The Department of Justice approved Cigna's acquisition of Express Scripts. What now?

Whether the deal is a good thing for healthcare depends who you ask. (Getty Images/Gajus)

The Department of Justice (DOJ) approved Cigna’s acquisition of Express Scripts on Monday, saying the move was “unlikely to result in harm to competition or consumers.”

While some economists, legal experts, and business leaders agree—there are plenty of concerns in the marketplace about what this could mean.

A survey conducted by the National Business Group on Health (NBGH) found only 26% of large employers believe mergers between health plans and pharmacy benefit managers (PBMs) “will have a positive impact on cost, quality and consumer experience.

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

Brian Marcotte, NBGH’s president and CEO, said the merger “should drive better care for patients and lower costs for employer plans,” though its impact on medical and pharmacy integration will depend on “Cigna’s ability to execute.”

RELATED: Cigna issues $20B in senior bonds to fund Express Scripts purchase

Thomas Greaney, J.D., a professor of health law and federal securities at the University of California, Hastings, warned the merger could trigger other market effects that have detrimental effects for consumers,

If DOJ approves CVS’s acquisition of Aetna, more than 70% of the PBM market could be combined with three of the largest health insurers (including UnitedHealthcare and Optum), he noted. Smaller insurers that operate “without an effective and well-functioning PBM provider partner…could be at a disadvantage.”

This could prove problematic at a time when many insurers, including small ones, have been expanding their reach across the board, including in the slowly-stabilizing individual market.

To curb these unwanted effects, state insurance commissioners or attorneys general could put consent decrees on the merger, Greaney explained. Alternatively, state or federal agencies could issue vertical merger guidelines.

Bill Baxter, associate attorney general under president Ronald Reagan, issued guidelines for horizontal mergers that had an “enormous effect,” functioning “almost as if they’re law,” Greaney noted.

RELATED: Experts say there's growing evidence 'under the radar' healthcare consolidation hurts consumers

That said, there is a contingent that believes the deal will be good for consumers. Among them: Ben Isgur, who leads PricewaterhouseCooper's Health Research Institute. He told FierceHealthcare this deal is “the true definition of disruption.”

With Express Scripts under its wing, Cigna will control more of the supply chain and have more negotiating power, Isgur said. Ideally, this will generate savings that translate into lower prescription drug costs for consumers.

William Sage, M.D., J.D., who teaches at the University of Texas, Austin's School of Law and Dell Medical School, agreed, saying "the health insurance industry could use a major re-think of its business model." 

"The current “pharmaceutical supply chain” is less a chain than a circle, where employers and beneficiaries inject cash while the participants find clever ways to pass it around," Sage said. 

"Anything that reduces contractual complexity and the potential for hidden self-dealing...strikes me as a good thing," he concluded.

Suggested Articles

To reduce readmissions and create greater operational and cost efficiencies for providers and payers, we must rethink how we deliver and manage care.

Outpatient specialty drugs can be a lucrative income source for not-for-profit hospitals, but Washington presents some risks, Moody's says.

Healthcare innovation network AVIA has secured $22 million in its latest funding round.