The $69 billion merger of CVS Health and Aetna will proceed after the Hartford-based insurance giant sells off its Medicare Part D prescription drug plan businesses for individuals. The Department of Justice made the announcement Wednesday requiring the Medicare Part D divestiture in order for the deal to go through.
The Justice Department said the proposed divestiture to WellCare Health Plans Inc., an experienced health insurer dealing with government-sponsored health plans, including Medicare D individual prescription drug plans, was needed to resolve competitive questions.
In a statement on its website Wednesday, CVS said it welcomed the news.
“DOJ clearance is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health experience,” said CVS Health President and Chief Executive Officer Larry Merlo. “We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna. We are now working to complete the remaining state reviews.”
Merlo added: “CVS Health and Aetna have the opportunity to combine capabilities in technology, data and analytics to develop new ways to engage patients in their total health and wellness.”
Aetna’s website had a link to the CVS statement. Aetna press representatives, T.J. Crawford and Ethan Slavin, did not respond to a request for comment Wednesday.
In a statement, Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said the pending merger has “the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”
CVS, the nation’s largest retail pharmacy chain, and Aetna, the nation’s third-largest health insurance company, had been competitors in the sale of Medicare Part D prescription drug plans to individuals. They serve, according to the Justice Department, 6.8 million members nationwide.
The Justice Department said the terms of the proposed settlement includes several provisions aimed at improving the effectiveness of the decree and the Antitrust Division’s future ability to enforce it.
In a report in the New York Law Journal earlier this month, U.S. Rep. David Cicilline, D-Rhode Island, who is in line to take the helm as chairman of the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law, had been critical of several recent multibillion-dollar mergers. But Cicilline has been a vocal supporter of the CVS/Aetna merger. CVS is headquartered in Rhode Island.
According to its website, CVS has more than 9,800 retail locations and more than 1,100 walk-in medical clinics. It also has 94 million plan members. CVS earned revenue of about $185 billion in 2017, according to the site.
According to Aetna’s website, as of June 30, the company served about 22.1 million medical members, about 12.7 million dental members, and about 13.1 million pharmacy benefit management service members. Aetna earned revenue of about $60 billion in 2017.