The Department of Justice (DOJ) conditionally approved CVS and Aetna’s controversial merger on Wednesday, permitting the move after Aetna completes the sale of its Medicare Part D business to WellCare.
Whether the settlement resolves the competition concerns raised by antitrust regulators—or benefits consumers as both companies have promised—remains to be seen. And not everyone is looking at the new company with rose-tinted glasses.
The American Medical Association (AMA) was disappointed in DOJ’s decision, standing by its stance that the merger will harm patients.
“We now urge the DOJ and state antitrust enforcers to monitor the postmerger effects of the Aetna acquisition by CVS Health on highly concentrated markets in pharmaceutical benefit management services, health insurance, retail pharmacy and specialty pharmacy,” AMA President Barbara L. McAneny, M.D., said in a statement.
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Consumers Union, an advocacy organization, concurred. The conditions the DOJ set forth “simply are not enough” to ensure CVS-Aetna does not “[leave] consumers with fewer options and higher costs,” wrote George Slover, senior policy counsel. He added that the deal “creates an enormous market force that we haven’t seen before" and creates "far-reaching profit maximizing incentives."
Both Aetna and CVS executives have repeatedly argued that the merger will benefit consumers by creating more localized care options for patients and bringing together a wealth of data. But Robert Weissman, president of the of the left-leaning group Public Citizen, said it creates a "corporate goliath."
"More concentrated corporate power is not going to fix the mess of out-of-control medicine prices and a dysfunctional health care system," he said in an emailed statement. "The CVS-Aetna lockup, like other health sector mergers, may shift the relative balance of power between competing industry factions, but it is not likely to make medicines more affordable or improve healthcare provisions."
The CVS-Aetna merger represents a shift towards vertical alignment between insurers and pharmacy benefit managers. But eliminating the middleman also constricts competition, Michael Levinson, M.D., partner and leader of healthcare practice at Berger Singerman, told FierceHealthcare.
“States are taking a serious look at their internal antitrust review practices," he said. "Going forward, [healthcare] deals are going to receive a lot more scrutiny."
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According to research from The BDO Center for Healthcare Excellence & Innovation, half of healthcare executives and clinical leaders believe the CVS-Aetna deal will make a “significant impact” on the industry. That could prompt other industry players to reevaluate their role.
“If you’re in the healthcare world in any way, shape, or form, this decision says your world is about to change, and you have to really think about how you’re going to fit in and who you’re going to partner with, and what your role is going to be,” said David Friend, M.D., BDO’s managing director and chief transformation officer.
Many aspects of the healthcare system may undergo an existential crisis, he said.
“You don’t have insurance to go to a restaurant; you go and pay," he said. "It begs the very question, ‘What is the future of insurance?’”
It also raises questions about the value of PBMs as a drug middleman, particularly as the wants and needs of consumers change, and new entrants like Amazon challenge the status quo.
“A lot of these things that we assume will always be there may not be needed going forward,” Friend said.