Justice Department OKs Cigna's $52 billion acquisition of Express Scripts

Cigna-Express Scripts merger OK'd by Justice Department

Cigna-Express Scripts Deal Is Cleared by US Justice Department

In August, billionaire investor Carl Icahn slammed the deal, arguing that Cigna was "dramatically overpaying" for the nation's largest PBM at a time when such middlemen were facing mounting government scrutiny for their role in rising drug prices. "We're chuffed that the Division of Justice has cleared our transaction and that we're one other step closer to ending our merger", Cigna Chief Govt David Cordani acknowledged in an announcement.

The Justice Department review of CVS's planned purchase of Aetna may conclude this month, but will take longer because of divestitures needed to resolve competitive concerns, a source familiar with the matter told Reuters. Express Scripts also owns specialty pharmacies that distribute pricey drugs. As a result, he said, "it's a travesty to complete this deal". The agency had asked for more information from the companies back in April.

The US Department of Justice just cleared Cigna's $67 billion merger with Express Scripts.

Express Scripts is one of three massive pharmacy benefit managers.

Yesterday's approval "bodes well for the pending USA antitrust review of CVS Health Corp's proposed $69 billion acquisition of health insurer Aetna Inc.", writes Reuter's Caroline Humer. The deal is described as a "vertical merger", meaning it involves companies at different points in the supply chain that do not directly compete for customers.

"Everyone is feeling the pressure right now.to react to disruption in the healthcare industry", said Brad Haller, a director in West Monroe Partners' mergers & acquisitions practice.

"PBMs have come under fire from both the drug industry and President Trump, and the administration is considering completely eliminating the current rebate system as a way to bring down the cost of prescription drugs", he continues. "And Amazon.com Inc. was casting its disruptive eye on the health-care business", he continues.

Express Scripts shares rose 3.7 percent to $95.23 at the close of trading in NY. That's because it indicates that the Justice Department likely isn't concerned about consolidation among insurers and pharmacy-benefits managers, which aren't direct competitors.

The deal is expected to close by the end of the year. Federal antitrust enforcers have not successfully blocked a vertical merger in decades, and a federal judge in June cleared the vertical deal between Time Warner and AT&T after the Justice Department challenged it, which boded well for Cigna and Express Scripts' chances. Cigna and Anthem are still battling over a $1.85 billion break-up fee.

Cigna and Express Scripts said in a press release that they have received approval from 16 state insurance departments and are working with regulators in the other states to get the necessary approval.

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