Justice Department Clears $68 Billion CVS–Aetna Merger

CVS and Aetna received conditional approval for their $68 billion merger, the US Department of Justice (DOJ) announced today, clearing the way for a union between a health insurer and a pharmacy benefit manager (PBM) with a well-known brand of drugstores on corners across the country.

The deal will require the previously planned sale of Aetna’s Medicare Part D plans, which was already under way, according to the statement today from the DOJ. Last month, Aetna announced plans to sell the Medicare drug plans to WellCare health plans.

“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 health care services that American consumers can obtain,” Makan Delrahim, the head of the DOJ’s antitrust division, said in the statement.

The merger will let CVS transform its stores into one-stop shops for a variety of medical services, and could also direct consumers with Aetna coverage that way if it would save them money in the process.

The transaction is the high point of a wave of consolidation that has transformed the healthcare landscape since the passage of the Affordable Care Act in 2010. While the antitrust division rejected direct mergers of giant insurers—such as the proposed Aetna—Humana and Anthem—Cigna mergers—it is accepting deals that allow vertical integration of the pieces of the healthcare chain. Last month, Cigna won clearance to buy pharmacy benefits manager Express Scripts.

As part of its announcement, the antitrust division said that along with 5 state attorneys general, it would file a civil antitrust lawsuit in the US District Court for the District of Columbia to enjoin the transaction, along with a proposed settlement, to resolve competitive concerns. Participating state attorneys general come from California, Florida, Hawaii, Mississippi, and Washington.

Doctors’ groups, including the American Medical Association, have spoken out against the merger, saying it would bring fewer choices for consumers and less innovation in the functioning of PBMs, which providers say contribute to rising drug prices.