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CVS-Aetna and Cigna-Express Scripts Mergers

The AMA aims to protect patients and physicians by actively opposing anticompetitive health insurer mergers.
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Merger Announcements

CVS-Aetna announced their proposed merger on Dec. 3, 2017. Cigna-Express Scripts announced their intention to combine on March 8, 2018. The AMA’s analysis of the CVS-Aetna merger takes into account the likely impact of the Cigna-Express Scripts merger.

CVS-Aetna Merger

The CVS-Aetna merger is a horizontal and a vertical merger. In horizontal mergers, two competitors combine, and CVS-Aetna are significant competitors in numerous Medicare Part D geographic markets and also with respect to pharmaceutical benefit management (PBM) services.

In additional markets, the merger is “vertical” because Aetna is a buyer of inputs (such as PBM services and pharmacy) that CVS sells. The AMA has never opposed a vertical merger—it has only challenged horizontal mergers of health insurers with varying degrees of success.  Vertical mergers’ impacts are much more difficult to determine than those of horizontal mergers. Compared with horizontal mergers, very little economic research and legal guidance about vertical mergers exist. These factors make it difficult to determine whether or not opposition to a vertical merger can succeed.

AMA CVS-Aetna Advocacy

August 2018

The AMA submits a comprehensive analysis of the CVS-Aetna merger to the U.S. Department of Justice (DOJ) stating that the CVS-Aetna merger is anticompetitive because it is likely to substantially lessen competition in PBM services, health insurance, retail pharmacy, Medicare Part D, and specialty pharmacy, and asks that the DOJ oppose the merger.

The AMA’s opposition is based on reports (which were attached to the AMA statement) by the following nationally recognized experts:

  • Lawton “Rob” Burns, PhD—Professor of Management and chairperson of the Health Care Management Department of The Wharton School of The University of Pennsylvania. Dr. Burns’ report shows that the benefits of the proposed CVS-Aetna merger are speculative, the benefits of vertical integration are limited, and retail clinics have significant shortcomings.
  • Richard Scheffler, PhD—Distinguished Professor of Health Economics and Public Policy, joint tenured appointments in School of Public Health and Goldman School of Public Policy, University of California, Berkeley.  Dr. Scheffler’s report describes the potential anticompetitive effects that the CVS-Aetna merger would have in the Medicare Part D market across the country.
  • Neeraj Sood, PhD—Professor & vice dean for Research at the USC Sol Price School of Public Policy and Director of Research at the Leonard D. Schaeffer Center for Health Policy & Economics.  Dr. Sood’s report discusses the CVS-Aetna merger’s potential anticompetitive effects in the insurance, pharmacy and PBM markets.
  • Amanda Starc, PhD—Associate Professor of Strategy at the Kellogg School of Management and a Faculty Research Fellow at the National Bureau of Economic Research.  Dr. Starc’s report shows that the CVS-Aetna merger would raise health insurance premiums, and that any cost efficiencies resulting from the merger are not likely to be passed on to consumers.

The AMA’s statement is shared extensively with state and federal regulators and legislators. AMA also reconvenes its state-based workgroup to develop next steps in its advocacy strategy. The AMA and the Utah Medical Association file a statement requesting that the Utah Commissioner of Insurance oppose the proposed CVS-Aetna merger. Attached to this statement is a report by Dr. Richard Scheffler discussing the merger’s anticompetitive effects in the Medicare Stand-Alone PDP market. On August 1, California Insurance Commissioner David Jones submits an extensive analysis to the U.S. Department of Justice, recommending that the Department of Justice sue to block the CVS-Aetna merger. 

July 2018

AMA experts Drs. Sood and Burns file supplemental statements with the California Department of Insurance (CA DOI) that rebut claims made in documents filed with the CA DOI by CVS and Aetna after an extensive public hearing about the merger that the CA DOI held on June 19.  Diana Moss, PhD, President, American Antitrust Institute (AAI) also submits a statement that counters claims made by CVS and Aetna, as does Thomas “Tim” Greaney, JD, Visiting Professor at UC Hastings Law School.

The AMA continues to develop legal theories and evidence to further support its opposition to the CVS-Aetna merger. 

