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The US Department of Justice has now authorized two mega-associations in the health sector, after the merger between CVS Health and Aetna, worth $ 69 billion, got the green light from the 39th agency on Wednesday.
In September, the agency also authorized the $ 67 billion merger of Cigna with Express Scripts.
The agreements, once concluded, will redraw the health sector as we know it.
In the case of CVS and Aetna, the agreement creates a new type of company that includes a health insurer, a retail pharmacy and a company that negotiates the price of prescription drugs with manufacturers of drugs, called the benefits manager of pharmacy. As part of the agreement with the Department of Justice, CVS and Aetna must divest the Aetna Medicare Part D drug plan business.
And in the case of Cigna and Express Scripts, the agreement associates a health insurer and a PBM under the same roof and puts an end to the activities of the autonomous PBM.
The decision to embark on other business sectors comes shortly after the DOJ blocked two mergers of a health insurer in 2016 that allegedly combined Aetna and Humana and Cigna and Anthem. The blocking of these so-called horizontal mergers suggests that large companies in the health sector may have to look for combinations elsewhere.
Since vertical mergers, which combine different activities under one roof, do not have a negative impact on the size of the market, they tend not to be challenged as frequently as horizontal mergers.
"Vertical mergers are generally not a problem," Andrea Agathoklis Murino, a partner in Goodwin's antitrust and competition law group, told Business Insider. That is to say, except in case there is a case in which prices go up because of the merger.
However, the connection between CVS and Aetna took place. The American Medical Association said Wednesday that she was disappointed with the DOJ's decision.
"We are disappointed that the DOJ did not go any further by blocking the CVS-Aetna merger," said AMA President Barbara L. McAneny in an e-mail. "WADA has worked tirelessly to oppose this merger and has presented a wealth of empirical evidence to convince regulators that this merger would cause harm to patients."
To be sure, the offers are not frozen for the moment. Companies still need to get the go-ahead from state insurance agencies, which both groups of companies claim are still working on.
What does it mean for health care
The boundaries of the health sector are changing. Instead of growing by acquiring other companies in the same sector, companies have begun to expand into new business sectors, with no two combinations alike.
This is part of the pressure of healthcare companies to both reduce costs and better control the patients who need their services. It's happening as big technology companies look for ways to disrupt the health care sector with new drugs that challenge the way we pay for treatment.
If the agreement were to succeed, Cigna would not be the only one to control both the insurer and PBM in the payment of orders. UnitedHealthcare, for example, owns the OptumRx PBM, while Anthem, which owns various Blue Cross Blue Shield health insurance companies, will launch its own PBM called IngenioRx. And with the CVS Health-Aetna agreement, CVS Caremark, the PBM unit of CVS and Aetna will also be under the same roof.
With both acquisitions, Cigna and CVS will both have more control over who will pay the prescriptions.
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