Despite threats to the contrary, New York state regulators have approved CVS Health’s proposed acquisition of Aetna Inc., paving the way for the $69 billion deal to close this week. But the merger will cost CVS $40 million paid to the state over three years for health insurance education and require the fulfillment of about a dozen other conditions.
New York State Department of Financial Services superintendent Maria Vullo announced Monday that CVS has agreed that “New Yorkers will not pay to finance this acquisition, in insurance premiums, drug prices or otherwise,” according to the agency’s decision and order approving the deal. During a public hearing in October, Vullo expressed concerns that CVS, which had to borrow $40 billion for the acquisition, could raise insurance premiums for millions of residents.
The U.S. Department of Justice announced in October that it would approve the Woonsocket, Rhode Island-based retail pharmacy giant’s purchase of Hartford, Connecticut-based Aetna, assuming the latter divests its Medicare Part D prescription drug plan for businesses and individuals. Connecticut regulators also approved the deal last month, but New York remained wary and the only apparent roadblock to the merger.
In addition to her concern about potential premium rate increases, Vullo also expressed worry about increased pharmaceutical costs, data privacy issues, community support and CVS’ ability to do business statewide, “in a manner that serves New York’s communities fairly and equitably, including those communities most in need of access to affordable health care services.”
Many of those issues appear to be addressed in the conditions. For the deal to go through, for example, Aetna and CVS have agreed to provide “enhanced consumer and health insurance rate protections, privacy controls, cybersecurity compliance, and a $40 million commitment to support health insurance education and enrollment and other consumer health protections,” according to the Department of Financial Services’ news release announcing the deal.
In addition, CVS also agreed that Aetna cannot pay dividends without the express prior approval of the department for three years or discontinue current products throughout the Aetna New York service area for the same length of time.
“Roll-out of health care measures must be done fairly and equitably in New York, including in underserved communities,” according to the conditions, which also include a guarantee from CVS that participating provider networks for insured products maintain access to nonchain New York pharmacies for three years.
For its part, Connecticut received, as part of its approval, an assurance that CVS will keep Aetna in Hartford for at least 10 years.