business line.  

Two weeks ago, Aetna initiated the sale of its Part D business to WellCare in order to comply with DOJ requirements for a successful merger with CVS.  Both Aetna and CVS expressed confidence that the divesture would be an effective business strategy to allow the completion of the merger by the end of 2018.

DOJ officials explained that it will only approve the merger once Aetna finalizes the sale of its Medicare Part D services.

“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  

“The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”

CVS Health issued a statement saying that a DOJ approval is a significant milestone towards completing its merger with Aetna. Both CVS and Aetna now have to secure state-level approvals before the merger is complete.

“DOJ clearance is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience,” said CVS Health President and CEO Larry J. Merlo. “We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna. We are now working to complete the remaining state reviews.”

Merlo added that the merger will allow both organizations to combine technology and data analytics capabilities to improve consumers’ overall health and wellness.

“Our focus will be at the local and community level, taking advantage of our thousands of locations and touchpoints throughout the country to intervene with consumers to help predict and prevent potential health problems before they occur,” Merlo said.

“Together, we will help address the challenges our healthcare system is facing, and we'll be able to offer better care and convenience at a lower cost for patients and payers.”

In addition, Aetna released a separate disclosure that explains the sale of its Part D businesses to WellCare does not impact its Medicare Advantage (MA), MA prescription drug, or other Medicare health plan products.

The $69 billion merger is expected to significantly alter the payer landscape by combining the nation’s largest pharmacy benefit manager with the third largest payer. Both Aetna and CVS have explained the clinical and financial advantages of integrated pharmacy benefits for consumers, and believe a merger would provide cost-effective health and wellness services for beneficiaries.