Aetna and Humana have decided to end their merger agreement rather than appeal a judge’s decision to block the deal on antitrust grounds.
“While we continue to believe that a combined company would create greater value for healthcare consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” Aetna CEO Mark Bertolini said in a statement.
“We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations,” he added.
In accordance with their contract, Aetna will pay Humana a $1 billion breakup fee. Aetna will also pay the fees associated with terminating its deal to sell some of its Medicare Advantage assets to Molina Healthcare, an arrangement the insurer had hoped would lessen concerns about the Aetna-Humana merger’s effect on market competition.
The companies first announced their plans to combine back in July 2015, followed by Anthem’s announcement that it would acquire Cigna. The Justice Department and several states sued to block both deals on antitrust grounds this past summer.
In the case of the Aetna-Humana deal, a federal judge ruled that the merger would unlawfully lessen competition in the Medicare Advantage and individual exchange markets. He also pointedly noted that Aetna exited some exchange markets in 2017 “specifically to evade judicial scrutiny of the merger.”
Bertolini, however, has denied that Aetna’s decision to exit exchange markets in 2017 was a decision driven by anything other than financial losses tied to those products.
In February, a different federal judge ruled against the Anthem-Cigna deal, but unlike Aetna and Humana, Anthem has said it plans to appeal the decision. However, it is unclear whether Cigna will join Anthem in fighting for the deal.