Confidence remains in CVS-Aetna deal despite pushback from New York regulators

Sharp rhetoric from New York regulators isn’t expected to derail the $69 billion CVS-Aetna deal, according to one financial analyst.

Getting approval from New York is the merger’s last big regulatory hurdle, after receiving approval from the Department of Justice earlier this month. But last week, New York State Superintendent of Financial Services Maria Vullo questioned whether the deal would lead to higher drug costs, less transparency, data privacy concerns and higher premiums due to increased financial pressure resulting from CVS’ significant debt associated with the purchase.

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“Large corporate for-profit conglomerates do not have a good history of serving the public above their shareholders,” she said in her opening statement. “And, here, we have independent pharmacists, medical providers, the uninsured, consumers suffering from too high pharmaceutical costs, who may suffer from this transaction.”

The deal has drawn the ire of independent pharmacists in New York, who claim CVS Caremark has strong-armed them with unpredictable pricing. One pharmacy owner told the New York Post the “it’s like dealing with the mob.”

But in a note (PDF) to investors, Leerink analyst Ana Gupte, Ph.D., called Vullo’s rhetoric a “negotiating tactic” that won’t prevent the state from approving the $69 billion merger.

“We believe this is par for the course and should not be an impediment to deal close later this year,” she wrote.

Connecticut’s insurance commissioner cleared (PDF) the deal last week in part because Aetna agreed to sell off its Part D business to WellCare.