Senator urges more oversight in healthcare mega-deals like CVS-Aetna merger
Senator Chuck Grassley, R-Iowa, has asked the U.S. Department of Justice (DOJ) for heightened scrutiny over two significant healthcare deals currently underway, citing limited competition and high drug pricing concerns in a letter.
The deals—Cigna’s $67 billion purchase of Express Scripts and CVS Health’s $69 billion acquisition of Aetna—would create major vertical integration in the healthcare market during an era of rising drug prices.
The combined entities, plus Humana and UnitedHealth, would cover 71 percent of Medicare Part D enrollees and 86 percent of stand-alone drug plan enrollees, according to a Kaiser Family Foundation cited by Grassley.
Vertical integration, as the proposed mergers would accomplish, can lead to greater consumer benefits and increased efficiencies, he said, but can also have major downsides for the marketplace, according to Grassley.
“Such integration, however, can also lead to increased barriers to entry for competition in each standalone market,” Grassley wrote. “As such, we must ensure that these transactions do not foreclose competition and consumer access, or hinder innovation, especially in underserved rural areas.”
The senator's intervention comes a time when Congress is feeling pressure to act when it comes to rising drug prices. Congress also has a role to play to encourage experimentation and new strategies to drive down drug prices, Grassley wrote. He urged the Antitrust Division to conduct a “careful analysis” of how the proposed transactions will impact the pharmaceutical supply chain and competitive markets and work with the Federal Trade Commission and FDA in the analysis.
Grassley’s letter follows a similar strategy by the American Medical Association, which urged the DOJ to block the merger between CVS and Aetna, arguing the resulting entity would limit competition and negatively impact patients. A California insurance commissioner also urged the DOJ to sue to block the deal, which was proposed in December 2017, for similar reasons. Despite these efforts, other reports have concluded that the deal is actually close to clearing the antitrust process and will likely be approved by CVS Health and Aetna shareholders.
CVS is currently in “productive discussions” with regulators and DOJ officials, CVS Spokeswoman Carolyn Castel told the Hartford Courant. Aetna is one of the nation’s biggest healthcare services and insurance providers, serving approximately 44.6 million people. CVS Health operates nearly 10,000 retail locations, more than 1,100 medical clinics and has nearly 90 million plan members in its PBM business.
At the same time, Cigna is running into its own roadblocks in its attempt to take over pharmacy benefits manager (PBM) Express Scripts, after activist investor Carl Icahn spoke out against the deal, which he called overvalued. Cigna executives expect shareholders to approve the deal in a vote scheduled for August 24.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."