Cigna's $67 billion acquisition of Express Scripts cleared regulatory hurdles in two states on Thursday, putting the deal on pace to close by the end of the year.
The megamerger got critical approvals from California and New York and is now waiting for a final approval from New Jersey. The Department of Justice cleared the deal in September.
California Department of Managed Health Care Director Shelley Rouillard approved the megamerger on Thursday with $60 million in concessions from the companies, including a $35 million investment in Cigna’s Collaborative Accountable Care and Delivery System Alliances. Another $10 million will go toward increasing the number of healthcare providers in underserved areas of the state.
Cigna and Express Scripts also agreed not to increase premiums as a result of acquisition costs and to keep premium rate increases to a minimum.
“The Department holds each proposed merger to a high standard of review to ensure consumers’ healthcare rights are upheld and access to appropriate healthcare services continues,” Rouillard said in a statement. “The conditions imposed on Cigna and Express Scripts will improve plan performance, increase access to healthcare services and assist in controlling healthcare costs.”
The New York Department of Financial Services determined that a previously scheduled hearing was not required given the "substantial commitments" from the companies. Those included a promise not to raise premiums in New York to pay off more than $24 billion in new debt and an agreement that Cigna will not receive preferential pricing from Express Scripts.
The companies also agreed not to oppose the department's proposed legislation to license and regulate PBMs.
In a financial filing issued after the markets closed on Thursday, Cigna said it continues to work with regulators in New Jersey, the one remaining state where approval is required. The company expects the deal will close by the end of 2018.