A little more than a month after the Department of Justice (DOJ) approved a $69 billion merger between mega-pharmacy retailer CVS Health and health insurer Aetna, the acquisition has officially been completed.
“Today marks the start of a new day in health care and a transformative moment for our company and our industry,” CVS Health President and CEO Larry J. Merlo said in a statement. “By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative healthcare model that is local, easier to use, less expensive and puts consumers at the center of their care.”
According to an October statement released by the DOJ, meeting a condition of the merger’s approval that resolves the DOJ’s “competition concerns,” Aetna entered into an agreement with the DOJ to divest is Medicare Part D prescription drug plan business. The Justice Department’s Antitrust Division had significant concerns about the anticompetitive effects of the merger with regards to the Medicare Part D businesses. CVS and Aetna are significant competitors in the sale of Medicare Part D prescription drug plans to individuals, together serving 6.8 million members nationwide, according to the DOJ.
Although the DOJ approved the merger last month, in the last several weeks some states still pushed back. For one, “New York regulators ultimately imposed a slew of conditions on the two companies, including guarantees that the combined business will not finance the acquisition through increased health insurance rates,” according to a report.
CVS Health announced in early December 2017 its intention to acquire Aetna in a $69 billion-dollar merger, marking the largest ever in the health insurance industry. Woonsocket, R.I.-based CVS operates the nation’s largest retail pharmacy chain, owns a large pharmacy benefit manager called Caremark, and is the nation’s second-largest provider of individual prescription drug plans, with approximately 4.8 million members.
CVS earned revenues of approximately $185 billion in 2017. Aetna, headquartered in Hartford, Connecticut, is the nation’s third-largest health-insurance company and fourth-largest individual prescription drug plan insurer, with over two million prescription drug plan members. Aetna earned revenues of approximately $60 billion in 2017.
Merlo stated today, ““By fully integrating Aetna's medical information and analytics with CVS Health’s pharmacy data, we can develop new ways to engage consumers in their total health and wellness through personal contacts and deeper collaboration with their primary care physicians. As a result, we expect patients will benefit from earlier interventions and better-connected care, leading to improved health outcomes and lower medical costs.”
Officials said today that CVS Health has “begun to put the foundational pieces of its new healthcare model in place and, in the coming months, will introduce new programs and services designed to increase access to care, improve health outcomes and reduce medical costs for all consumers. In particular, these programs will target better, more efficient management of chronic disease using the networks, technology and the people of the combined company.”
The deal is the latest in a wave of combinations among healthcare companies, including many pharmacy benefit manager (PBM) and insurer integrations. Last month, the Justice Department approved Cigna’s $67 billion takeover of Express Scripts.
