Today marks the beginning of the antitrust trial that challenges Anthem’s proposed acquisition of Cigna, pitting the Justice Department against two insurers that have often been at odds with one another.
The trial is one of two that will decide the fate of mergers between four of the industry’s largest for-profit health insurers. The Aetna-Humana trial begins Dec. 5.
Both trials are set to end before Donald Trump is sworn in as the next president, though his administration might be amenable to a more insurer-friendly settlement if either the companies or the government decides to pursue an appeal, noted the New York Times.
#wallstroundtable Analysts also raise the big boost the election gives to the odds of Aetna-Humana and Cigna-Anthem mergers going through— Loren Adler (@LorenAdler) November 15, 2016
The Anthem-Cigna trial will begin with Anthem CEO Joseph Swedish and Cigna CEO David Cordani taking the witness stand, according to the Wall Street Journal. But the start of the trial is just the latest chapter in what has been a high-drama deal stretching for more than a year. Here’s a look at some of the key events:
- June 2015: Concrete news of a potential Anthem-Cigna deal emerged when Cigna’s board unanimously voted to reject a public takeover bid from Anthem, then issued a sharply worded letter that criticized the larger insurer’s negotiating tactics as well as its merger proposal.
- July 2015: The two companies worked out their differences and agreed on a deal initially valued at $54.2 billion. "At the end of the day, what's been configured today is something that works for both organizations today and something that works for both organizations over the long haul," Cigna CEO David Cordani said.
- Aug. 2015: The American Hospital Association began what would be a lengthy lobbying campaign against both the Anthem-Cigna and Aetna-Humana deals, beginning with a letter that criticized the former.
- September 2015: At a House Judiciary Committee hearing, lawmakers and expert witnesses voiced concern about the pending health insurer mergers, with the American Medical Association’s Barbara McAneny, M.D., noting that "the health and safety of American patients is at stake” in the government’s review of the deals.
Then, at a Senate hearing, lawmakers grilled Swedish and Aetna CEO Mark Bertolini about their respective deals, with Sen. Al Franken (D-Minn.) pressing them both to commit to passing merger-achieved savings onto consumers. And in another House Judiciary Committee hearing, Bertolini and Swedish continued to defend their deals, but provider group representatives amped up their criticism.
- March 2016: Assistant Attorney General William J. Baer said the DOJ is closely scrutinizing both insurer deals, noting they are “transformational mergers in a number of markets.”
- May 2016: Cigna indicated in a regulatory filing that it believed the deal with Anthem may not close by the end of the year, despite Anthem continuing to say it expects the deal to close in the latter half of 2016. In a further sign of tension, a Wall Street Journal report revealed that the companies’ executives have been at odds about issues like Anthem’s lawsuit with Express Scripts and missing regulatory filing deadlines.
- June 2016: Federal regulators told Anthem and Cigna representatives during a meeting at the DOJ that they were not optimistic the companies could offer satisfactory fixes for their concerns about the deal. Later that month, Anthem denied reports that the deal is close to collapsing.
- July 2016: The DOJ officially sued to block both the Anthem-Cigna and Aetna-Humana mergers on antitrust grounds, with Baer noting that the biggest concern in the Anthem-Cigna deal was the potential effect on the employer-sponsored insurance market. Both Aetna and Anthem executives said they would fight to defend their mergers, with Swedish noting that if allowed to merge, Anthem and Cigna could enter additional Affordable Care Act exchange markets.
- August 2016: On an earnings call with investors, Cordani noted that “Anthem independently decided to pursue the lawsuit with the DOJ,” though Cigna would fulfill its obligations to support Anthem as it fought for the deal. It would, however, also look into pursuing other growth opportunities if the deal failed, he said.
Meanwhile, the federal judge assigned to hear both merger cases sent the Anthem-Cigna case to Judge Amy Berman Jackson in order to grant both pairs of companies’ requests for a speedy trial.
- September 2016: The DOJ sought to compel Anthem and Cigna to turn over letters between the insurers’ in-house attorneys—in which they accused one another of breaching the merger agreement—arguing they were evidence of escalating governance disputes that erode the insurers’ argument that their deal will produce efficiencies.
- October 2016: The judge presiding over the Anthem-Cigna cases issued an order to split it into two parts, with the first examining the deal’s effect on national markets followed by a review of its effect on local markets. She also ordered the companies to produce the letters between their in-house attorneys.
- November 2016: Both Anthem and the DOJ filed their pre-trial briefs, laying out their core arguments for the first phase of trial. Anthem noted that the DOJ itself admitted the deal would likely reduce reimbursement rates paid to providers, thus lowering healthcare costs. However, the government said it really only has to prove the deal was likely to harm competition in one market to make the acquisition illegal.