CVS Health Corp. and Aetna Inc. can go ahead with their about $68 billion deal, the Justice Department said, clearing the way for a merger that will create a health-care giant with a hand in insurance, prescription-drug benefits and drugstores across the U.S. "This type of consolidation in a market already dominated by a few powerful players presents the very real possibility of reduced competition that harms consumer choice and quality". "Along with its thousands of retail pharmacies, CVS manages drug-benefits plans for employers and insurers", write Bloomberg's David McLaughlin and Robert Langreth. The response continues: "The evidence also showed that CVS is unlikely to be able to profitably raise its PBM or retail pharmacy costs post-merger because it would lose customers and Aetna would not be able to offset those loses by capturing additional health insurance customers".
As CVS reported that the U.S. Department of Justice will allow it to proceed with its pending acquisition of Aetna, the company also added new board directors and management in anticipation of the merger closing. The move will make the new business one of the largest drugstore chains in the USA, including a major segment in delivering key health plans to consumers across its pharmacy benefit arm. (NYSE: WCG) for the divestiture of Aetna's standalone Medicare Part D prescription drug plans, which have an aggregate of approximately 2.2 million members. The state officials joined the Justice Department in approving the transaction as long as Aetna made the divestiture. Amazon sells its own line of over-the-counter drugs online, and it recently bought online prescription delivery business PillPack.
In a recent statement, Larry J. Merlo, the chief executive of CVS Health, said that the approval "is an important step towards bringing together the strengths and capabilities of our two companies to improve the consumer health care experience". Walgreens holds a 26 percent stake in drug distributor AmerisourceBergen Corp., which helps supply Walgreens stores, and last winter the companies held early discussions about about a merger, according to reports at the time.
Additionally, the DOJ has informed Aetna that it must enable WellCare to hire employees who are employed by this division.
"Despite the companies" big promises that consumers will see greater savings thanks to new "efficiencies, ' history has taught us to remain skeptical", George Slover, senior policy counsel for Consumers Union said in a statement in the wake of the CVS-Aetna merger approval. Both deals followed blocked attempts to merge with rival health insurers.
"It's the latest example of change in a health-care industry bracing for disruption while regulators and consumers demand lower costs". Anthem Inc., whose deal to acquire Cigna Corp. was blocked previous year, is another possible acquirer.