Access to Care

How CVS-Aetna case puts regulators on notice

Kevin B. O'Reilly , Senior News Editor

What’s the news: After unprecedented legal scrutiny driven by legal arguments and economic data that the AMA presented, a federal judge has decided to allow the $69 billion merger of health insurance behemoth Aetna Inc. and CVS Health Corp.

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CVS is the country’s biggest retail pharmacy chain, specialty pharmacy, pharmacy benefit management (PBM) and Medicare part D prescription drug plan (PDP) insurer. Prior to joining forces, Aetna and CVS had competed against each other for PDP customers on factors such as quality and price.

Why it matters for patients and physicians: The decision “ultimately fails patients, will likely raise prices, lower quality, reduce choice, and stifle innovation,” said AMA President Patrice A. Harris, MD, MA.

“For patients and employers struggling with recurrent increases to health insurance premiums, out-of-pocket costs, and prescription drug prices, it's hard to find any upside to a merger that leaves them with fewer choices,” added Dr. Harris, an Atlanta psychiatrist. “Nothing in the deal guarantees reductions on insurance premiums or prescription drug costs. As for promised efficiency savings, that money will likely go straight to CVS’s bottom line. CVS made no commitment to pass much-hyped savings onto consumers through lower premiums or drug costs.”

Last year, the AMA outlined in a 141-page analysis how the proposed CVS-Aetna merger would harm patients.

“We know from history that when health insurance and pharmaceutical benefit management markets are ruled by only a few massive companies, patients pay a steep price,” Dr. Harris said.

The AMA’s advocacy efforts began shortly after the merger was announced Dec. 3, 2017, and have crisscrossed the country, taking the fight to the nation’s capital, as well as to various state capitals, where the AMA warned state insurance officials that the deal would harm consumers by raising prices, lowering quality, reducing choice and stifling innovation.

What’s next: Despite the unfortunate outcome, Dr. Harris noted that the court found that the AMA’s concerns “warranted serious consideration” and that is why an unprecedented judicial review, under the Tunney Act, of the U.S. Department of Justice (DOJ) decision to approve the merger went forward.

“Regulators should now be on notice of the antitrust risks associated with the CVS-Aetna merger, and must vigilantly monitor the conduct of the merged firm to make sure that this colossal new entity does not hurt patients in the PBM services, health insurance, retail pharmacy, specialty pharmacy, and PDP markets, which are already highly concentrated."

Moreover, she said, the thorough scrutiny of this type of health care merger is “a sign of things to come.”

“When the public interest is harmed by health care mergers, courts charged with scrutinizing DOJ merger settlements must not be a rubber stamp,” Dr. Harris said.