Having recently stepped up their scrutiny of the Aetna-Humana and Anthem-Cigna mergers, federal regulators are now said to be preparing to file suit to block the deals.
The Justice Department’s final decision on whether to challenge the deals could come sometime this week or next week, Bloomberg reports, noting that the companies could settle a lawsuit either before or after it is filed.
Aetna had been gearing up to sell a chunk of its Medicare Advantage assets to reduce its overlap with Humana's MA business, though sources tell Bloomberg that may not be enough to convince officials that the deal will not harm competition. Indeed, critics of the deal have been skeptical that divestitures are enough to preserve competition in the MA space, as many divested plans often fail and the market is already highly consolidated.
The DOJ has also been skeptical that Anthem and Cigna could offer satisfactory remedies to antitrust concerns. At issue, according to the Wall Street Journal, are concerns over how the deal would affect the national employer-sponsored insurance market, the individual market and healthcare providers, over which a combined company would have greater negotiating power.
Leerink Partners analyst Ana Gupte says she expects Aetna and Humana to countersue the government if the DOJ files a lawsuit against their deal, according to Bloomberg, but she thinks Anthem and Cigna are less likely to do so. Given reports of conflict between the two companies, “they both may decide to walk away,” she told the news outlet.
If the DOJ does sue to block the deals, it will be just the latest in a string of successful challenges to major mergers, including Halliburton-Baker Hughes and Comcast-Time Warner. William Baer, who has spearheaded the DOJ’s recent tough-on-mergers stance, previously called the Aetna-Humana and Anthem-Cigna deals a “game changer” in the health insurance industry.