CVS Health Corp.’s plan to buy Aetna Inc. for $69 billion was cleared by U.S. antitrust regulators Wednesday, paving the way for the nation’s largest pharmacy chain to acquire one of the largest health care insurers.
The deal was approved because Aetna has agreed to sell its Medicare prescription-drug business, or Medicare Part D, to WellCare Health Plans Inc., which the Justice Department said “would fully resolve the department’s competition concerns.”
CVS said the Aetna deal remained on track to close in the current quarter.
“We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value-creation potential of our combination with Aetna,” CVS Health Chief Executive Larry Merlo said in a statement.
CVS, based in Woonsocket, R.I., operates about 9,800 drugstores — including one in Sterling — and it’s a pharmacy benefits manager under the Caremark brand. CVS’ revenue last year totaled $178 billion.
About 1,100 of CVS’ retail locations include walk-in healthcare clinics, and CVS hopes to use the Aetna deal to expand the range of health services it can offer to Aetna’s vast membership and other customers.
Aetna, based in Hartford, Conn., has about 22 million medical members, and its 2017 revenue totaled $63 billion.
The CVS-Aetna marriage is part of a wave of consolidation rolling across the U.S. healthcare industry. The major players are bulking up and diversifying their product and service offerings in the face of uncertainty about the direction of the nation’s healthcare policy, threats of heightened competition and a desire to streamline their combined operating costs and to gain leverage for negotiating lower drug prices.
Cigna Corp., another health insurer, agreed early this year to buy pharmacy benefits manager Express Scripts Holding Co. for about $52 billion, a deal that also has received clearance from the Justice Department.
Internet retail giant Amazon.com agreed in June to acquire online pharmacy PillPack for an undisclosed price.
Amazon and two other major U.S. companies, the bank JPMorgan Chase & Co. and billionaire Warren Buffet’s conglomerate Berkshire Hathaway Inc., also announced a joint plan to find ways of reducing healthcare costs for their U.S. employees — which many viewed as a precursor of more disruption in the industry.
And another drugstore chain, Rite Aid Corp., had planned to be purchased by grocery operator Albertsons Cos., which also owns Vons and Safeway. But that deal was scuttled in August amid opposition from some Rite Aid stockholders.
Aetna last year had tried to acquire rival insurer Humana Inc. for $34 billion, but that deal also was dropped after a federal judge blocked that merger on antitrust grounds.
CVS agreed in December to buy Aetna for $207 a share, with $145 in cash and the rest, $62, in CVS stock. Aetna’s stock was up 1.3 percent at $206.35 a share in midday trading Wednesday while CVS’ stock was up nearly 1 percent at $80.22 a share.
Aetna’s agreement to sell its Medicare prescription-drug business, in order to get clearance for the merger with CVS, was part of a settlement reached with the Justice Department and five state attorneys general, including California’s.
The settlement also remains subject to approval by certain other states, and CVS’ Merlo said the company was “working to complete the remaining state reviews.”
California Atty. Gen. Xavier Becerra said in a statement that the Justice Department settlement “resolves California’s year-long investigation” into the CVS-Aetna deal, which “raised significant antitrust concerns due to its potential impact on prescription-drug prices for seniors in Medicare Part D,” among other issues.
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