The AMA continues working with state medical associations and national medical specialty societies to identify other opportunities to further opposition to the CVS-Aetna merger, e.g., state attorneys general and insurance departments. 

April-June 2018

On June 29, the AMA files a comprehensive statement, along with an exhibit containing expert reports from Drs. Burns, Scheffler, Sood and Starc, with the CA DOI describing in detail why the AMA opposes the merger and urges the CA DOI to recommend that the DOJ challenge the merger.  The AMA also sends copies of the statement and exhibit to the National Association of Attorneys General.

On June 22, California Medical Association (CMA) files a statement with the CA DOI in which CMA announces that it opposes the CVS-Aetna merger. 

Working closely with the California Medical Association (CMA), the AMA and CMA are able to secure a hearing—on June 19— before the California Department of Insurance (CA DOI) on the CVS-Aetna merger. During the hearing California Insurance Commissioner David Jones, the AMA and a number of experts testify about the CVS-Aetna merger.

  • Barbara McAneny, M.D., AMA President, testifies that after very careful consideration over the past months, the AMA now opposes the merger and urges the CA DOI and Commissioner Jones to recommend to the DOJ that the DOJ oppose the merger. 
  • Dr. Lawton Burns testifies that the benefits of the proposed CVS-Aetna merger are speculative, the benefits of vertical integration are limited, and retail clinics have significant shortcomings.
  • Dr. Richard Scheffler testifies about the potential anticompetitive effects that the merger would have in the Medicare Part D market in California and across the country.
  • Dr. Neeraj Sood testifies about the merger’s potential anticompetitive effects in the insurance, pharmacy and PBM markets.
  • Testifying on behalf of CMA, Long Do, JD, states that the CMA has serious concerns about the proposed CVS-Aetna merger.  (However, in its subsequent June 22 filing with the CA DOI, CMA changes its position to outright opposition to the proposed merger.)
  • Thomas “Tim” Greaney testifies about the analysis that should be applied to vertical mergers and the competitive concerns that the CVS-Aetna merger raises.
  • Dr. Diana Moss explains why the AAI opposes the CVS-Aetna merger.
  • Representatives from Consumers Union, Health Access California, and Consumer Watchdog testify as do representatives of CVS and Aetna.

Throughout May and into June, the AMA begins to receive reports from Drs. Scheffler, Sood, Starc and Burns.  In these reports, the AMA’s experts conclude that the CVS-Aetna merger is likely to substantially lessen competition in PBM services, health insurance, retail pharmacy, Medicare Part D and specialty pharmacy.

In May, based on the evolution of the work with its national experts, the AMA files a statement with the California Department of Managed Health Care (DMHC), asking the DMHC to closely scrutinize the CVS-Aetna merger in PBM services, health insurance markets, retail pharmacy markets, Medicare Part D, and specialty pharmacy.

The AMA continues throughout April, May and June to analyze the CVS-Aetna merger.  This analysis also begins taking into account the proposed Cigna-Express Scripts transaction. 

March 2018

In March, the AMA hires four nationally recognized antitrust experts to help evaluate the proposed CVS-Aetna merger and begins building an evidence base needed to help the AMA evaluate its position on the merger. These experts are Dr. Lawton Burns, Dr. Richard Scheffler, Dr. Neeraj Sood and Dr. Amanda Starc.

February 2018

On Feb. 28, 2018, the AMA submits a statement to the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law in anticipation of a hearing entitled “Competition in the Pharmaceutical Supply Chain: The Proposed Merger of CVS Health and Aetna.”

In this document, the AMA states that the CVS-Aetna merger has the potential to worsen competition in the following four markets: Medicare Part D; PBM services; local health insurance; and many local retail pharmacy markets.

The AMA also forms and conducts the first of an ongoing series of calls with an AMA-state and specialty society coalition established to coordinate CVS-Aetna and Cigna-Express Scripts advocacy efforts.

December 2017

The AMA begins its comprehensive analysis of the proposed CVS-Aetna merger shortly after CVS-Aetna made their announcement.

For more information on AMA health insurance merger advocacy, please visit www.ama-assn.org/advocacy-resource-center or contact Wes Cleveland, JD, Senior Attorney, at [email protected] (312) 464-4503 or Henry Allen, JD, Senior Attorney, at [email protected]or (312) 464-4271.

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