AMA calls on regulators to block CVS-Aetna merger

Editor's note: This story was updated to include a response from CVS Health.

The American Medical Association has come out against the planned merger between CVS Health and Aetna, warning that the deal could hurt patients by reducing competition. 

AMA President Barbara McAneny, M.D., said at a hearing before the California Department of Insurance that regulators should block the deal, as it could lead to anticompetitive effects in Medicare Part D, health insurance, pharmacy benefit management, retail pharmacy and specialty pharmacy.

"After very careful consideration over the past months, the AMA has come to the conclusion that this merger would likely substantially lessen competition in many health markets, to the detriment of patients," McAneny said. "The AMA is now convinced that the proposed CVS-Aetna merger should be blocked."

The group intends to file a memorandum later this month that will more extensively outline its concerns about the deal, it said in an announcement.

RELATED: American Antitrust Institute urges DOJ to block CVS-Aetna merger, citing competition concerns

Some of the potential issues the AMA will cite in that filing are:

  • Higher premiums due to significant concentration in the majority of Medicare Part D markets
  • Higher drug prices and out-of-pocket costs as the unified CVS-Aetna takes advantage of its strong position in both the insurance and PBM markets
  • Lower quality insurance options for patients
  • A failure to meet efficiency and benefit projections, as the merger will be complex to implement if approved

These factors, among others, should give regulators "powerful reasons" to block the deal, McAneny said.

CVS and Aetna have argued that the $69 billion deal would not be anticompetitive and would instead allow for positive changes, such as CVS investing more telemedicine in its research clinics. But consumer advocates have been skeptical, as healthcare consolidation has yet to pay dividends for patients.

Erin Britt, director of corporate communications for CVS, said in a statement to FierceHealthcare that the goal of the merger is not to further consolidation but to "bring together disparate parts of the health care system that today lead to inefficient, ineffective and more costly care."

"We intend to continue to engage in a dialogue with the AMA as we create a community-based integrated model in which doctors, pharmacists, nurses and other health care professionals work together to provide a health care experience that is simpler, more convenient and less expensive," Britt said.

RELATED: CVS-Aetna, Cigna-Express Scripts would lead to massive Part D consolidation

The AMA raised similar concerns about competition in testimony submitted to a February congressional hearing. Then-AMA President David Barbe, M.D., said the merger could raise anticompetitive concerns unique to vertical mergers.

The Department of Justice has requested additional information on the merger but has yet to take steps to block the deal. Experts say a federal judge's ruling that allows AT&T to purchase Time Warner without preconditions bodes well for the CVS-Aetna deal, even if the DOJ does challenge the merger.