Antitrust Law Daily CVS, Aetna ordered to divest Medicare Part D business for merger approval
Wednesday, October 10, 2018

CVS, Aetna ordered to divest Medicare Part D business for merger approval

By Stephanie K. Mann, J.D.

The nation’s largest retail pharmacy chain, CVS, and third-largest health-insurance company, Aetna Inc., will be required to divest Aetna’s Medicare Part D prescription drug plan business for individuals in order for the companies’ $69 billion merger to progress. According to the Department of Justice, the proposed divestiture to WellCare Health Plans, Inc. will alleviate the regulator’s concerns that the merger will cause anticompetitive effects, including increased prices, inferior customer service, and decreased innovation in sixteen Medicare Part D regions covering twenty-two states.

"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."

The DOJ, along with the state attorneys general from California, Florida, Hawaii, Mississippi, and Washington filed a complaint in the U.S. District Court for the District of Columbia, seeking an injunction of the merger. The lawsuit also included a proposed settlement that, if accepted and approved by the court, would fully resolve the Department’s concerns.

"We can’t stand idly by and watch a merger go through that could lead to higher prescription drug prices and fewer choices for our seniors," said Attorney General Becerra. "Market consolidation benefits big business’ bottom line at the expense of seniors’ pocketbooks. We know that over-consolidation is bad for healthcare and leaves millions of Californians with fewer options. We will keep close watch to ensure that the terms of this settlement are met."

Under the terms of the proposed settlement, Aetna must divest its individual prescription drug plan business to WellCare and allow WellCare the opportunity to hire key employees who currently operate the business. Aetna must also assist WellCare in operating the business during the transition and in transferring the affected customers through a process regulated by the Centers for Medicare and Medicaid Services, an agency within the Department of Health and Human Services. The settlement also includes several provisions designed to improve the effectiveness of the decree and the Division’s future ability to enforce it.

Companies: Aetna, Inc.; CVS; WellCare Health Plans, Inc.

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