Pharmacy chain CVS Health won U.S. antitrust approval for its $69 billion acquisition of health insurer Aetna, the Justice Department said Wednesday, paving the way for a combination the companies say can help cut soaring U.S. healthcare costs.
It is the second large recent healthcare deal to win a thumbs up from the U.S. Justice Department. The agency gave the green light to health insurer Cigna Corp’s $52 billion acquisition of the nation’s largest pharmacy benefit manager (PBM), Express Scripts Holding Co, on Sept. 17.
Shares of CVS and Aetna each rose about 1 percent on Wednesday, a day when the broader market was sharply lower, with CVS trading at $80.25 and Aetna at $206.00.
The deal was approved on condition that the company’s sell Aetna’s Medicare Part D prescription drug business, the Justice Department said.
Aetna last month said it would sell all of its standalone prescription drug plans for the government Medicare program for Americans aged 65 and older and the disabled to WellCare Health Plans Inc, paving the way for the deal’s approval.
Without the divestiture the two companies would have owned more than a 30 percent share of the Medicare Part D drug plans, creating concern about the amount of control the new CVS would have had over the Medicare prescription drug market.
Together the two have 6.8 million members in Medicare Part D drug plans, the Justice Department said.
“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,” Makan Delrahim, head of the department’s Antitrust Division, said in a statement.
The companies have said they believe together they can improve customer health by offering more low-priced medical services in CVS’s nationwide network of pharmacies, including providing chronic disease screenings and preventative care, such as blood sugar monitoring and vaccines.
CVS also has a large PBM business.
SOURCE: Reuters, Diane Bartz and Caroline Humer