The Department of Justice (DOJ) cleared the way for the nation’s largest retail pharmacy, CVS, and insurance giant Aetna to move forward with their massive $69 billion merger on Wednesday which is expected to change the healthcare landscape.
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Shares of both companies rose on the news.
|CVS||CVS HEALTH CORPORATION||74.18||-0.35||-0.47%|
Aetna said last month it would sell all of its Medicare prescription drug plans to WellCare Health Plans. The DOJ said regulatory approval was conditional on that sale, because otherwise the combination of the two companies’ Medicare Part D prescription drug services would be anticompetitive.
“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,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement.
CVS CEO Larry Merlo said in a statement on Wednesday that the deal will create new ways for the companies to engage patients' total health care needs, with added convenience and lower costs.
"Our focus will be at the local and community level, taking advantage of our thousands of locations and touchpoints throughout the country to intervene with consumers to help predict and prevent potential health problems before they occur," he said, adding that Aetna would continue to operate as a standalone company within CVS.
Aetna counts 23.1 million medical members, 14.5 million dental members and 15.2 million pharmacy benefit managers as customers, according to the company’s website. CVS is a pharmacy benefit manager with more than 9,700 location and $40 billion in specialty drug revenue.
Experts believe the acquisition of Aetna would give CVS better leverage in pricing discussions, which would be particularly valuable at a time when companies are inundated with public pressure to reduce costs. It could also usher more patients into its MinuteClinics for care.
CVS expects the deal to save a potential $750 million in the second full-year after it passes, the company said in a presentation last year.
The DOJ recently gave the green light for health insurer Cigna to acquire pharmacy benefits manager Express Scripts.